New Fund Capitalizes on Two Strategies
Recently I wrote favorably about the Alpine Global Dynamic Dividend Fund (AGD) for its then-unique dividend rotation strategy, which, simply put, seeks to double up the dividend yield by trading stocks around their dividend dates so that it doubles the yield but still qualifies for favorable tax treatment.
I have also written several articles favorably disposed (in moderation) toward the call-selling, closed-end funds that seek to enhance yield by selling options against a portfolio of stocks.
Both types of funds tend to offer very high yields and have low volatility. These traits have a place in most individual portfolios, although in differing proportions.
Eaton Vance just listed a closed-end fund called the Eaton Vance Tax Managed Diversified Equity Income Fund (ETY). ETY captures both strategies, dividend rotation and call-writing, a veritable cornucopia of fund fads. ETY is the largest closed-end fund IPO ever -- it raised $2.6 billion.The fund is intended to be diversified. It can own up to 40% in foreign stocks and 5% in emerging markets, it must keep sector weights under 25%, and it will sell options against indices that best capture the holdings in the fund. This means that if the fund has 5% in U.K. stocks, it wouldn't be limited to selling options just on those stocks; it could sell options on iShares MSCI United Kingdom Fund (EWU), as an example.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV