Eaton Vance Municipal Bond Fund offers tax-free income as a municipal bond-focused closed-end fund. EIM's leverage and interest rate sensitivity pose risks, but rate cuts bode well for the costs of borrowing to decline and lead to NII increasing. EIM's current discount isn't that appealing historically, but the tender offers provide opportunities for investors to realize some of that discount.
There is a bullish outlook in the municipal market, despite flat performance in two months or so. EV Municipal Bond fund, EIM, offers a high yield of 5.8% and top credit quality for a long-term income investment. Many funds, including the emerging active Muni ETFs, have been increasing positions in Muni funds, likely looking for performance gains in the near term.
Eaton Vance Municipal Bond has suffered losses due to the Fed's rate hikes and increased borrowing costs, but its discount and recent distribution increase make it an appealing investment. The fund has become a target for activist group Karpus Management, which now owns over 20% of the fund. Lower rates and a narrower discount could improve distribution coverage and potentially lead to capital gains for investors in muni CEFs.