Question about EVV

[Broozer]

I've been pondering buying EVV, an Eaton Vance CEF for income only.

I remember reading somewhere (a book I think) some years ago, to be cautious about a CE fund when it sells at a discount most of the time, which EVV does.

Is this a legit concern? If so, can anyone explain it in simple terms?

[roi2020]

I haven't heard of any "rules" stating investors should avoid CEFs which trade at discounts most of the time.

"Academic studies have shown that current discounts/premiums converge to their average discounts/premiums much more regularly than they converge to their NAVs."

Z-scores can be used to compare relative discounts/premiums.
Perhaps those more knowledgable about CEFs can provide additional information.

www.fidelity.com/learning-center/investment-products/closed-end-funds/relative-discounts-premiums

[Broozer]

Nov 14, 2023 3:39:19 GMT roi2020 said:

I haven't heard of any "rules" stating investors should avoid CEFs which trade at discounts most of the time.

"Academic studies have shown that current discounts/premiums converge to their average discounts/premiums much more regularly than they converge to their NAVs."

Z-scores can be used to compare relative discounts/premiums.
Perhaps those more knowledgable about CEFs can provide additional information.

www.fidelity.com/learning-center/investment-products/closed-end-funds/relative-discounts-premiums

Thanks for the link, good stuff there at Fidelity. I rarely check them for research.

[Broozer]

So I added EVV to my portfolio the other day, which already held CE bond funds PDI, GOF, and HYI. The four make up about 32% of my portfolio.

[steelpony10]

Broozer ,     
     
     We’ve been using CEF’s to live on for about 15 years now. We concentrate on the ones normally in the 8-10% range. We have other holdings, “normal” bonds and a large equity index fund for capital gains.

      I’ve seem the same articles. My take is the ones permanently with a premium are the best managed most steady distributors and maybe occupied by traders hoping to make a quick buck. The discounted ones are run of the mill not as reliable for steady distributions or currently out of favor. Either ccondition can last years.

       I do equate premiums as similar to PE’s, the more it’s a sure thing the better I like it. I am not a trader and would never dump any CEF unless I find a better option, something that fits current needs better or I’m been forced to liquidate as a last resort. Our’s are mostly PIMCO CEF’s the top house in that niche and a smattering of managed ones. As with everything else quality costs and there are reasons for the discounts of which you should find out why in your research.

[yogibearbull]

As CEFs have fixed number of shares (except at IPO or with secondary's), premiums/discounts reflect the popularity or sentiment. Those asset classes and strategies that are "in" have premiums; those that are "out of favor" have discounts. Most of the CEFs are in the latter category.

Pimco CEFs used to trade at premium (or lower discounts) than other CEFs. But years ago, that changed when it came out with huge PCI (now merged away into PDI) and even it pretty much went into discount out of the gate. Now, PIMCP CEF discounts are quite common.

One has to be nimble trade with CEFs at high premium as the sentiment can change quickly.

On the other hand, many CEFs have discounts that seem perpetual, without any prospects of closing. There are CEF activists like Saba that buy into CEFs at discounts and try to force them to open-end or just to control/run them. It has its own ETF of CEFs CEFS and CEFs BWR, GIM/SABA (switch on 12/31/23). Its recent wins against Franklin Templeton, Nuveen, BlackRock, etc have shaken up the sleepy CEF industry. Other ideas for reducing/eliminating CEF discounts haven't been effective - managed-distributions, interval-funds, etc.

As for EVV, it is a leveraged ST-HY (or, HY-blend). So, Broozer now has 2 multisector CEFs and 2 HY CEFs.

[mnfish]

I always look at PCN when there's talk of a CEF premiums. It has traded at a discount only a few times since inception and has outperformed SPY since 2002 to YTD.

[yogibearbull]

Yep, Pimco PCN, PTY, etc have been at premium most of the time. Note high swings in their premiums/discounts.

