EXG And ETG: 2 Global Funds At Attractive Discounts

seekingalpha11-25

The U.S. equity market has outperformed international markets for an extended period of time, going back to around the Global Financial Crisis.Diversifying with global investments can be beneficial; ...

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}\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 And ETG: 2 Global Funds At Attractive Discounts\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-25 04:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4739945-exg-and-etg-2-global-funds-trading-at-attractive-discounts><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>The U.S. equity market has outperformed international markets for an extended period of time, going back to around the Global Financial Crisis.Diversifying with global investments can be beneficial; ...</p>\n\n<a href=\"https://seekingalpha.com/article/4739945-exg-and-etg-2-global-funds-trading-at-attractive-discounts\">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":"ETG","symbol_name":"Eaton Vance Tax-Advantaged Globa","start_time":0,"source_url":"https://seekingalpha.com/article/4739945-exg-and-etg-2-global-funds-trading-at-attractive-discounts","article_id":"2486192677","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1140900431/image_1140900431.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2486192677","pubTimestamp":1732481420,"columns":[],"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"The U.S. equity market has outperformed international markets for an extended period of time, going back to around the Global Financial Crisis.Diversifying with global investments can be beneficial; r","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"ETG":"Eaton Vance Tax-Advantaged Globa","EXG":"Eaton Vance Tax-Managed Global D"},"translate_title":"EXG和ETG：2只折扣诱人的全球基金","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ETG":0.9,"EXG":0.9},"content_text":"The U.S. equity market has outperformed international markets for an extended period of time, going back to around the Global Financial Crisis.Diversifying with global investments can be beneficial; relative valuations between the U.S. market and the international counterparts have been getting quite extended.Today, we look at two closed-end funds that have the added flexibility of investing with a global tilt but also having meaningful U.S. exposure.   imaginima  Written by Nick Ackerman, co-produced by Stanford Chemist The U.S. equity market has performed incredibly well for most of the last couple of decades, easily outperforming its international counterparts. So it would be easy for some investors just to assume that the U.S. market has always outperformed. For some newer investors, this could be understandable as that is all that cohort has likely seen. However, that isn't exactly the case; it has just been quite a significant period of time since international has been able to come out on top.   U.S. Vs. International Outperformance (Hartford) For this outperformance, U.S. companies have tended to perform better overall in terms of growth in earnings. Higher growth has led to stronger performance. However, the U.S. equity market has also received the benefit of seeing valuation drive higher, too. In fact, we are looking at valuations reaching some incredibly rich levels for the U.S. market while global investments are trading right around historical valuation levels, according to JPMorgan's data. Should the S&P 500 Index simply revert back closer to its longer-term average P/E level, that alone would see international investments outperform significantly. We see this similarly in the differences when looking at dividend yields as well.   International Valuations (JPMorgan) This can help highlight why having some added diversification to global investments isn't necessarily a negative and can have some benefits. In particular, I wanted to look at two closed-end funds that have the added flexibility of including a sleeve of international investments but are otherwise free to still invest significantly in the U.S. market. It also doesn't hurt that both of these funds are trading at some attractive discounts with appealing monthly distributions. Eaton Vance Tax-Managed Global Diversified Equity Income Fund (NYSE:EXG)  1-Year Z-score: 2.07 Discount/Premium: -8.80% Distribution Yield: 9.37% Expense Ratio: 1.06% Leverage: N/A Managed Assets: $2.888 billion Structure: Perpetual.  EXG will \"invest in a diversified portfolio of domestic and foreign common stocks with an emphasis on dividend-paying stocks and writes call options on one or more U.S. and foreign indices with respect to a portion of the value of its common stock portfolio to generate current cash flow from the options premium received.\" EXG comes with an options writing strategy with a 50% overwrite target. They also write against indexes rather than the underlying individual positions. However, the fund puts together a portfolio with a composition that acts like it is \"covered.\" In this case, the fund's equity benchmark is the MSCI World. The latest breakdown shows that the fund is roughly around 50/50 split between international and U.S. (North America) exposure.   EXG Geographic Mix (Eaton Vance) In the top ten holdings of the fund, we see plenty of familiar names, particularly several of the Magnificent 7 names that have ultimately been what is driving the U.S. market higher. That's where that added flexibility of still being able to invest meaningfully into the U.S. market can pay off.   EXG Top Ten Holdings (Eaton Vance) At an 8.8% discount level, the fund has seen its discount narrow since the last time we gave the fund a look earlier this year. With that, the fund's 1-year z-score has become more elevated. A more patient investor could wait for a pullback in the broader market, which could end up driving the discount lower, as we've tended to see during times of greater volatility for CEFs. However, it remains quite an attractive bargain regardless in look at the longer term. This is both on an absolute basis but also on a relative basis to its historical levels. The fund may not ever see itself trading at a premium again.   