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Fund Spotlight: ETJ - A Fund That Has Performed Well Through The Crisis


  • ETJ is a unique CEF in that it employs a collar options strategy to a portfolio of stocks.
  • That collar strategy is meant to protect on the downside while producing income by writing calls.
  • The fund has held up well during this crisis and has acted more like a bond fund than an equity fund.
  • Looking for a helping hand in the market? Members of Yield Hunting: Alt Inc Opps get exclusive ideas and guidance to navigate any climate. Get started today »

We screen the top funds on a NAV basis year-to-date, one-year, and three-year quite frequently, for obviously reasons. This is especially the case in times when the market sees significant volatility as those instances provide great insight into the positioning of the portfolios.

One of the best funds this year has been Eaton Vance Risk Managed Diversified Equity (NYSE:ETJ). We've highlighted this fund a lot in the last few years as it's a unique strategy allowing investors access to the S&P 500 with downside protection and an attractive yield.

Fund Characteristics

  • Total Assets: $607M
  • Leverage: 0%
  • Management fee: 1.0%
  • Avg. Daily Volume: 264K
  • Avg. Daily Volume $: 2.37M
  • Distribution rate: $0.076
  • Distribution frequency: Monthly
  • Discount: -1.2%
  • 3-year Avg. Discount: -3.2%
  • 1-year Z-score: -0.30

What does the fund do?

It invests in a diversified portfolio of common stocks - about 53 of them in total - across their $607M in total assets. The stocks are primarily large-cap US equities of name-brand companies. The mega caps occupy most of the spots in the top 10 holdings list - a list which constitutes over one third of the total portfolio.

(Source: Eaton Vance)

But in addition to holdings those stocks - which by itself is nothing special - it writes call options on the S&P 500 to generate income. Those are typically called covered calls and is a common strategy for increasing your yield on your stock portfolio. This also is not very unique as there are dozens of funds including ETFs, and open-end mutual funds, that employ that strategy. The more unique aspect of the fund is that they also buy put options on the S&P 500 to reduce the downside risk - also called a protective put.

This is called a collar strategy. You cap your upside and limit your downside

Data by YCharts

Data by YCharts

Data by YCharts

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This article was written by

Alpha Gen Capital profile picture
Targeting 8+% Income Stream using CEFs, ETFs, Munis, Preferreds and REITs
Yield Hunting: Alternative Income Opportunities is a premium service dedicated to income investors who are searching for yield without the high risk of the equity market. We are one of the top experts in closed-end funds ("CEFs") in the country having spoken at many national conferences on how to incorporate CEFs into client portfolios. We manage four portfolios that investors can follow:

- YH Core Income Portfolio: yield ~8%
- YH Flexible Income Portfolio: yield 7.53%
- YH Taxable Core Portfolio: yield 5.24% (some tax free)
- YH Financial Advisor Model

Plus: Muni CEF Shopping List.

Our team includes:

1) Alpha Gen Capital - I am a former financial advisor and investor. Not someone from another career doing this on the side. My analysis is meant to provide safe and actionable insight without the fluff or risky ideas of most other letters. My goal is to provide a relatively safer income stream with CEFs and mutual funds. We also help investors learn about investing and how to properly construct a portfolio.

2) George Spritzer - Another career financial guru who runs a registered investment advisor with a specialization in closed-end funds for individuals. George uses the following investment strategies:1) Opportunistic Closed-end fund investing: Buy CEFs at larger than normal discounts to NAV and sell them when the discounts narrow. 2) Exploit special situations: tender offers, fund terminations, fund activism, rights offerings etc.

3) Landlord Investor- spent his career as a management consultant for public sector clients at a multinational consulting firm in the DC area. He has transitioned to a new career as a full time landlord. His investment portfolio is comprised of two parts -- broad-based index funds and income plays such as preferred stock, CEFs, and REITs. He also owns individual/baby bonds which he buys on margin to boost total return. Landlord is our 'individual preferred stock' expert analyst.


Analyst’s Disclosure: I am/we are long ETJ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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