EXG: Moving This Equity CEF To Hold After The Run-Up (Rating Downgrade)

seekingalpha05-18

Monty Rakusen Thesis The Eaton Vance Tax-Managed Global Diversified Equity Income Fund (NYSE:EXG) is an equity closed end fund which we have covered extensively in the past. The CEF comes from the ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2436079309?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/551986071/image_551986071.jpg","is_english":true,"pubTime":"2024-05-18 19:52","share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","id":"2436079309","market":"fut","top_or_hot":-1,"title":"EXG: Moving This Equity CEF To Hold After The Run-Up (Rating Downgrade)","media":"seekingalpha","content":"<div>\n<p>Monty Rakusen Thesis The Eaton Vance Tax-Managed Global Diversified Equity Income Fund (NYSE:EXG) is an equity closed end fund which we have covered extensively in the past. The CEF comes from the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4694290-exg-cef-hold-after-run-up-rating-downgrade\">Source Link</a>\n\n</div>\n","source":"seekingalpha_fund","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>EXG: Moving This Equity CEF To Hold After The Run-Up (Rating Downgrade)</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nEXG: Moving This Equity CEF To Hold After The Run-Up (Rating Downgrade)\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-05-18 19:52 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4694290-exg-cef-hold-after-run-up-rating-downgrade><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Monty Rakusen Thesis The Eaton Vance Tax-Managed Global Diversified Equity Income Fund (NYSE:EXG) is an equity closed end fund which we have covered extensively in the past. The CEF comes from the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4694290-exg-cef-hold-after-run-up-rating-downgrade\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"FT_SY_VIX","symbol_name":"VIX波动率","start_time":0,"source_url":"https://seekingalpha.com/article/4694290-exg-cef-hold-after-run-up-rating-downgrade","article_id":"2436079309","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/551986071/image_551986071.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2436079309","pubTimestamp":1716033146,"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Monty Rakusen Thesis The Eaton Vance Tax-Managed Global Diversified Equity Income Fund (NYSE:EXG) is an equity closed end fund which we have covered extensively in the past. The CEF comes from the Eat","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"TVIX":"二倍做多VIX波动率指数短期期权ETN","CEF":"Sprott Physical Gold & Silver Trust","EXG":"Eaton Vance Tax-Managed Global D","BK4585":"ETF&股票定投概念","UVXY":"1.5倍做多恐慌指数短期期货ETF","SVXY":"0.5倍做空波动率指数短期期货ETF","VXX":"短期VIX期货ETN","VIXY":"波动率短期期货指数ETF"},"translate_title":"EXG：在上涨（评级下调）后，将该股票CEF改为持有","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"CEF":1,"EXG":1,"TVIX":0.9,"VXX":0.9,"VIXmain":0.6,"SVXY":0.6,"UVXY":0.6,"VIXY":0.6},"content_text":"Monty Rakusen Thesis The Eaton Vance Tax-Managed Global Diversified Equity Income Fund (NYSE:EXG) is an equity closed end fund which we have covered extensively in the past. The CEF comes from the Eaton Vance platform, and provides an expression of global equities returns. In our last piece on EXG which you can find here, we assigned the CEF a 'Buy' rating based on attractive valuation metrics for both the CEF and the larger equity market. The vehicle has done very well since:   Prior Rating (Seeking Alpha) In today's article we are going to explore the CEF in light of stretched overall equity markets, which no longer provide for an attractive entry point. A CEF simply transforms equity returns into dividends Via its structure, EXG simply transforms equity market returns into dividends. If global equity markets collapse, so will EXG. If equity markets are stretched, the same will apply to EXG. The fund contains 78 names, with roughly half of the portfolio covered by written calls:   Characteristics (Fund Fact Sheet) As a buy-write CEF, the vehicle generates its dividends via writing covered calls on its portfolio. The fund is overweight North American equities:   Countries (Fund Fact Sheet) North America represents 53% of the fund, followed by Europe at 37% and Asia at 7.4%. From an individual name perspective, the fund's top holdings are as follows:   Top 10 Holdings (Fund Fact Sheet) We can see tech mega-caps having a large representation in the fund, followed by large European conglomerates. Equity markets are at record highs A retail investor should always try to follow as closely as possible the classic 'buy low, sell high' investment adage. Through index construction, equity markets move upwards over long periods of time, but they do hit overbought levels at times and can get ripe for corrections. We are now witnessing a period where the 'soft landing' market view has pushed equities across the board to record highs:   Equities (CNBC) While Europe is very close to having its first ECB rate cut in June, the Fed has seen its forecast for cuts pushed longer into the future, as inflation has proved to be sticky. Equities have been pushed higher by the soft landing narrative and the prospect for lower risk free rates. The North American market especially has re-entered P/E levels which in prior historic occurrences were associated with 'bubbles':   Valuations (Alliance Bernstein) A P/E level in excess of 20x for the S&P 500 has usually signified market tops. Nobody can call the exact timing of market tops, since they tend to develop for a while, but the above graph from Alliance Bernstein is very eloquent in highlighting the subsequent performance post record P/E levels. The metric to watch in the above data is the 'P/BFE' metric, which is the price/blended forward earnings for the next 12 months. As per Alliance Bernstein, the average P/BFE metric since 2000 has been 16x, versus a level which is now roughly 20x. An informed reader needs to understand we are not calling for a top in the EXG CEF, but we are merely pointing out equities are at record highs and record valuation levels. History has taught us that over longer periods of time valuation metrics tend to mean revert, hence buying when prices are stretched is not the best strategy to pursue. Equities should represent a permanent allocation in any investor's portfolio, and EXG via its dividend yield is a great holding to have. However, the fund should only be bought when underlying equities are oversold, or the CEF's structure presents a good arbitrage opportunity. We feel equities are now overbought, and the CEF's discount to NAV will not close until the VIX moves in the 20s again for a longer period of time, as we describe below. The discount to NAV is stubbornly high due to the low VIX environment The CEF's discount to NAV has remained stubbornly high, despite the historic beta to overall performance (i.e. the discount usually narrows when underlying stocks rally): Data by YCharts During past episodes, as the market rallied and the portfolio outperformed, the CEF's discount to NAV would narrow as well. Well, not in today's environment. We are of the opinion the reason behind this occurrence is the systemically low VIX environment. EXG generates yield via writing covered calls. The main input into options pricing is represented by volatility. A high volatility input results in a high premium. Conversely, today's low VIX environment generates low option premiums: Data by YCharts The VIX has been stuck below 20 for the past year, grinding towards the bottom of its historic range. We did a deep dive into this phenomenon in the 'VIXM: Not A Hedge Anymore In The 0DTE Environment', where we looked at an ETF composed of VIX futures. As long as the VIX is low and the call writing strategies are going to produce sub-optimal premiums, the fund will not be able to meaningfully narrow its discount, even when underlying equities rally. The market is expressing its views via the discount on the high delta being utilized via the strategy rather than vega. Conclusion  EXG is an equities closed end fund. The vehicle offers exposure to global equities via its portfolio, and employs a buy-write strategy on roughly half of its portfolio. The fund's discount has been persistently wide versus historic norms due to the low VIX environment, and we believe we will continue to see this trend until volatility moves above 20 for sustained periods of time. With the underlying equities in stretched territory due to the soft landing narrative, we do not believe the CEF presents an attractive entry point. We own the name and will continue to hold, as a core component of our portfolio, but we are also presently switching off the DRIP feature for this CEF.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2436079309"}