Eaton Vance Launches Option Absolute Return Strategy Fund

BOSTON, Oct. 5 /PRNewswire/ -- Eaton Vance Management, a subsidiary of Eaton Vance Corp. (NYSE: EV), announced today the launch of Eaton Vance Option Absolute Return Strategy Fund (Class A: EOAAX, Class C: EOACX, Class I: EOAIX), a new mutual fund managed for total return.   As an absolute return fund, the Fund benchmarks performance primarily against short-term cash instruments and expects to provide returns over the long term that are substantially independent of movement in the stock and bond markets.

The Fund pursues its objective by writing a series of call and put option spread combinations on the S&P 500 Composite Stock Price Index, a broad-based U.S. stock market index, and/or an S&P 500 Index proxy.  The strategy employs a systematic, rules-based program that seeks to take advantage of the general imbalance of natural buyers of stock index options over natural sellers, reflected in the customary excess of option price-implied volatilities over observed market volatilities. The Fund seeks to mitigate risk by selling option "spreads," rather than stand-alone options, by staggering roll dates across the option position portfolio, and by utilizing exchange-traded options guaranteed for settlement by the Options Clearing Corporation, a market clearinghouse.  

The Fund will generally write call spreads and put spreads that are "out of the money," meaning that the exercise price of call options sold generally will be above the current level of the index when written and the exercise price of put options sold generally will be below the current level of the index when written. In implementing its strategy, the Fund generally intends to enter into written call and put option spread positions that primarily have a maturity of approximately four weeks, and to space the timing of spread originations and expirations through each four-week period.  Positions will generally be written more out-of-the-money when option valuations reflect high volatility and less out-of-the-money when implied volatilities are lower, providing relatively consistent market exposures and net option premiums through varying equity market conditions.  The Fund's option strategy will be implemented as an overlay to a portfolio of short-term, high-grade debt securities that are expected to maintain a dollar-weighted average effective maturity of one year or less.

"Eaton Vance Option Absolute Return Strategy Fund expands and diversifies our growing lineup of absolute return mutual funds," said Thomas E. Faust Jr., chairman and chief executive officer of Eaton Vance.  "Strategies that offer the potential for returns that are uncorrelated to traditional asset classes continue to broaden their appeal."

The Fund's option program is managed by Parametric Risk Advisors LLC (PRA), a specialty investment manager focused on the management of equity option and equity index option strategies for institutional, high-net-worth and fund investors.   PRA is an affiliate of Parametric Portfolio Associates LLC, a subsidiary of Eaton Vance, and has been part of the Eaton Vance organization since 2007.  Jonathan Orseck and Kenneth Everding, Ph.D., Managing Directors of PRA, are the portfolio managers responsible for implementation of the Fund's option strategy.  Thomas Luster, Director of Eaton Vance's Investment-Grade Income Group, and Maria Cappellano, are the portfolio managers responsible for managing the Fund's cash and short-term income investments.  

Eaton Vance is one of the oldest investment management firms in the United States, with a history dating to 1924. Eaton Vance and its affiliates managed $173.3 billion in assets as of July 31, 2010, offering individuals and institutions a broad array of investment strategies and wealth management solutions. The Company's long record of providing exemplary service and attractive returns through a variety of market conditions has made Eaton Vance the investment manager of choice for many of today's most discerning investors. For more information about Eaton Vance, visit www.eatonvance.com.

About Risk - The effectiveness of the Fund's option strategy is dependent upon a general imbalance of natural buyers over natural sellers of index options. This imbalance could decrease or be eliminated, which could have an adverse effect on the Fund. Derivatives instruments can be used to take both long and short positions, be highly volatile, result in economic leverage (which can magnify losses), and involve risks in addition to the risks of the underlying instrument on which the derivative is based, such as counterparty, correlation and liquidity risk. An imbalance in supply and demand in the income market may result in valuation uncertainties and greater volatility, less liquidity, widening credit spreads and a lack of price transparency in the market. As interest rates rise, the value of certain income investments is likely to decline. Investments in income securities may be affected by changes in the creditworthiness of the issuer and are subject to the risk of non-payment of principal and interest. No Fund is a complete investment program and you may lose money investing in a Fund. The Fund may engage in other investment practices that may involve additional risks and you should review the Fund prospectus for a complete description.

Before investing, investors should consider carefully the investment objective, risks, charges and expenses of a mutual fund. This and other important information is contained in the prospectus or summary prospectus, which can be obtained from a financial advisor. Prospective investors should read the prospectus carefully before investing.

Not FDIC Insured.  Not Bank Guaranteed.  May Lose Value.

The Fund is distributed by Eaton Vance Distributors, Inc. Two International Place, Boston, MA 02110

SOURCE Eaton Vance Management

WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?

440k+
Newsrooms &
Influencers

9k+
Digital Media
Outlets

270k+
Journalists
Opted In

GET STARTED