Thoughts on NBI, MXT & MOT
I see NBI taking a big dive in price and trading some 10% below NTA whereas the other are trading above. Any idea why the NBI price drop and divergence to NTA? Cheers
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Answer
Hi Peter,
These three securities hold different underlying assets. NBI is a high yield global bond fund – or junk bonds in other words. These move more like equities on the downside and credit spreads have widened this week pushing yields up and prices down (reflecting the increased risks around). This is a high risk bond exposure where underlying assets are priced daily. MXT is a commercial loan fund so their assets don’t get priced daily (although the fund does). They lend money (alongside banks) to corporate clients and this is a lower risk fund that is less volatile than NBI. MOT is somewhere in between the two.
In terms of the discount to NTA, I suspect March of 2020 is still fresh in peoples mind where the fund traded down to 90c, which was ridiculous at the time. Right now, the chart of NBI looks very similar to many junk bond ETFs, like the one from Barclays which trades under code JNK US.
NB: MM sold NBI in early 2021 saying at the time – This listed investment trust trades at a discount to NTA which is not ideal, however it is very much exposed to a large cross section of US Junk Bonds. As spreads hit record lows, the backdrop for NBI is as good as it gets in MM’s view.
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NB Global High Yield International Bond Fund (NBI)
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NB Global High Yield International Bond Fund (NBI)
