ipopba/iStock via Getty Images

The tone of the market hasn’t changed much from January to February now. In fact, it seems that more instability and uncertainty is happening due to the Russian-Ukrainian conflict. Using the VIX, we are back above 30, which is about where we peaked towards the end of January.

VIX chart

Y-Charts

Looking further ahead, the VIX hasn’t reached these levels since 2020. At that time, people around the world were grappling with the COVID pandemic and the lockdowns it brought.

VIX chart

Y-Charts

Not so long ago, it seems like the world was coming together to be divided again due to Russia’s invasion of Ukraine. While the West rallies in strong unity against these actions, other Russian neighbors in Russia remain neutral. I’m not sure what that means for the future, and I’m not even sure it’s calculable at present.

That being said, this hasn’t deterred my long-term commitment – adding capital to my portfolio each month and buying positions. Some months this means I put more capital to work than others. As we entered correction territory in the broader indices, I put a lot of money to work in January. I was overall less aggressive in February. I let some of my cash flow replenish for new opportunities.

Eaton Vance Tax-Advantaged Global Dividend Income Fund (ETG)

Most of my readers who have been following me for a while will definitely recognize this name. I cover it frequently, and it was one of the longer term buys I’ve had for a few years now. I consider it to be a more central type for me and I take this opportunity to add to this solid name. In fact, I had posted an update quite recently, at the beginning of January.

The fund recently fell to a discount of around 6% from the 1.65% discount it had at the start of the year. Unfortunately, I had taken the job earlier in February when there was only about a 3% discount. Over the past month, it peaked at a 7.27% discount – so that would have been an attractive valuation to enter a position as well. That being said, I’m not too disappointed as I would also consider the overall decline in the fund and the market.

On a YTD basis, the price is down more than 14.5%. The net asset value itself held up significantly better, which pushed the discount to open.

% change in ETG price and % change in net asset value

Y-Charts

It could be a global fund and given the current circumstances it might not seem like the best position to add. However, as I said, this is a long-term position for me, and I intend to continue to hold it. Buying today still means my income will increase, with the higher distribution they boosted last year. Considering they just raised it, I suspect they won’t be too quick to adjust it lower. I suspect they will weather some of the volatility until we hopefully get a resolution.

While I had been more bullish on international positions, I think this trade will take longer to materialize. Current unfolding events appear to be pushing investors to stick with US investments.

Cohen & Steers Quality Income Realty Fund (RQI)

After adding ETG, I ended up adding to my position in RQI. It’s another solid long-term position I’m in. I had only sold this position before to avoid a rights offering. Then added shortly after this event.

I had also added to RQI in January too. That makes it an even bigger part of my portfolio now. In fact, I hold RQI in two different accounts, and if they were combined, this would be my most important position. In my closed-end fund portfolio, it is the third largest holding. It follows BlackRock Science and Technology Trust II (BSTZ) and John Hancock Tax-Advantage Dividend Income Fund (HTD).

Real estate was one of the worst performing sectors of the year. As RQI leans towards a more growth-oriented portfolio, it has also hit the stock a bit. This has resulted in poor RQI performance since the start of the year. Interestingly, it has held up better than ETG at present – despite ETG’s NAV holding up better.

% change in RQI price and % change in net asset value

Y-Charts

The shed itself did not open too much. Similar to my reasoning for adding ETG, the wider declines also contributed to its appeal. Currently, we only have a very slight discount of 0.38% at the time of writing.

Over the past month, it had reached a low of -5.40% and a premium high of 0.18%. This is the one where I got lucky; I bought it on February 23. The discount at that time was 4.24% at the close that day, but the low of 5.40% was where it had closed the previous day.

Eaton Vance Tax-Advantaged Dividend Income Fund (EVT)

The third position I bought on the last day of the month was EVT. It’s a CEF that has been rare to go on the cheap. However, it has sunk there in the past month. The largest closing discount took place on the 22nd; it closed with a discount of 4.28%. Over the past year, the fund has posted an average discount of just 0.41%. This puts the fund’s 1-year z-score at a fairly attractive -1.60.

Not surprisingly, the fund is also down on a YTD basis. However, what is surprising is how well its net asset value is holding up. It was only down a little over 5% at that time. The stock price fell more than 12%, prompting the fund to move from a discount to a premium.

% change in the price of the EVT and % change in the net asset value

Y-Charts

The fund’s high financial exposure has helped EVT weather some of the downsides experienced in other market sectors. Financials has been one of the best performing sectors so far this year, but a bit behind the energy sector which has a strong lead. Although financials are holding up quite well due to expected interest rate hikes, some of those gains are coming out on the last day of trading.

This is due to the SWIFT payment system sanctions that were imposed on Russia for its invasion of Ukraine. In addition, due to global instability and market conditions, the number of interest rate hikes is in question. EVT will feel this blow to financial stocks due to its higher exposure. The market does some of the tightening for the Fed, so it doesn’t have to. At the same time, inflation could only get worse due to supply chain disruptions, putting them in an even tougher spot.

Conclusion

Nothing in the future is guaranteed; however, I suspect that my income will continue to increase as I buy income-oriented investments. Global uncertainty is putting additional pressure on equities and increasing volatility. No one can really tell where it ends or what Russia might do next, but that comes with the territory of the investment. No one really knows what the next Black Swan event will be; this is what makes them black swan events. We don’t seem to be in a full market panic just yet, in my opinion, but something could trigger one any day.