Entering text into the input field will update the search result below

CII: The Best Of BlackRock's Option-Income CEFs But Not Good Enough

Left Banker profile picture
Left Banker


  • In researching high-income opportunities for a Sustainable Income Portfolio, I looked into BlackRock's Option-Income Equity CEFs as a follow-up to an analysis of Eaton Vance's offerings.
  • Of four funds, only two, BDJ and CII, merited close analysis. Two global funds were eliminated from consideration.
  • CII is a clear winner on all performance criteria, but its low yield makes it a difficult fit for the Sustainable Income Portfolio's objectives.
Man Holding Two Coin Stacks
Photo by AndreyPopov/iStock via Getty Images

After two articles on option-income CEFs (here and here), and one on an option-income ETF (DIVO), you’d think we could put the subject to rest. But there’s a lot of interest in the category. For good reason. It

This article was written by

Left Banker profile picture
I'm a retired individual investor.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.

This article does not constitute investment or tax-planning advice. I am passing along the results of my research on the subject. Any investor who finds these results intriguing will certainly want to do all due diligence to determine if any fund mentioned here is suitable for his or her portfolio. And, any investor who has concerns about the tax status of an investment will want to consult with a tax professional on that topic.

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.

Recommended For You

Comments (53)

GetRealHere profile picture
Looking back - EOS lost 25% of its value YTD, theres your additional income minus 1/4 of your principle.
7865671 profile picture
@GetRealHere Not sure the point you are attempting to make. The YTD is about on par with QQQ, which EOS's holdings have significant alignment. The YTD NAV TR of EOS is actually very slightly better than QQQ.
adam22164 profile picture
Love CII and have owned it in the past, but as you point out the yield is too low for an income portfolio. I actually think the yield of all the BlackRock Equity CEF's (both Domestic focused and International focused) "SUCK". If BlackRock decides to increase the distribution I will take another look at it. As for Eaton Vance, the fund to look at is ETW not EOS. Yes ETW is a global fund with less US exposure, but it trades at a discount while EOS trades at a premium & ETW yields over 8% while EOS is just over 5%.
Left Banker profile picture
Depends on your goals and objectives whether you want ETW or EOS. There's certainly a place for both.
Carsten F. profile picture
I would use EOS instead of ETW ... no doubt .... seekingalpha.com/...
mysonchino profile picture
While CII has a lower yield than some it still provides a monthly solid dividend. It's total return is better than a lot of funds. I need some diversification of holdings, management and want my next buy to be primarily domestic.

So I'm going to buy CII. I take the lower yield and once a year as the total return minus dividend results in a higher NAV, I'll sell 2% of the holdings and have the same cash flow but more assets than many chasing yields. Good luck to all.
ijeff profile picture
I haven't dug too deep but sure looks to me like EOS and CII are pretty comparable based on past performance with a slight edge to EOS.
@Left Banker Thank you for your very interesting analysis of all these CEFs. I'm long full (for me) positions in EOS and ETY. I started a position in BDJ at the end of last year because I liked the diversification of its financial holdings. True BDJ hasn't done as well as CII, but CII looks to me more like the Eaton Vance funds that I own and like. We'll see whether the diversification has any benefits over time.
Long EOI instead of EOS. Also long CII.

Tim Mc profile picture
Own CII, but not reinvesting distributions at this time since it's at 5.23% yield, or 1.64% less than it's 5-yr average yield of 6.87%. I like no leverage and that the distributions are all qualified.
gnewmie23 profile picture
Same! Great fund.
2specs profile picture
I owned CII for a long time but it seemed to gradually sink lower and lower in rate of return-- sold it years ago , believe it was a good decision
etfman profile picture
Right now, I like BDJ because it holds a lot of banks which will do well as rates rise. I do also hold DIVO and CPZ. I own one leveraged stock CEF, GDV which is more of a value play.
@etfman , I'm not sure the rates will rise much further. Everybody expects rates to rise, and as we know everybody is usually wrong. BDJ should do well nonetheless.
@etfman Rates rise? Good luck with that.
IMHO - the only time to buy CEF’s is after a large correction like March ‘20 and the discounts widen. Otherwise you are better off trading the swings in the Q’s. Thanks for your work LB.
Main negative for BDJ is financials. Which could become a positive going forward as interest rates rise.
bryan555 profile picture
It's so helpful to have you writing again, LB. Another great article. Actually, what I have taken away is that EXD is probably the best of this pack. Yesterday, you noted its superb two-year performance, but downplayed it because of the (quite irrelevant) 5-yrs stats.

May I also recommend ETJ for your friend? I hold a lot of it, and it's been very kind to me. That's the Eaton Vance lower risk CEF, with a yield that I believe you will find attractive.
Left Banker profile picture
Yes. On the one hand I think I've worked this vein to death but on the other, I think I missed on EXD and really should take another look at it.

Having said that, I never have understood all the love for ETJ. It has its place but I just can't see it as a core holding (meaning something to hang on to for the long term income it generates). It has had a continual decline in NAV from its inception through the COVID crash. The last year has been its only sustained period of NAV growth.

It can, I suppose, work as an opportunistic buy at key market inflection points but market timing is not something I'm inclined to.

