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!
That yield and the benefits in the coming market does peak my interest. I just don’t like fees. I will have to check them out to see what it is.
DFG
The fees are part of the package. I consider them partially offset in the case of a leveraged fund as the fund can borrow at a better rate than I can; this justifies part of the fee.