Thanks for the video. I was in BST for years. I finally cashed out for more income on Tech using QQQI, FEPI, and AIPI as my primary tech holdings. BST was a choppy ride, and so these other funds seemed attractive. Happy with the switch so far. Note: I use a more conservative distribution on FEPI and AIPI in my calculations then they actually have been distributing in practice.
Thanks for sharing your experience. I have some FEPI too and I'll give it more time before passing judgment. It has plenty of downside risk but I think if I with draw 8% and reinvest the rest of the huge dividend then the downside is far less. I think you're wise to assume the "real" yield is less than what its currently showing. There's no such thing as 25%+ yields that last forever with zero NAV erosion :)
I don't find this CEF extremely attractive, but it does offer some minimal diversification (private placements) vs JEPQ at similar yeilds. I think the challenge is return of capital (the bad kind), vs JEPQ is all option premiums and a little dividends. Also you do point out that if one bought in at 2021, they would still be severely underwater, and yield on cost would probably be 3% or less. IMO, the volatility risk is too great vs JEPQ, while yielding less. If it yeilded 10%-12%, then that might be worth it.
Great update. For me personally I am sticking with CC ETFs for all my equity holdings (especially tech) and using the CEFs for the fixed income portions.
BST is a good fund. Nothing wrong with holding it alongside JEPQ, QQQI, and GPIQ. Also, I don't blame you for selling your SVOL position, I did the same thing recently and put the proceeds into QQQI. I sleep better at night now, LOL. I was uncomfortable with lots of things going on with SVOL. I never liked Simplify "double dipping" by purchasing it's other funds to make up SVOL's composition, and it seemed like they were always tinkering with the mechanics of the fund like it wasn't working out like they planned. Plus, add in an unhealthy scoop of declining dividends, and that's a sell for me.
Thanks. You've covered the pros and cons well. I own some BST, and thanks for the heads-up that this is a good time to add to my position. High yield and on sale, win-win.
Thanks for sharing. It hasn't exactly been on fire since I first reviewed it but I think it's better positioned now than it was then. BST is a long term play because the private placements are volatile.
Hi Armchair, I want to say thank you to inspire me to start doing income investing lately. I am approaching retirement now.I accumulated enough real estate to fund the retirement. But this will give me a backup income. Your channel is very authentic I think even you don't come out to talk everyday.
Thanks for your feedback. I spent a good part of my life investing in real estate and its great but some diversification is good too. I have no plans to release content daily because as much as I like income investing, I also have other stuff to do in retirement ;) I appreciate you taking the time to say thanks, and best wishes for your looming retirement...such an exciting time ahead!
Took a hard look at BST sometime ago, but decided to go with EOS instead. As to SVOL, never felt comfortable with the idea. If there is a good product, I actually would take the opposite of trade to long VOL as a direct hedge. Everything else in my portfolio is probably strongly negatively correlated with VOL.
I think you mean BSTZ. It has a larger allocation to private placements. A full comparison of BST to BSTZ is explained in the Seeking Alpha article I linked in the description of this video.
I've made several videos on the subject of Return of Income as it relates to income generated by selling covered calls. Regarding BST, BlackRock doesn't explicitly state on their website whether the ROC is destructive to NAV or not. However, based on the 2023 Taxable Closed End Fund Breakdown" available on BlackRock's BST website in pdf form, Note (3) in the fine print at the bottom of page one says "a return of capital may occur, for example, when some or all of the shareholder's investment is paid back to the shareholder". That is why I made the assumption that the ROC is destructive to NAV. As for the tax treatment, ROC isn't taxable at the time of the distribution, but it is taxable at the capital gains rate, based on the adjusted cost basis, at the time of sale. Therefore I wouldn't characterize it as "100% tax free". There isn't time in each video to fully explain the tax implications of each form of distribution but I hope this clarifies my thoughts on BST distributions, as it relates to ROC.
I've never DRIP'd so we are both new at something :) Automatically buying a fund every month regardless of price doesn't make sense to me with CEF's because their relative value fluctuates each month. I'd rather buy whatever is the best priced opportunity at the time. To answer your question, yes you can DRIP many CEF's but it depends on the CEF and also your brokerage.
I'm not familiar with it. It has a great run in 2022 and early 2023. The distributions are a bit too volatile for what I'm looking for (consistent income). I would need to understand know how to assess the downside risk of this fund before considering it.
If you had one or two ETFs to choose from for someone that doesn't have the desire to choose individual stocks for the best income bang for the buck, what would you suggest to look into? I asked the same thing of a couple dividend gurus on TH-cam and most say SCHD is a good one to think about. I'd like to see if you had something to research.
