FFA: This Fund Has Become Even More Concentrated In Tech

Summary

• The First Trust Enhanced Equity Income Fund offers a 7.00% yield through a covered call strategy, but its yield is lower than some peers.
• The fund's recent performance includes an 11.79% gain, though it lagged behind the S&P 500 due to its income-focused strategy.
• Despite a high weighting in low-yielding mega-cap tech stocks, the fund's covered call strategy boosts income, making it attractive for income-focused investors.
• The fund's exposure to the mega-cap technology stocks has been increasing over the past few months, which makes it more difficult to avoid concentration risk across a portfolio.
• The fund's recent distribution increase and solid financials ensure it can maintain its current payout, trading at a 4.73% discount to NAV.
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Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such 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.