Spotlight On Closed End Funds: ETO

If anyone here hasn't yet checked out ETF Connect, do yourself a favor and look around the site. It is a great resource for investors interested in closed-end funds and ETFs. I particularly find it interesting to look through its list of closed end funds ordered by discount for deals.

The extent to which many of these closed-end funds trade below their net asset value astounds me. For some funds it is understandable; many real estate and fixed income funds, for example, are trading at discounts greater than 10% due to the current interest rate environment. For other funds, however, it doesn't make much sense. (Not that I am angry about this phenomenon, of course!)

One such wrongly-discounted fund is the Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund, which trades on the NYSE under the ticker symbol ETO. It is closed today at $21.47, a price that represents a roughly 12% discount to the fund's Net Asset Value. What is there to like about ETO apart from this hefty discount? First, it has an expense ratio of 1.06%, which is relatively low compared to similar funds. Second, it has a dividend yield somewhere in the neighborhood of 6%. Third, it has a global focus, with more than 50% of the fund invested internationally. Last, and most importantly, the fund has savvy management. Eaton Vance is one of a handful of fund companies that I respect.

ETO's quarterly portfolio holdings, just released on Monday, can be viewed here. ETO's largest positions are in banking, utilities, and energy. Additionally, the fund owns 150,000 shares of May Department Stores (MAY), which have done well in recent days, of course, after Federated announced it would purchase the company for nearly $11B.

Full disclosure: I am long ETO.