XFLT: No, 20% Yield Is Not A Signal To Buy

XAI Octagon Floating Rate & Alternative Income Trust remains highly risky, with repeated dividend cuts and significant underperformance.

Mar. 4, 2026 at 3:04pm

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The article discusses the risks associated with investing in XAI Octagon Floating Rate & Alternative Income Trust (XFLT), a closed-end fund that has a current yield of around 20%. The author, a CFA charterholder, argues that this high yield is not a signal to buy the fund, as it has a history of repeated dividend cuts and significant underperformance compared to its peers.

Why it matters

Investors seeking high-yielding investments may be tempted by XFLT's 20% yield, but the author cautions that this is a sign of the fund's underlying risks and instability, rather than an attractive investment opportunity.

The details

The article provides an in-depth analysis of XFLT's performance, highlighting its history of dividend cuts and underperformance compared to other closed-end funds and the broader market. The author also discusses the fund's investment strategy and the risks associated with its portfolio, which includes exposure to alternative assets and floating-rate instruments.

  • The article was published on March 4, 2026.

The players

Roberts Berzins

A CFA charterholder with over a decade of experience in financial management, who has also worked on policy-level initiatives to support the development of capital markets in the Baltic region.

XAI Octagon Floating Rate & Alternative Income Trust

A closed-end fund that invests in a variety of alternative assets and floating-rate instruments, and has a current yield of around 20%.

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What they’re saying

“I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.”

— Roberts Berzins, CFA Charterholder

The takeaway

Investors should be cautious about high-yielding investments like XFLT, as the high yield may be a sign of underlying risks and instability rather than an attractive investment opportunity. It's important to carefully analyze a fund's performance history, investment strategy, and risk profile before investing.