The 10-year treasury yield increased 48 basis points during April, that followed on the 32-basis-point increase during 1Q24, which resulted in DVDN declining 2.85% during the month. In fact, the 80-basis-point YTD24 increase resulted in 10-year treasury yields settling just above the yield at the time DVDN was launched. Market expectations are settling in at 1 rate cut, later in FY24, as the most likely outcome.
During April, DVDN portfolio managers, (a) reduced BDC positions from 7 to 2 as stocks reached price targets and forward lending spreads are compressing; (b) reduced CREIT positions from 5 to 4 eliminating one office-centric stock; and (c) increased MREIT positions to 8 from 5 to take advantage of better relative value companies. One notable item is the reduction in the equal-weighted yield for the CREITs that declined from 12.22% in MAR24 to 8.97% in APR24. The reason is that DVDN currently holds one CREIT that does not pay a dividend and is owned as a total return opportunity.
For further details, please see our April 2024 Newsletter here.
