BIT: Investing In This High-Yielding CEF Might Be A Risky Play For Present Turbulent Times
Published Apr 15, 2020 on Seeking Alpha

The key bullish catalyst is the Fed's recent decision to purchase a broad range of fixed income securities including MBS.
The fund recently reported a monthly distribution of $0.1237, which currently makes up a 10.80% yield.
We believe that a higher return of capital to shareholders will be required in order to maintain the current monthly distribution of $0.1237.
This time, we will present our readers with the BlackRock Multi-Sector Income Trust (BIT) which was incorporated back in February 2013. It is structured as a closed-end fund and has a total AUM of approximately $520 million. It has been distributing its shareholders a monthly dividend payment of $0.1237 per share over the last couple of months. That makes up an interesting 10.80% dividend yield as of April 9, 2020. Based on our analysis, we believe that the fund will have to increase its share of return of capital in order to be able to maintain such a high distribution rate for the rest of 2020. In terms of the key bullish catalysts, we find them as the following: (1) Fed's decision to buy a broad range of fixed income securities on the market including corporate bonds of "Fallen Angels" and mortgage-backed securities, (2) resilient nature of its portfolio to the coronavirus crisis in terms of geographic and industrial exposure.
About the Fund

(Source: BlackRock)
During normal market conditions, the fund will invest at least 80% of its assets in loan and debt instruments both in domestic fixed income securities and globally. Investors should keep in mind this fund has a primary objective to generate a diversified source of income, while capital appreciation comes in second place.

(Source: BlackRock)
The fund offers a distribution rate of 10.80%, while Yield to Worst comes at 11.33%. We believe that Yield to Worst might not be the most suitable metric to rely on at this point in time. Especially now when we face uncertainties surrounding a potentially massive scale of... Read more