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Eaton Vance Tax-Advantaged Glob Message Board

  • maaveriks maaveriks Jun 7, 2010 7:56 AM Flag

    The problem with ETG

    I like the EV leveraged CEF's in a bull market, but frankly, ETG should be at a larger discount for this kind of risk, more like ETO or EVT. It has a discount more in line with a buy/write CEF than a leveraged CEF & leveraged CEF's should be getting whacked right now, not buy/write CEF's.

    For example, you can buy the Nuveen buy/write funds, JSN or JLA at roughly the same 5%-6% discounts as ETG and yet have a MUCH safer NAV and 100 bps higher yield! ETG's NAV is down almost 10% YTD after dividends whereas JSN's and JLA's are only down about 2% YTD. Plus, JSN & JLA go ex-div this week. This is really a no-brainer in this kind of dangerous market where leveraged CEF's have a MUCH larger risk component than buy/write CEFs. JMHO.

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    • We do not share your preference for JLA. We had that fund for several years and got fed up with it's alledged divvy. There was simply too much ROC and too little actual income being paid. We sold that fund earlier this year and used the loss to offset gains we made on more profitable funds. Everyone has a right to their own opinion and we respect yours. Good luck to you.

    • When you're comparing ETG and JLA, don't overlook what kind of dividend is being paid each fund. ETG has a dividend consisting of 100% income; whereas JLA consists of a lot of ROC. See for yourself on cefconnect.com. Good luck anyway. We still own ETG but dumped JLA because of excess ROC.

      • 1 Reply to walsingmalinda
      • What is wrong with ROC? Simply lowers your cost basis. In the meantime, ROC is not taxed. This is not an issue in tax-deferred account (IRA, for example). For taxable account, cap gains are still only 15%, same as dividend.

        But let's look at ETG vs JLA over the past two years. PPS for ETG has declined 37% (19.90 to 12.53) over that two year period. Over the same 2 year period, JLA pps declined on 13% (14.70 to 12.73). So much for the adverse effect of ROC on share price.

        Besides ROC is primarily the result of buy-write activities.

 
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