BXMX - Eaton Vance's ETY Is The Cream Of The Option-Income CEF Crop

2024-04-18 13:10:13 ET

Summary

• Don't believe all the negativity surrounding the Eaton Vance Tax-Managed Diversified Equity Income CEF.
• As a CEF that writes S&P 500 index options against roughly 50% of its $2.1 billion market cap, you can't expect it to outperform in a ramp-up bull market.
• But as I've said over and over again, once we start getting some volatility in the markets in which no clear trend is established, option-income funds can start to outperform.
• And year-to-date, no fund has been outperforming its S&P 500 benchmark like ETY, up a solid +8.9% vs. the S&P 500 up +5.7% and the Nasdaq-100 up +4.2%.
• You want another reason to own ETY now that its market price has dropped -4.5% from a week ago? April will be its first ex-div month in which ETY pays its 22.3% higher distribution, which means a very generous 9.3% current market yield.

I did a quick ratings search from contributors on Seeking Alpha on the Eaton Vance Tax-Managed Diversified Equity Income Fund ( ETY ) , $12.85 closing market price , and just about everyone over the last year has the fund as a Hold rating....

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