Ycharts Over time, EXG has cut its distribution more than it has increased it—though the latest adjustment was an upward one. This goes back to the international exposure holding the fund back relative to its U.S.-focused peers, some of those funds being in the same Eaton Vance equity option writing suite. That's something that could reverse over the coming decades if we see a reversal in performance. At the same time, EXG's distribution is still looking healthy today regardless. The fund's distribution rate works out to 9.37%, and the NAV distribution rate comes to 8.54%—which is fairly modest for this line-up of funds and not in the danger zone of cutting, in my opinion.   EXG Distribution History (CEFConnect) However, it should be noted that, like most equity CEFs, they will require capital gains to fund the bulk of the payout. That means those gains can dry up quite quickly in a severe market correction and Eaton Vance tends to be one of the first fund sponsors to be rather quick in cutting. Eaton Vance Tax-Advantaged Global Dividend Income Fund (NYSE:ETG)  1-Year Z-score: 2.68 Discount/Premium: -8.12% Distribution Yield: 8.18% Expense Ratio: 1.13% Leverage: 18.90% Managed Assets: $1.998 billion Structure: Perpetual  ETG invests \"primarily in global dividend-paying common and preferred stocks and seeks to distribute a high level of dividend income that qualifies for favorable federal income tax treatment.\" More specifically, the investment strategy is:  Under normal market conditions, the Fund invests at least 80% of its total managed assets in dividend-paying common and preferred stocks of U.S. and foreign issuers that the Fund's investment adviser believes at the time of investment are eligible to pay dividends that qualify for federal income taxation at rates applicable to long-term capital gains. The Fund may invest in preferred stocks that are rated below investment grade. The Fund may also invest a portion of its assets in stocks and other securities that generate fully taxable ordinary income, including up to 30% of its total assets in securities rated below investment grade. Under normal market conditions, the Fund will invest (i) at least 25% of its total managed assets in the securities of U.S. issuers; (ii) at least 30% of its total managed assets in securities of non-U.S. issuers, including issuers located in emerging market countries; and (iii) in issuers located in at least five different countries (including the U.S.).  ETG could be seen as a more aggressive fund relative to EXG, given that ETG is leveraged. They aren't too aggressively leveraged, but leverage will amplify moves in either direction and that increases risks. ETG also carries a small sleeve of fixed-income exposure but its equity benchmark is still listed as the MSCI World Index.   ETG Asset Allocation (Eaton Vance) ETG also carries a bit higher of an allocation to North America at ~55% but overall carries a smaller allocation of information technology relative to EXG. Some of that can be seen when looking at the top ten. The Mag 7 names come to an allocation of around 18% for ETG, and for EXG, those names are pushing closer to 21%.   ETG Top Ten Holdings (Eaton Vance) Having that bit of leverage seems to have helped ETG start to pull away more recently while the equity market has been surging higher. We saw that heading out of the Covid pandemic as well, where ETG started to pull away. That said, each market correction dropped ETG back down to EXG's level, so the fund has never really been able to pull too meaningfully.   Ycharts Similar to EXG, ETG's discount has also narrowed since our last update. That has been somewhat of a trend in the overall CEF space, but it was more specifically noticeable in the taxable fixed-income space; equity CEFs, on the other hand, still show that there are more bargains and aren't as richly priced overall on a relative basis. Compared to EXG, ETG's discount isn't looking as deeply discounted on a relative basis. Part of this was that EXG was able to flirt with a higher premium and more occasionally touch the premium level compared to ETG. On the other hand, I still believe that the long term suggests a fair time to consider adding to the position.   Ycharts ETG was fairly unique when it came to its distribution, as the fund had for many years paid the same distribution to investors after having only one distribution cut during the Global Financial Crisis. However, over the last several years there have been some more adjustments.   ETG Distribution History (CEFConnect) This was mostly similar to the entire suite of Eaton Vance funds, which saw increases in their distributions in 2021 only to be then cut in 2022. They then raised the payouts again heading into 2024. The one fund that was able to buck that trend from the group was Eaton Vance Enhanced Equity Income Fund (EOI). EOI saw the increases but not the reduction that the rest of the EV suite did.  ETG's current distribution yield works out to 8.18%, with the NAV distribution rate coming in at 7.53%. While ETG's distribution is lower currently than EXG's, that isn't necessarily a negative. ETG could be in a better position to either increase its distribution again or, during the next more prolonged market correction, see the cut be relatively smaller. Again, coverage of ETG's distribution is going to be fueled by capital gains primarily.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","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":"4.29.3","shortVersion":"4.29.3","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/2486192677"}