By Nathan SlaughterEaton Vance is a leader in the tax-efficiency movement and has launched a number of funds designed specifically to reduce tax exposure, including Eaton Vance Tax-Advantaged Global Dividend (NYSE: ETG).
ETG is a broadly focused fund with a heavy weighting in foreign markets. The primary goal is simple: distribute a high level of dividend income that qualifies for the reduced tax rate. The managers focus on companies that are likely to raise dividends and have substantial capital appreciation potential.
At the moment, the portfolio includes roughly 130 stocks, and the high-yielding utility, energy and financial sectors represent more than half of the fund's assets. From a geographic standpoint, the portfolio is split almost equally between North America and Europe.
Following a sharp increase last April, shareholders can currently expect monthly distributions of $0.1438 per share. That works out to an annual payment of about $1.73 per year, for a yield of 6.9%. And if the past is any indication, then the lion's share of those payouts will be taxed at the favorable 15% rate.
For the fiscal year ending October 31, 2007, the fund reported net investment income (after paying dividends on preferred shares issued for leverage) of $124.5 million, or $1.63 per share -- and 100% of its ordinary income qualified for the reduced rate.
Meanwhile, shareholders were treated to total returns (dividends plus appreciation) of +27.2% for the year, versus just +10.8% for the benchmark Russell 1000 Value Index. And over the past 3 calendar years, ETG has returned an average of +15.4%.
In recent months, ETG's managers have countered the threat of rising inflation by shifting into hard assets -- a move that has already paid off. And looking ahead, the fund has just secured the financing to redeem all of its $750 million in preferred shares and will begin using lower-cost debt to fund its leverage -- which should leave more cash left over for dividends, helping to make it a good fit for anyone looking to maximize their after-tax global income.
Disclosure: No position