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5 Best CEFs This Month For Yields Upto 13% (July 2025)

Top 5 High-Yield Closed-End Funds Offering Up to 13% Yields: A July 2025 Investment Spotlight

In the ever-evolving landscape of income-focused investing, Closed-End Funds (CEFs) continue to stand out as compelling vehicles for investors seeking robust yields without sacrificing too much on the growth front. As we delve into the recommendations for July 2025, a recent analysis highlights five standout CEFs that are poised to deliver yields averaging around 13%, making them particularly attractive in a market where interest rates remain elevated and volatility persists. These funds not only offer high distributions but also trade at discounts to their net asset values (NAVs), providing a potential margin of safety and upside for capital appreciation. This summary explores the key attributes of these funds, their investment strategies, and why they might be worth considering in the current economic climate.

First, let's set the stage with a brief overview of CEFs. Unlike open-end mutual funds or ETFs, CEFs issue a fixed number of shares through an initial public offering and trade on exchanges like stocks. This structure allows them to employ leverage, invest in less liquid assets, and often distribute income at rates far exceeding those of traditional funds. However, they can trade at premiums or discounts to their underlying NAV, which introduces both opportunities and risks. In July 2025, with inflation cooling but geopolitical tensions simmering, CEFs focused on high-yield bonds, equities, and alternative assets are gaining traction. The selected five funds exemplify this trend, boasting yields from 11% to 13% or more, backed by diversified portfolios and experienced management teams.

Leading the pack is the PIMCO Dynamic Income Fund (PDI), a heavyweight in the fixed-income CEF space. This fund targets a broad spectrum of global credit opportunities, including high-yield bonds, emerging market debt, and mortgage-backed securities. As of the latest data, PDI offers a staggering yield of approximately 13.5%, making it a go-to choice for income seekers. What sets PDI apart is its active management under the PIMCO umbrella, which allows for tactical shifts in response to interest rate changes and credit spreads. The fund currently trades at a slight premium to NAV, around 2-3%, but this is justified by its consistent distribution history and ability to navigate rising rate environments. Investors should note that PDI employs leverage—often around 30-40%—to amplify returns, which can enhance yields but also magnify losses during market downturns. In the context of July 2025, with the Federal Reserve potentially pausing rate hikes, PDI's focus on floating-rate securities positions it well to benefit from any stabilization in bond markets. Historically, the fund has delivered total returns exceeding 8% annually over the past decade, blending income with moderate capital growth.

Next up is the DoubleLine Income Solutions Fund (DSL), another bond-centric CEF that emphasizes multi-sector fixed income. Managed by the renowned Jeffrey Gundlach and his team at DoubleLine, DSL invests in a mix of investment-grade corporates, high-yield junk bonds, and international debt, aiming for a yield north of 12%. The fund's current discount to NAV stands at about 8-10%, presenting a buying opportunity for those betting on a narrowing gap as credit conditions improve. DSL's strategy is particularly resilient in inflationary periods, as it incorporates inflation-linked bonds and emerging market exposures that can hedge against currency fluctuations. One of the fund's strengths is its low duration profile—typically under 5 years—which mitigates interest rate risk compared to longer-duration peers. For July 2025 investors, DSL could shine if global growth picks up, boosting corporate earnings and tightening spreads. However, risks include credit defaults in a recessionary scenario, though the fund's diversified holdings (over 500 positions) help spread this exposure. Over the last five years, DSL has maintained distributions without significant cuts, underscoring its reliability for retirees or those building passive income streams.

Shifting gears to equity-oriented CEFs, the Calamos Strategic Total Return Fund (CSQ) offers a balanced approach with a yield hovering around 11-12%. This fund allocates across convertible securities, high-dividend equities, and fixed-income assets, managed by Calamos Investments with a focus on total return. Trading at a 5-7% discount to NAV, CSQ provides value in a market where growth stocks are rebounding. Its portfolio includes tech giants, healthcare leaders, and consumer staples, blended with convertibles that offer equity upside with bond-like downside protection. In July 2025, amid potential AI-driven market rallies, CSQ's tech exposure could drive performance, while its dividend policy ensures steady payouts. Leverage is moderate at 20-25%, enhancing yields without excessive risk. The fund's track record shows annualized returns of 9-10% since inception, making it suitable for moderate-risk investors seeking both income and growth.

For those drawn to alternative investments, the BlackRock Enhanced Capital and Income Fund (CII) stands out with a yield of about 13%. This CEF employs a covered call strategy on a portfolio of large-cap U.S. equities, generating income through option premiums while holding blue-chip stocks like Apple, Microsoft, and Amazon. Currently at a 6-8% discount to NAV, CII benefits from BlackRock's quantitative expertise in options writing, which can thrive in sideways or moderately bullish markets. The fund's approach limits upside in strong bull runs but provides a buffer during volatility, as seen in past corrections. In the July 2025 environment, with stock market valuations stretched, CII's income overlay could appeal to conservative equity investors. Distributions have been consistent, supported by realized gains and premiums, though tax implications from options should be considered.

Rounding out the list is the Nuveen Credit Strategies Income Fund (JQC), focusing on leveraged loans and high-yield credit with a yield exceeding 12%. Managed by Nuveen, JQC invests in floating-rate bank loans, which adjust with interest rates, offering protection against hikes. Trading at a 9-11% discount, the fund is undervalued relative to its peers, with a portfolio emphasizing senior secured debt from mid-sized companies. This makes it resilient in economic slowdowns, as loans sit higher in the capital structure. Leverage around 30% boosts yields, but the fund's emphasis on credit quality minimizes defaults. For July 2025, if rates stabilize, JQC could see NAV appreciation, narrowing the discount and enhancing total returns.

In summary, these five CEFs—PDI, DSL, CSQ, CII, and JQC—represent a diversified basket for high-yield hunting in July 2025. They collectively average yields of 13%, with discounts providing entry points for savvy investors. However, CEFs aren't without pitfalls: leverage amplifies volatility, distributions can include return of capital, and market discounts may persist. Investors should assess their risk tolerance, perhaps consulting advisors, and monitor economic indicators like Fed policy and inflation data. By incorporating these funds into a broader portfolio, one can potentially achieve superior income streams while navigating the uncertainties of the mid-2020s market. This selection underscores the enduring appeal of CEFs in an era where traditional bonds and dividends fall short, offering a pathway to enhanced returns for those willing to embrace their unique dynamics.

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Read the Full Seeking Alpha Article at:
[ https://seekingalpha.com/article/4803487-5-best-cefs-this-month-for-yields-13-percent-july-2025 ]