A Bank-Loan Fund to Keep an Eye On

Kenneth Oshodi: Eaton Vance Floating-Rate & High Income first caught my attention because of its combination of the firm’s well-respected bank-loan and high-yield groups. The joint management team consists of Scott Page, Michael Weilheimer, Craig Russ, Kelly Baccei, and Stephen Concannon, and both Page and Weilheimer have been portfolio managers on this fund since its September 2000 inception.

The team's goal here is to use fundamental analysis across an 80-20 portfolio of bank-loans and high-yield bonds to deliver reasonable outperformance. They use relative value analysis to adjust portfolio exposure across the two assets classes and employ the up to 20% high-yield bond allocation to find the best risk/return profile for the fund.

This approach has led to good performance, but the out-of-index high-yield position has also led the fund to be slightly more volatile than both Morningstar bank loan peers and the fund's S&P/LSTA Leveraged Loan Index benchmark. However, its 10-year annualized return through April 30, 2017, outpaces most of those peers and is competitive with the index.

With that said, expenses for this fund are unattractive and either rank as Above Average or High when compared to peers in the Morningstar universe. But its positives, which include a long-tenured team, effective process, and strong performance, contribute to make this a bank-loan fund that investors should keep an eye out for.