SCHD is good for the dividend growth strategy. I use a high yield strategy (more yield, less dividend growth). To diversify risk I recommend having more than a few funds for a high income strategy. However, to get started, I would suggest SPYI, QQQI, PBDC, and PFFA.
I'm concerned about the very high payout ratio on fepi. I notice you've held it for a good while. Can you explain why this is a sound investment? I'd like to buy it again but this looks fragile. I'm a rookie so admit I likely just don't fully understand. Thanks for any light you can shine on this.
I made a video about FEPI (this video is about BST). FEPI is one of my highest risk holdings. It relies on the success of just 15 tech stocks that have performed well recently. Additionally, its so new that there's little data to analyze. On the other hand, it produces a lot of income. It's currently my 20th largest holding and represents about 2% of my portfolio. I don't anticipate increasing that unless/until it has a much longer history and performs well. In summary, no...I don't think this is a sound investment. I consider it high risk / high reward.
In your recent update you mentioned buying a position in EICC. Right now it is trading at a very small premium to it's face value of $25. What are your thoughts on ECC/PRD? It's well below the $25 face value at $19.41 which makes its current yield 8.69%. It's next call date is 2 years from now. I was just curious if this is a bargain at such a discount.
I haven't analyzed that ECC pref. ECC invests in Equity CLO's which carry more upside and more risk than EIC. I think it depends on your comfort with the various levels of risk.
Thanks for the suggestion. I assume that everybody is using it the same way but we're all busy! I don't plan to do a full tutorial (that would get long and boring) but I'll look into doing something that shows how I use my favorite features. Their help website is good but its mostly in written form and videos are easier to digest.
Great video as always! Unrelated question: I know both these investments are tax inefficient, but which one is better for a taxable brokerage account? JEPQ or BDC's such as HTGC? Do you pay less taxes in one versus the other? Thanks for all the great info and videos, keep them coming!
I like BIZD but I like PBDC more because its actively managed. Not all BDCs are good. I suggest comparing total returns for both and then picking your favorite.
I know you have your rules but with so much uncertainty in the next few months why not park your money in something like JAAA and if you want a little more yield JBBB kind of a no brainer with the market conditions where they are. I see QQQI and SPYI coming back to the mid-upper 40's where I will add. Good video enjoy your content.
JAAA and JBBB have done very well recently. I would have to understand the effect on future distributions of the floating rate loans that these CLO's are built on,before assuming that performance will continue. Not saying they're bad, I just don't have enough knowledge of them yet to buy them.
@@delliott777 That's because if the returns don't come in, they backfill the shortfall with return of capital (giving back your own money) to artificially prop up/boost the yield. With JEPQ, those dividends are all profits from options and dividends... no shenanigans on payouts.
Snowball Dividend Tracker (Create a Free Account, and the 10% Discount will appear under "Subscribe"):
armchairincome.link/snow
Is there a snowball type app that is from an American company?
I would like to see you revisit the Kurv Fund KQQQ and the new Neos Fund HYBI. I really like your analyses.
Thanks for the video. I was in BST for years. I finally cashed out for more income on Tech using QQQI, FEPI, and AIPI as my primary tech holdings. BST was a choppy ride, and so these other funds seemed attractive. Happy with the switch so far. Note: I use a more conservative distribution on FEPI and AIPI in my calculations then they actually have been distributing in practice.
Thanks for sharing your experience. I have some FEPI too and I'll give it more time before passing judgment. It has plenty of downside risk but I think if I with draw 8% and reinvest the rest of the huge dividend then the downside is far less. I think you're wise to assume the "real" yield is less than what its currently showing. There's no such thing as 25%+ yields that last forever with zero NAV erosion :)
BSTZ also seems interesting. It is a tech based CEF that has done well over the last year.
Yes, it's a higher risk version of BST because it holds more private placements. A bit risky for my taste.
Thanks for your update on BST, one of my most recent investments. Good stuff!
That makes 2 of us :)
I don't find this CEF extremely attractive, but it does offer some minimal diversification (private placements) vs JEPQ at similar yeilds. I think the challenge is return of capital (the bad kind), vs JEPQ is all option premiums and a little dividends. Also you do point out that if one bought in at 2021, they would still be severely underwater, and yield on cost would probably be 3% or less. IMO, the volatility risk is too great vs JEPQ, while yielding less. If it yeilded 10%-12%, then that might be worth it.
You make some good points. For those reasons I allocated more to JEPQ than BST.
