First Trust HY Opps 2027 (FTHY): A Better Way To Play High Yield

New (and Permanent) Discord Link: Join the Yield Hunting Discord Server!

----------------------------------------------------------------------------------

Lots of research and news: Steve at the BondBeat

---------------------------------------------------------------------------------

Overview

First Trust High Yield Opp (FTHY) is a relatively 'mild' high yield corporate bond fund that has a kicker behind it. The recent bout of market volatility has given us a present in this fund to invest at wider high yield spreads and a wide discount on top of it. The yield on this fund is 10.9% with the discount of -6.2%.

In recent CEF Reports, we have made the comment that the environment for taxable bond closed-end funds was not compelling. When assessing the space, we look for a 'double-discount' whereby the CEF itself is at a discount to NAV, AND the bonds held within the fund are trading at a discount to par.

In other words, we want wide credit spreads and deep discounts to NAV when buying a fund. On top of that, this fund 'self liquidates' in June 2027 at NAV so you capture the discount between now and then.