EVN - EIM: Distribution Bump But Still An Attractive Discount
2024-03-26 13:54:07 ET
Summary
- Eaton Vance Municipal Bond has suffered losses due to the Fed's rate hikes and increased borrowing costs, but its discount and recent distribution increase make it an appealing investment.
- The fund has become a target for activist group Karpus Management, which now owns over 20% of the fund.
- Lower rates and a narrower discount could improve distribution coverage and potentially lead to capital gains for investors in muni CEFs.
Written by Nick Ackerman, co-produced by Stanford Chemist.
Eaton Vance Municipal Bond Fund ( EIM ) suffered substantial losses like many of its peers when the Fed was hiking rates aggressively. Being a leveraged fund added further pressure due to the Fed raising short-term rates, causing the borrowing rate on their floating rate notes to climb materially. Risk-free rates shot higher, and that meant the underlying portfolio of long-duration municipal bonds shot lower....
EIM: Distribution Bump But Still An Attractive Discount