Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (1) | Ignore Thread Prev | Next
Author: sklam Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 105  
Subject: Morning*'s problem with EV Date: 12/29/2005 10:19 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
From a recent Morningstar article called "What your fund company isn't telling you":

Eaton Vance, Fourth-Quarter Earnings Call | Nov. 22, 2005

What the fund company said: "As we have mentioned in prior calls, our focus on closed-end funds does redirect some of our sales and marketing efforts from our open-end funds. However, the very attractive financial characteristics of closed-end funds, low cost per dollar of assets raised, and lack of redemptions suggest to us that this is a very favorable and rational business trade-off. As you know, retaining assets is an important component of profitability in the asset-management business. One of Eaton Vance's many strengths is our lower-than-average fund redemption rate."

Our Comment

Eaton Vance has been one of the leaders in the resurgence of closed-end funds in recent years. So why does the firm like the format? Because it's better for investors? Nope. Because investors can never redeem their money from closed-end funds, so the fund company can earn fees on the assets in perpetuity (investors can trade with each other over an exchange, but the original investment remains with the fund). Oh, and they're cheap to launch.
Eaton Vance also deserves special mention for illustrating a common practice in fund company conference calls: focusing on the firm's growth and profitability with barely a word about how shareholders of its funds have fared. The best companies talk about the investment performance of their funds, and how this has helped or harmed their business, but Eaton Vance's management barely even refers to fund performance in their opening remarks. They do, however, note how extraordinarily well their stock has done.


http://news.morningstar.com/article/article.asp?id=152657&pgid=wwhome1a

-Steve
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (1) | Ignore Thread Prev | Next

Announcements

2013 Feste Award Voting Begins!
Who will win the 2013 Feste Award? Vote now for the Fool that most exemplifies the Fool Community mission of Learning Together!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Tax Strategies

TMFPMarti-Feeling Good
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement