Option-Income Equity CEFs: 10% Yields With Some Defense For Your Portfolio

Option-Income Equity CEFs: 10% Yields with Some Defense for Your Portfolio
For openers let’s consider the two major categories of equity closed-end funds. On one side there are the leveraged funds. These can be great in a bullish market, especially when interest rates (and, therefore, the cost of leverage) are low. But in a less bullish market or in a rising rate environment the second category, option-income funds, should have the advantage. Several months ago I was exploring leveraged equity CEFs, a category I had avoided, as I explained at the time. But in the current investing climate, I’m concerned on both counts. Has this bull run itself to death yet? Will it soon? And, how much do I want to be exposed to rising leverage costs? I’m not bailing on my leveraged equity CEFs holdings yet, but I’m beginning to think it time to pay more attention to the other side of the equity CEF coin once again.
With those thoughts let’s return to consideration of the funds. I started an examination of option-income closed-end funds with a survey of Eaton Vance’s offerings in this category. Eaton Vance leads the group with eight funds, so it demands attention. But there are an additional 19 funds from other sponsors. I want to turn my attention to those other funds now. One thing I like about the EV funds is that they are delineated into categories by defined investment strategies, and within each there are examples of domestic and global funds that... Read more