EBI: Cheap Balanced Fund for Income Investors

Evergreen International Balanced Fund (ticker:EBI) is a closed-end balanced fund that invests in foreign- issued equities and debt securities. The fund currently has around 62% of managed assets in equities and the remainder in debt. The fund supplements its income by using an options strategy. They write index options to hedge a portion of the portfolio. An advantage of using index options is that they are more liquid than individual stock options and can be traded with lower cost and slippage.

The current EBI discount to NAV of -14.15% is close to the 6 month average discount of -14.26% and 1 year average discount of -14.02%, but considerably better than the three year average discount of -10.36%. I am not aware of any activist investors who own EBI, but several investment advisors who specialize in closed-end funds hold fairly large positions in EBI for their clients and would likely participate with activists to help narrow the discount.

EBI Annual Performance

 (as of April 23)

 Year NAV (%) Mkt Price (%)
 YTD   2.23      2.36
 2009   28.92    26.56
 2008   -26.88   -31.82
 2007   11.89     2.60
 2006   18.65   29.90

EBI is currently paying stable monthly distributions of 0.06475 per share or 0.777 a year.

EBI’s performance would benefit going forward if the US dollar weakens since their holdings are outside the US. Their top holdings by country are:

Country %Portfolio
UK 17.30%
France 8.10%
Germany 7.00%
Norway 6.40%
Canada 6.10%
Netherlands 6.10%
South Korea 3.70%

Ticker: EBI  Evergreen intl Balanced Income.   pays monthly

  • Total Assets= 189.3 MM
  • Annual Distribution (Market) Rate= 5.55%    SEC Yield= 3.85%
  • Call Options as a % of equities= 65.66%
  • Average Duration= 5.2 years (on fixed income portion)
  • Fund Expense ratio= 1.19%              Discount to NAV= -14.15%
  • Portfolio Turnover rate= 78%
  • No leverage.

Full Disclosure: Long EBI.


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