BlackRock Credit Allocation Funds: CEFs With Exceptional Yield

BlackRock has a series of nearly identical closed end funds, investing in corporate debt and offering exceptional yields. They are all leveraged and presently offering yields of approximately 6.5%. They are all traded on the New York Stock Exchange. In purchasing these funds, I simply look to which fund offers the highest discount from net asset value. These discounts fluctuate and sometimes one fund offers a much more substantial discount than another.On, July 22, 2011, the discounts on the four funds range from 10.20% to 12.65% which is not much of a spread. All the funds have the majority of their assets in corproate bonds with the balance in preferred shares. I will now talk about each fund individually.BlackRock Credit Allocation Income Fund I (PSW) was launched on August 1, 2003 and as of April 30, 2011 had a yield of 6.4% with 25% leverage. 77% of assets... Read more