PCN www.cefconnect.com/fund/PCN
PTY www.cefconnect.com/fund/PTY

[retiredat48]

Dec 13, 2023 13:58:11 GMT yogibearbull said:

Yep, Pimco PCN, PTY, etc have been at premium most of the time. Note high swings in their premiums/discounts.

PCN www.cefconnect.com/fund/PCN
PTY www.cefconnect.com/fund/PTY

@yogibearbull ,...question:

On cefconnect chart/info for PDI, they show (under distributions)  ROC as $0.000 for last six monthly dividends paid by PDI.  Yet section 19a's show some return of capital is in the payments.  Explanations??  What am I missing?

TIA
R48

[yogibearbull]

retiredat48 , I have checked Pimco and M* as well and they don't show ROCs yet.

I think that with managed-distribution policy (e.g. for PDI), Pimco can just issue section 19a notices that some distribution may be from ROC, and not formally declare interim/tentative ROCs.

The final ROC determination is only after the yearend.

I checked some CEFs without managed-distribution policies, and then the firms, CEFConnect, M*, all show interim/tentative ROCs as the year progresses, but the total ROC for the year may be adjusted AFTER the yearend.

This is my best guess for explanation.

[retiredat48]

YBB...thanks

[richardsok]

Dec 13, 2023 15:20:14 GMT retiredat48 said:

Dec 13, 2023 13:58:11 GMT yogibearbull said:

Yep, Pimco PCN, PTY, etc have been at premium most of the time. Note high swings in their premiums/discounts.

PCN www.cefconnect.com/fund/PCN
PTY www.cefconnect.com/fund/PTY

@yogibearbull ,...question:

On cefconnect chart/info for PDI, they show (under distributions)  ROC as $0.000 for last six monthly dividends paid by PDI.  Yet section 19a's show some return of capital is in the payments.  Explanations??  What am I missing?

TIA
R48

R48 ---

AlphaGen, one of the better writers on SkAlpha, just put out an in-depth analysis of PDI.


seekingalpha.com/article/4657658-pdi-distribution-reliant-on-atm?mailingid=33677906&messageid=etf_daily&serial=33677906.86657&utm_campaign=ETF%2BIdeas%2B2023-12-13&utm_content=etf_daily_control&utm_medium=email&utm_source=seeking_alpha&utm_term=ETF%2BDaily




p://tinyurl.com/mry4sv2m


I'm going to be selling my remaining  PDI position today.     FWIW.

[Broozer]

Dec 13, 2023 11:53:45 GMT yogibearbull said:

As CEFs have fixed number of shares (except at IPO or with secondary's), premiums/discounts reflect the popularity or sentiment. Those asset classes and strategies that are "in" have premiums; those that are "out of favor" have discounts. Most of the CEFs are in the latter category.

Pimco CEFs used to trade at premium (or lower discounts) than other CEFs. But years ago, that changed when it came out with huge PCI (now merged away into PDI) and even it pretty much went into discount out of the gate. Now, PIMCP CEF discounts are quite common.

One has to be nimble trade with CEFs at high premium as the sentiment can change quickly.

On the other hand, many CEFs have discounts that seem perpetual, without any prospects of closing. There are CEF activists like Saba that buy into CEFs at discounts and try to force them to open-end or just to control/run them. It has its own ETF of CEFs CEFS and CEFs BWR, GIM/SABA (switch on 12/31/23). Its recent wins against Franklin Templeton, Nuveen, BlackRock, etc have shaken up the sleepy CEF industry. Other ideas for reducing/eliminating CEF discounts haven't been effective - managed-distributions, interval-funds, etc.

As for EVV, it is a leveraged ST-HY (or, HY-blend). So, Broozer now has 2 multisector CEFs and 2 HY CEFs.

HYI, non-leveraged junk, is set to liquidate somewhere around September 2025. My plan is to slowly sell shares over the next 12 months or maybe longer, and fold them into the three other funds. I kinda liked HYI for having no leverage, but we'll see what the future brings. I may croak by the time all this happens.