EV Floating Rate Income Stock Price, News & Analysis

Eaton Vance Floating-Rate Income Trust (EFT) is a closed-end fund that invests primarily in floating-rate senior loans and other floating-rate debt instruments. Managed by Eaton Vance Management, a Boston-based investment firm with roots dating to 1924, EFT provides investors access to a diversified portfolio of bank loans that typically adjust their interest rates periodically based on benchmark rates like SOFR.

Investment Strategy and Portfolio Focus

The fund's investment objective centers on generating high current income while seeking to preserve capital. EFT accomplishes this by investing in senior secured floating-rate loans, which occupy a senior position in borrowers' capital structures. This seniority means that in the event of default, senior loan holders receive repayment before subordinated debt holders and equity investors.

Floating-rate instruments distinguish themselves from traditional fixed-income investments through their interest rate adjustment mechanism. When benchmark rates rise, the income generated by floating-rate loans increases accordingly, potentially protecting investors from interest rate risk that affects fixed-coupon bonds. Conversely, when rates decline, income from these instruments decreases.

Closed-End Fund Structure

As a closed-end fund, EFT trades on the New York Stock Exchange, meaning investors buy and sell shares through the exchange rather than directly from the fund. This structure allows the fund to maintain a stable asset base without needing to sell holdings to meet redemption requests. Closed-end funds can trade at premiums or discounts to their net asset value, creating potential opportunities for investors who monitor these spreads.

The closed-end structure enables EFT to employ leverage as part of its investment strategy. By borrowing at short-term rates and investing in higher-yielding floating-rate loans, the fund can potentially enhance returns for shareholders. However, leverage also amplifies both gains and losses, adding a layer of risk that investors should understand.

Bank Loan Market Positioning

The senior loan market where EFT invests consists primarily of loans made to corporations by banks and other financial institutions. These loans are typically rated below investment grade, placing them in the leveraged loan category. Borrowers in this market range from mid-sized companies to large corporations undergoing leveraged buyouts, recapitalizations, or other financing events.

Senior loans offer several structural protections. They are typically secured by collateral such as company assets, real estate, or other property. Loan agreements often include financial covenants that require borrowers to maintain certain financial metrics, providing early warning signals if a borrower's financial condition deteriorates.

Income Distribution

EFT distributes income to shareholders on a monthly basis, making it potentially attractive to investors seeking regular income streams. The distribution amount can fluctuate based on the income generated by the underlying portfolio, prevailing interest rates, and the fund's use of leverage.

Management and Oversight

Eaton Vance Management serves as the investment adviser for EFT, drawing on decades of experience managing fixed-income and floating-rate strategies. Eaton Vance became part of Morgan Stanley Investment Management following an acquisition, combining resources and expertise across a larger investment platform.

• Investment Focus: Senior secured floating-rate loans and debt instruments
• Income Approach: Monthly distributions based on portfolio income
• Structure: NYSE-traded closed-end fund with leverage capability
• Rate Sensitivity: Floating rates adjust with benchmark rate changes