A little something for those seeking income without interest rate risk today.
music selection: “Glycerine” — Bush
The Eaton Vance floating rate trust is a closed end fund that invests in floating rate debt. If interest rates rise, so does its income…and your distribution. This provides a lot of protection if the Fed gets aggressive with increasing interest rates. The trust is currently paying .076 per share in interest income. This investment is thus best held in a tax advantaged account. Current yield on market price of 13.45 is 6.78%.
EFT currently trades at a 10.9% to its Net Asset Value (NAV). You can thus by 14.96 worth of assets for only 13.45! Remember, a raptor never buys a Closed End Fund for more than NAV. That is a dumbo T.Rex move.
The raptor model calls for a healthy allocation to bonds. EFT can be an important part of that allocation for lizards that are wary of Fed rate increases.
Devour your prey raptors!