Even this may not be an issue for those investors who can wait a decade or two for recovery. However, when market conditions are souring, and credit instabilities surface, they can be pretty destructive for many investors' portfolios. There is a time, place and age for 'high-risk, high-yield' assets. Honestly, there is nothing fundamentally 'wrong' or 'bad' about investment options like PDI. A Poster Child For Unsustainable Risk-Taking Indeed, PDI is still trading at a 3% premium to its NAV, signaling that investor interest in PDI remains favorable despite its recent losses. Investors have been very interested in this 'high income' fund over recent years, so it has typically traded at a hefty premium to its net asset value. The fund's NAV (the actual value of its holdings) has only started declining more recently but has also shown firm resistance around its current levels. Since early 2020, PIMCO's Dynamic Income Fund has made an apparent topping pattern, with total returns rising back to pre-COVID levels and subsequently falling. It also pays a high dividend yield of around 10% while rarely appreciating, so there is an understandably large discrepancy between its total returns (which include dividends) and price. PDI is a closed-end fund, so it often strays away from its Net-Asset-Value. This issue can already be seen in the breakdown of popular riskier-credit funds such as PIMCO Dynamic Income Fund ( NYSE: PDI ). Thus far, most riskier credit assets have failed to hold their weight, given the rise in interest rates. In such an environment, high-risk assets, particularly credit assets, can easily lose most of their value if market conditions continue to sour. Today, investors face an undoubtedly odd set of market conditions with a multitude of both inflationary (supply & labor shortages) and deflationary forces (extreme public and private debt).

At the same time, the global economy is slowing at a faster-than-expected pace, and, finally, interest rates are starting to rise back to normal levels.

This issue has only worsened with inflation which has lowered real yields to unprecedented levels. Older investors who are at or near retirement have never had as high allocations into risk assets as they do today. The prolonged era of ultra-low interest rates has pushed many investors into riskier 'high-yield' assets.

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