Written by Nick Ackerman, co-produced by Stanford Chemist
After covering the Eaton Vance options based funds, I wanted to take a quick look at the levered equity funds that Eaton Vance offers. Three funds fit into their category of "equity/hybrid" funds. While the funds do have some small exposure to fixed-income investments - they are primarily equity holding funds. As we will see, the two global focused funds hold quite a bit of tech exposure in their top ten holdings. This is similar to the Eaton Vance option-based funds. However, EVT specifically doesn't list any large tech names as their top holding.
In fact, to the detriment of the funds, they last reported their largest sector to financials. As we know, the financial sector was hit disproportionately hard throughout this latest sell-off. Due primarily to the fact that financials generally need a strong economy to keep powering growth. The Fed had also slashed rates down to 0% to support the economy. This effort also extends to all sorts of programs and stimulus to prop up the economy. Regardless, these funds had been impacted differently than Eaton Vance's option-based funds did heading into this crisis. They have shifted the portfolios since last reporting their Annual Reports, however. In the Annual Reports is where they provide the sector breakdowns. We know they have changed since as they provide updates on their top ten holdings, and these show that they have shifted their positions.
It's also important to consider that since these funds are levered they will act more volatile, in general. Utilizing leverage was also a detriment to the funds heading into the latest sell-off. However, utilizing leverage can also have upside relatively speaking to non-leveraged counterparts. It is just hard to know exactly when to take this leverage off the table. Especially considering the black swan event
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