Big Discounts in Several Closed-End Funds

Eaton Vance's (ETG Quote)Tax Advantaged Global Dividend Income Fund (ETG) has a similar investment profile. It has widened to a 9.1% discount. At $24.79, the shares yield 6.05%.

A third closed-end fund, (ETO Quote)Tax Advantaged Global Opportunities (ETO) is more heavily weighted towards oils: As of last quarter, they made up most of the fund's top 10 holdings. At $28.24, the shares are 8.4% below net assets and yield 6.36%.

In general, buying stocks with high and sustainable dividend yields is one of the great long-term investment strategies. Too many investors, chasing the excitement of "growth" stocks, forget the value of regular, steady dividend checks. Saryan pursues a simple and conservative strategy and invests the funds' money worldwide.

A kicker is that all three funds boost their returns with leverage. They have borrowed between 25% and 29% against their holdings, by issuing preferred shares that pay interest linked to the federal funds rate. View that as a small adjustable-rate mortgage held against the equity.

That might be a worry if interest rates were to skyrocket. However, it's noticeable that the funds have actually managed to increase their monthly dividends over the past few years, while the Fed hiked rates. Put simply: The companies they have invested in have raised their dividends faster than the Fed has been able to raise rates.

If the turbulence of the past few weeks turns into something much worse, you would expect all stock market investments to go down. But in the case of these three Eaton Vance funds, you should benefit from a double cushion. First, you're already investing in the market at a big discount. And second, in a serious downturn you would expect the Fed to respond by cutting rates, not raising them further. Which means these funds will benefit from cheaper borrowing costs.