BCX: Improving Portfolio To Protect Against Inflation

2025-01-07 09:22:22 ET

Summary

• The BlackRock Resources & Commodities Strategy Trust offers a 9.56% yield, significantly higher than major equity indices, making it attractive for income-focused investors seeking commodity exposure.
• Commodities and equities in the commodities space are effective inflation hedges, with historical data showing a positive correlation between commodity prices and inflation.
• Despite recent underperformance compared to the S&P 500, the fund's high yield and increased exposure to precious metals provide potential inflation protection and income.
• Recent U.S. Treasury bond auctions suggest that the market is getting increasingly worried about U.S. fiscal policy and the dollar, which is a positive for gold.
• The fund trades at a 9% discount to net asset value but is more expensive than its long-term average, suggesting potential for a better entry price.

The BlackRock Resources & Commodities Strategy Trust ( BCX ) is a closed-end fund that income-focused investors can purchase as a method of gaining exposure to the commodity and natural resources space while still earning a very attractive yield on their assets. As of the time of writing, the BlackRock Resources & Commodities Strategy Trust yields 9.56%, which is substantially higher than the yield of any major equity index today. We can see that here:

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