Selling One-Quarter of HYLD

HYLD was the single largest holding of my portfolio at 7.2% and gives off an attractive yield at over 13.4% of the cost. This yield was the best-yielding fund in my portfolio. And as much as I love the high yield, I have not been thrilled with how the fund has lost value over the past few months.

In fact, a yield of over 14% just does not seem realistic in the current stock market, and that’s probably why the stock is basically giving back capital (return of capital) to fund its yield.

I looked at my account yesterday and realized my HYLD total profits (including capital gains and dividends) were $0. Exactly $0. So the dividends I have received have precisely offset the capital loss for the stock.

Needless to say, I’d rather own things that are making money with lower volatility. To have high volatility and not make any money is not an ideal situation.

And unlike my “covered call utilities ETF,” I don’t have confidence the price will come back up.

So yesterday, I made the decision to sell one-quarter of my holdings in HYLD. Right now, that money is sitting back in cash.

I should probably sell more, but I still can’t let go of that super-high yield so easily.

Next week, I’ll redirect that money into a t-bill fund or money market fund. I’ll take the reliable 4-5% that the government is paying, with no dramatic capital loss.

Maybe I might regret this move at some point, but I doubt it.