How will the extension affect the fund’s yield‑to‑maturity and overall risk‑adjusted return profile?

Yield‑to‑Maturity (YTM)

Because the Fund’s preferred‑share dividend rate for the new five‑year extension will be set “based on market yields for preferred shares with similar terms” and will be announced only 60 days before the original 2026 maturity, the current 10.7 % distribution rate is effectively a placeholder. In the short‑run the YTM stays roughly unchanged – the extension is not a taxable event and the cash‑flow schedule is simply pushed out five years. Once the new rate is fixed, YTM will be re‑calibrated to the prevailing yield curve for 5‑year preferreds. If market yields for comparable securities rise, the Fund’s YTM could decline (a lower dividend rate over a longer horizon) and vice‑versa. The key point is that the extension does not erode the existing 10.7 % distribution; it merely postpones the next rate‑setting point, preserving the current cash‑flow profile for now.

Risk‑adjusted return profile

Extending the term adds duration and therefore heightens interest‑rate and reinvestment risk – a longer‑dated preferred is more sensitive to shifts in the yield curve and to credit‑spread widening. However, the extension also defers tax on the distribution, effectively boosting the after‑tax return, and it keeps the fund in a high‑distribution, low‑volatility niche that can still deliver capital appreciation if the underlying assets continue to generate strong cash flow. In a risk‑adjusted sense (e.g., Sharpe or Sortino), the fund’s return may be slightly diluted by the extra duration, but the still‑attractive 10.7 % payout and tax‑deferral cushion keep the risk‑adjusted premium relatively appealing versus other 5‑year preferreds.

Actionable take‑aways

1. Hold or add if you value a current 10.7 % distribution and can tolerate a modest increase in duration; the after‑tax yield remains strong.
   
2. Monitor the upcoming dividend‑rate announcement (≈ 60 days before June 30 2026). A rate set well below current market yields will compress YTM and could trigger a price correction.
   
3. Compare with peer 5‑year preferreds on a risk‑adjusted basis; if the Fund’s projected YTM remains above peers after the rate is set, it stays a premium income play.
   

Overall, the extension preserves the present high yield while modestly raising interest‑rate exposure; the net effect is a stable but slightly less “sharp” risk‑adjusted return until the new dividend rate is locked in.