EVV - EVV: This 9%-Yielding CEF Is Smartly Reducing Its Interest-Rate Risk

2024-06-03 14:22:00 ET

Summary

• The Eaton Vance Limited Duration Income Fund offers a high level of current income with a yield of 9.57%.
• The fund invests in low-duration assets, which have lower interest rate risk and are more attractive in the current yield curve environment.
• The fund has outperformed major bond indices and delivered a 2.40% gain year-to-date, but its total return of 5.77% since January 2024 is not as attractive as some equity funds.
• The fund's low interest rate risk is attractive right now since there is still a possibility that the FOMC will not cut interest rates and most bonds are overpriced.
• The fund managed to cover its distribution in the most recent fiscal year, and its shares currently trade discounted on net asset value.

The Eaton Vance Limited Duration Income Fund ( EVV ) is a closed-end fund, or CEF, that income-seeking investors can purchase as a means of achieving a high level of current income from the assets in their portfolio. This is a proposition that is likely to be reasonably appealing to many investors today, as the rapidly rising cost of living has made it critical for all of us to bring in as much money as possible to maintain our usual standard of living. This increasing preference of investors to earn some sort of income is immediately apparent in the fact that Alphabet (GOOG) ( GOOGL ) and Meta Platforms ( META ) have both started paying dividends to their shareholders, breaking the longstanding practice of rapidly growing companies disappointing in this respect. Naturally, the Eaton Vance Limited Duration Income Fund has a substantially higher yield than those technology companies, though, as the fund yields 9.57% at the current price. This compares reasonably well with most of the fund’s peers:

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