Maybe as a a small part of a portfolio as a hedge that turns out income? I'd have to think about that.
bryan555 profile picture
@Left Banker Thanks for the comments on ETJ. I've only had it post-Covid, so, as you say, the NAV has been fine. And the yield is excellent for a low risk fund. I monitor my funds pretty carefully, so will keep an eye on that NAV.
People like it because, over certain rocky periods, it was the only CEF in positive territory.
adam22164 profile picture
@Left Banker I agree with your thoughts on ETJ. I own it as the second smallest holding in my income portfolio at 1.9% of my total portfolio of 21 CEF's & ETF's. I view it just as you said "as a hedge that turns out income". As the commenter below me @bryan555 accurately points out "over certain rocky periods, it was the only CEF in positive territory".
Perhaps comparing apples to oranges as one concentrated in financial stocks while the other in technology. Maybe both will work well in this environment.
rickevantodd profile picture
Excellent article, of course. Long all 4 funds compared by author.
Carsten F. profile picture
Hi, nice Article. From which site/homepage is the correlation-matrix? It is very imformative.
Left Banker profile picture
@Carsten F.
" This is the long-term correlation matrix from InvestSpy:..."
milbank profile picture
"After two articles on option-income CEFs (here and here)"

Hi Left Banker. It appears you have your ETY article attached to both of the "(here and here)" attachments in the sentence above in the article.
Left Banker profile picture
@milbank Hmmm, so I do. I can fix that. 2nd link should be seekingalpha.com/...
NV_GARY profile picture
@Left Banker
also- That leaves us with two funds to compare: BDY and CII.
Left Banker profile picture
@NV_GARY bah.
Thanks. I'll get it fixed.
I've got to get that wiring checked someday.
Thanks for this article. I own both EOS and CII. You mentioned the long-term outperformance of EOS, which is certainly true. Because EOS benchmarks the Russell 1000 Growth Index it has a somewhat higher weighting in tech, which has allowed it to outperform CII over the past decade. But market trends don't last forever, and due to tech's recent struggles, CII (which benchmarks the S&P 500) has outperformed EOS significantly year-to-date. So I see these two as complementary large cap funds that are ideal for anyone looking for both growth and income.
Douglas Albo profile picture
@toromi Absolutely correct. CII and BDJ have actually crushed the EV option funds this year simply due to value > growth. I should know since I own all the BlackRock and Eaton Vance option funds.
@Douglas Albo Thanks for your reply. I believe it's best to own multiple funds with varying investment styles/approaches, and it seems you agree. The idea that you have to "choose one" has always struck me as a false choice.
Left Banker profile picture
@Douglas Albo
Granted. But, seriously? How much weight do you want to put on one quarter? I suppose if you believe this value>growth business is the stable future of the market it makes some sense but that's something that all the hangdog value gurus keep saying every time there's been a flash of life in value. I'd like to see something a bit stickier than a single quarter. All I see is a bit of a needed correction in big tech and growth that, like all needed corrections, is likely transient and potentially bullish for the category.

And, it's really not even a quarter in this case, closer to eight weeks through Jan and Feb: EOS, ETY and CII (hardly a value portfolio BTW) have "actually crushed" BDJ at NAV over the past month. i.imgur.com/...

I'm much less interested in market performance on this question because market performance is driven by slow-responding CEF investors who take their lead from places like seeking alpha. If all you look at is seeking alpha you'd have thought growth and tech died a half decade ago.

And to move it out of CEF world. Last month VUG: +12%. VTV? Oh... <a third of that: +3.2%.
Edit to fix a number error. 4:32 PDT, 9Apr
Nick Ackerman profile picture
Thank you for this piece and glad to see you writing again! However, I have to respectfully disagree with your conclusion at this time. I actually own three of the funds you focused on; EOS, CII and BDJ. I see BDJ as the best positioned for the current environment. Though I don't plan on selling the others either.

I believe your analysis and looking at the total returns and risk metrics are too backward-looking. It would have been great if you dove into the positioning of each portfolio a little more. The reason being that BDJ holds a significant amount of exposure to financials at nearly 30%. CII and EOS, on the other hand, hold an overweight to tech. EOS being significantly so with over 42% being allocated to tech. We all know how tech has performed over the last decade, which is what most of your metrics show - that tech has been great!

At this time, I believe we see the continued strength in the financial sector that we have been seeing. On a YTD basis, we see that BDJ and CII top both ETY and EOS quite handily. Which has played into the rotation into value. No doubt, tech is still a great place to invest and I wouldn't recommend selling out of the sector completely or even making large dramatic shifts in one's portfolio - but believe that financials offer a better opportunity at least over the short to medium-terms.

Thanks again for your continued analysis on several great funds!
@Nick Ackerman You wrote my comment. I love statistics. You can make them say pretty much anything you like. As in any investment, it depends when you buy them as to the yield. The concentration of stocks and sectors have relevance. High distributions are hard to meet and risk negative ROC or cuts. It's much easier to make a lower distribution. Writing single stock options is harder then market options as well. In a rising market index options may be better but in a down market not as safe.
My thoughts too. I bought BDJ at the right time and it's up more than the EV funds. Buying low requires buying the worst performers😁 The best performing CEFS are always expensive. That's why they are the best performers.
team Gabe profile picture
@Nick Ackerman great counter Nick
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

About CII

SymbolLast Price% Chg
Expense Ratio
Div Frequency
Div Rate (TTM)
Yield (TTM)
Assets (AUM)
Compare to Peers

More on CII

Related Stocks

SymbolLast Price% Chg
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.