MIN: A 9% Yielding Conservative Bond CEF To Buy Now

MIN is a closed-end-fund that invests in U.S. Treasuries and investment-grade U.S. corporates.
The shorter duration profile represents a conservative risk profile that can serve to limit portfolio risk and add to diversification.
We recommend investors increase exposure to the fixed-income asset class as a defensive position against macro uncertainties and a deeper correction in risk assets.
The MFS Intermediate Income Trust (NYSE: MIN) with $475 million in total assets is a taxable-bond closed-end fund that invests across U.S. Treasuries and investment-grade U.S. corporate bonds. With an average effective duration of 4.0 years and a high-quality credit profile, the fund is one of only a few conservative type bond CEF investments meant at capital preservation. MIN currently yields 9% achieved through the regular use of return-of-capital distributions making it a compelling income vehicle. While the exposure here is similar to alternative passive intermediate maturity bond ETFs, income-focused CEF investors should consider MIN to lower portfolio risk in the current market environment.
Background
MIN occupies a typically overlooked segment of closed-end-funds by investing in short maturity U.S. Treasuries and investment-grade corporate bonds. The ticker symbol itself, "MIN", is meant to convey a profile of relatively minimum volatility in the context of an income-focused strategy. In contrast, the vast majority of taxable bond CEFs have a higher effective duration or lower average credit quality implying higher risk. By this measure, MIN is a lower-risk and lower-reward type fund that can serve as a defensive position in the context of a diversified portfolio.
The MIN fund composition is allocated between 40% weighting in Treasuries, 49% in high-grade corporates, and the remaining in small positions from other segments. In terms of credit quality, 80% of the fund is in "A"-rated securities or better, with 46% being in U.S. Government and Federal Agencies... Read more