Good, and the other reason to buy is the discnt to nav and get nvda at a disc with that div kicker.
Yes, the price is relatively decent, and Nvidia is the largest holding by far.
Look forward to your videos every Sunday. Thanks for the analysis on BST!
I appreciate that!
Great update. For me personally I am sticking with CC ETFs for all my equity holdings (especially tech) and using the CEFs for the fixed income portions.
Thanks for sharing. I like cc ETFs too but they have their own risks. Good idea to balance that with something else.
BST is a good fund. Nothing wrong with holding it alongside JEPQ, QQQI, and GPIQ. Also, I don't blame you for selling your SVOL position, I did the same thing recently and put the proceeds into QQQI. I sleep better at night now, LOL. I was uncomfortable with lots of things going on with SVOL. I never liked Simplify "double dipping" by purchasing it's other funds to make up SVOL's composition, and it seemed like they were always tinkering with the mechanics of the fund like it wasn't working out like they planned. Plus, add in an unhealthy scoop of declining dividends, and that's a sell for me.
You raise some good points. SVOL requires constant monitoring as they tinker with it often. I like the strategy when the market is "normal".
Thanks. You've covered the pros and cons well. I own some BST, and thanks for the heads-up that this is a good time to add to my position. High yield and on sale, win-win.
Glad it was helpful. Seems like a better buy now than during most periods, but definitely requires some patience.
Great analysis! I just picked up some more recently and thanks to your video, will pick up some more.
Glad the video was helpful :)
Good way to start my Sunday’s when I can have my dose of Armchair Income ! Interesting and refreshing way to discovers news investments ! 👌👌👌💪💪💪😎😎😎
Glad you enjoyed it!
I bought this fund when I heard your first video on it 😊......I've added money from time to time
Thanks for sharing. It hasn't exactly been on fire since I first reviewed it but I think it's better positioned now than it was then. BST is a long term play because the private placements are volatile.
HYBI please!!
It's in the works...
Thank you for this video! Unfortunately I bought BSTZ in the past and I deeply regret it......
BSTZ is a bit risky for me and requires timing. Sorry to hear it didn't work out for you.
Hi Armchair, I want to say thank you to inspire me to start doing income investing lately. I am approaching retirement now.I accumulated enough real estate to fund the retirement. But this will give me a backup income. Your channel is very authentic I think even you don't come out to talk everyday.
Thanks for your feedback. I spent a good part of my life investing in real estate and its great but some diversification is good too. I have no plans to release content daily because as much as I like income investing, I also have other stuff to do in retirement ;) I appreciate you taking the time to say thanks, and best wishes for your looming retirement...such an exciting time ahead!
one of my cornerstone holdings. and its more tax friendly if holding in taxable acct
The tax treatment varies by year but generally yes, its more tax efficient than most, especially for non-US investors.
Took a hard look at BST sometime ago, but decided to go with EOS instead. As to SVOL, never felt comfortable with the idea. If there is a good product, I actually would take the opposite of trade to long VOL as a direct hedge. Everything else in my portfolio is probably strongly negatively correlated with VOL.
Thanks for your feedback. EOS diversifies beyond tech, looks interesting. I'm also looking at ETG.
Thanks bro! Love the content!
My pleasure! Thanks for taking the time to comment :)
BST vs BSTV. Does anyone in the community know of the general differences?
I think you mean BSTZ. It has a larger allocation to private placements. A full comparison of BST to BSTZ is explained in the Seeking Alpha article I linked in the description of this video.
Excellent content, thanks.
Glad it was helpful!
ROC - options premium income which is 100% tax free, and reduces the adjusted cost base of the holdings.
Surprised ARMCHAIR INCOME does not know this.
I've made several videos on the subject of Return of Income as it relates to income generated by selling covered calls. Regarding BST, BlackRock doesn't explicitly state on their website whether the ROC is destructive to NAV or not. However, based on the 2023 Taxable Closed End Fund Breakdown" available on BlackRock's BST website in pdf form, Note (3) in the fine print at the bottom of page one says "a return of capital may occur, for example, when some or all of the shareholder's investment is paid back to the shareholder". That is why I made the assumption that the ROC is destructive to NAV. As for the tax treatment, ROC isn't taxable at the time of the distribution, but it is taxable at the capital gains rate, based on the adjusted cost basis, at the time of sale. Therefore I wouldn't characterize it as "100% tax free". There isn't time in each video to fully explain the tax implications of each form of distribution but I hope this clarifies my thoughts on BST distributions, as it relates to ROC.
I’ve never invested in a CEF. If they never issue additional shares, how does DRIP work? Can you even DRIP?
