BKT: Agency Securities Provide Safety, But This Fund Needs To Cut The Distribution

Impact · against what's priced in

BKT faces negative pressure due to an unsustainable 10.72% distribution that is causing capital erosion. The fund's inability to cover its payouts and its negative real returns over the last decade suggest a distribution cut is necessary to stop NAV destruction.

BKT−0.60

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In context

The fund is not covering its 10.72% distribution, which is leading to capital erosion and negative real returns over the past decade.

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• inflation▲33%
• dividends
• BKT
• agency mbs
• bond market
• closed end funds
• distribution cut
• fixed income
• interest rates