The Eaton Vance Risk-Managed Diversified Equity Income Fund (NYSE:ETJ) offers income-minded investors a chance to earn high current income without sacrificing equity exposure. A recent examination reveals that inflation might be higher than official figures, impacting fixed-income yields. With a 4.491% yield on U.S. Treasury securities, income investors may find better returns in equities. The Eaton Vance Fund currently boasts an 8.90% distribution yield compared to peers in the Equity-Covered-Call Funds category.
Analyzing Performance
The fund's performance since February 2024 shows a 5.66% gain, slightly underperforming the S&P 500 Index. However, with distributions included, the fund outperformed the index by 116 basis points. Recent changes in the fund's holdings, maintaining a technology and pharmaceutical focus, signal a unique investment strategy.
Portfolio Strategy
Unlike covered call funds, the fund employs a mix of stock options strategies to enhance income, including writing call options on the S&P 500. While the fund's concentration on technology stocks may deter some investors, the strategy aims to match or outperform the index.
Distribution Trend
The fund's monthly distribution of $0.0651 per share offers an 8.90% yield, though the trend has seen declines over the years. The fund managed to cover its distributions in 2023 and the first half of 2024, showcasing stability.
Valuation and Conclusion
Trading at a 6.96% discount to NAV, the fund presents a unique option-income opportunity for risk-averse investors. While exposed to market fluctuations, its protective strategies provide a buffer against potential losses. Despite some portfolio drawbacks, the fund remains a strong choice for income investors seeking a diversified equity income option.