1. Dividend Yield
One of the key attractions of FLCO is its dividend yield, which is paid to investors on a regular basis, usually monthly. The yield is influenced by the interest rates on the bonds in the fund’s portfolio. As FLCO invests in short-duration, investment-grade debt, its yield may be relatively lower than those of high-yield or longer-duration bond funds, but it offers a more stable income stream with lower risk.
2. Net Asset Value (NAV)
As a closed-end fund, FLCO’s market price may differ from its net asset value (NAV). The NAV is the per-share value of the fund’s assets minus liabilities, and it is calculated at the end of each trading day. Investors may buy shares of FLCO at a premium or discount to the NAV, depending on market demand for the fund’s shares. It’s important for investors to monitor both the market price and NAV to understand the value of the investment.
3. Interest Rate Sensitivity
FLCO’s focus on short-duration bonds makes it less sensitive to interest rate changes than longer-duration bond funds. However, like all fixed-income investments, it is still subject to interest rate risk. If interest rates rise rapidly, the value of the bonds in the portfolio may decrease, although the short duration of the fund’s holdings mitigates this risk.
4. Risk and Credit Quality
While FLCO invests in relatively safe, investment-grade securities, it is still exposed to credit risk, which is the risk that a bond issuer may default on its payments. The fund seeks to minimize this risk by focusing on high-quality bonds, but it’s important for investors to understand that there is no guarantee of returns, and all investments carry some level of risk. shutdown123