I've never DRIP'd so we are both new at something :) Automatically buying a fund every month regardless of price doesn't make sense to me with CEF's because their relative value fluctuates each month. I'd rather buy whatever is the best priced opportunity at the time. To answer your question, yes you can DRIP many CEF's but it depends on the CEF and also your brokerage.
Sabine Royalty Trust (SBR) What do you say about this one? I don't think you've spoken yet.
I'm not familiar with it. It has a great run in 2022 and early 2023. The distributions are a bit too volatile for what I'm looking for (consistent income). I would need to understand know how to assess the downside risk of this fund before considering it.
If you had one or two ETFs to choose from for someone that doesn't have the desire to choose individual stocks for the best income bang for the buck, what would you suggest to look into?
I asked the same thing of a couple dividend gurus on TH-cam and most say SCHD is a good one to think about. I'd like to see if you had something to research.
SCHD is good for the dividend growth strategy. I use a high yield strategy (more yield, less dividend growth). To diversify risk I recommend having more than a few funds for a high income strategy. However, to get started, I would suggest SPYI, QQQI, PBDC, and PFFA.
I'm concerned about the very high payout ratio on fepi. I notice you've held it for a good while. Can you explain why this is a sound investment? I'd like to buy it again but this looks fragile. I'm a rookie so admit I likely just don't fully understand. Thanks for any light you can shine on this.
I made a video about FEPI (this video is about BST). FEPI is one of my highest risk holdings. It relies on the success of just 15 tech stocks that have performed well recently. Additionally, its so new that there's little data to analyze. On the other hand, it produces a lot of income. It's currently my 20th largest holding and represents about 2% of my portfolio. I don't anticipate increasing that unless/until it has a much longer history and performs well. In summary, no...I don't think this is a sound investment. I consider it high risk / high reward.
In your recent update you mentioned buying a position in EICC. Right now it is trading at a very small premium to it's face value of $25. What are your thoughts on ECC/PRD? It's well below the $25 face value at $19.41 which makes its current yield 8.69%. It's next call date is 2 years from now. I was just curious if this is a bargain at such a discount.
I haven't analyzed that ECC pref. ECC invests in Equity CLO's which carry more upside and more risk than EIC. I think it depends on your comfort with the various levels of risk.
Could you create a tutorial on Snowball, or link to a good one? I signed up and I'm quite sure I'm not using 90% of what it's capable of
This.
Thanks for the suggestion. I assume that everybody is using it the same way but we're all busy! I don't plan to do a full tutorial (that would get long and boring) but I'll look into doing something that shows how I use my favorite features. Their help website is good but its mostly in written form and videos are easier to digest.
@@armchairincomechannel awesome 🤩
Thanks. Not for me, won't invest with Blackrock. Signed up for your newsletter, much appreciated.
Thanks for sharing (and not getting political). I hope you find the newsletter useful!
Great video as always! Unrelated question: I know both these investments are tax inefficient, but which one is better for a taxable brokerage account? JEPQ or BDC's such as HTGC? Do you pay less taxes in one versus the other? Thanks for all the great info and videos, keep them coming!
In 2023, both issued ordinary income so one wasn't better than the other. Thanks for your feedback :)
What do you think of BIZD. A pre made basket by Van Eck
I like BIZD but I like PBDC more because its actively managed. Not all BDCs are good. I suggest comparing total returns for both and then picking your favorite.
I know you have your rules but with so much uncertainty in the next few months why not park your money in something like JAAA and if you want a little more yield JBBB kind of a no brainer with the market conditions where they are. I see QQQI and SPYI coming back to the mid-upper 40's where I will add. Good video enjoy your content.
Is there ever a time there is certainty within the market?
JAAA and JBBB have done very well recently. I would have to understand the effect on future distributions of the floating rate loans that these CLO's are built on,before assuming that performance will continue. Not saying they're bad, I just don't have enough knowledge of them yet to buy them.
A benefit of BST over JEPQ, is that the dividend payout amount is consistent and reliable. We generally know what it’s going to be.
Thanks for pointing that out. I like both!
@@delliott777 That's because if the returns don't come in, they backfill the shortfall with return of capital (giving back your own money) to artificially prop up/boost the yield. With JEPQ, those dividends are all profits from options and dividends... no shenanigans on payouts.
Do not drip BST dividends - you get screwed
Why's that?
I don't DRIP anything because I prefer to buy whatever is the best opportunity at the time I receive the income.
@@armchairincomechannel Same for me. I was wondering why the other comment says DRIPing into BST gets you 'screwed'.