Eaton Vance Floating-Rate Advantaged Fund Class C (ECFAX)

Overview

The fund focuses on investing a significant portion of its assets, specifically at least 80%, in income-producing floating rate loans and other floating rate debt securities. These investments primarily encompass senior floating rate loans of both domestic and foreign borrowers, known as Senior Loans. The unique aspect of these investments lies in their ability to generate income through the interest that fluctuates with market rates. This strategy positions the fund to potentially benefit from rising interest rate environments. However, it's crucial to note that the loans and securities within the fund's portfolio are usually of below investment grade quality, bearing below investment grade credit ratings. Such ratings indicate that these investments carry high risk and possess speculative characteristics, often referred to colloquially as "junk." This classification suggests that while the fund may offer the potential for higher yields, it also comes with increased exposure to credit and default risk, requiring investors to weigh the potential rewards against the inherent risks.

Products and Services

• Income Producing Floating Rate Loans:

  These are loans made to corporations that pay interest which adjusts periodically based on market interest rates. The fund invests in these with the aim to earn income through the interest payments. Because their rates adjust, these loans have the potential to provide higher income when interest rates rise, making them an attractive investment in varying economic climates. However, the loans are typically below investment grade, indicating a higher risk of default.

• Other Floating Rate Debt Securities:

  Beyond senior floating rate loans, the fund diversifies its portfolio with other types of floating rate debt securities. These might include but are not limited to, floating rate bonds, notes, and other financial instruments that bear interest rates adjusting over time. Similar to the floating rate loans, these securities aim to provide income that can adjust with changing interest rates, offering potential protection against inflation and rising interest rates. As with the senior loans, these debt securities often carry higher risk due to their below investment grade status.

• Senior Floating Rate Loans of domestic and foreign borrowers (Senior Loans):

  A significant portion of the fund's investment goes into senior floating rate loans. These loans are considered senior in the borrowing company’s capital structure, giving them a higher claim on assets in the event of a liquidation compared to other debt types. By focusing on senior loans, the fund aims to mitigate some of the risks associated with below investment grade loans, as these debts are likely to be paid before other obligations in cases of financial distress. They encompass a mix of domestic and international borrowers, providing geographic diversification that can help in spreading out risk.