Eaton Vance Tax-Managed Diversified Equity Income Fund (ETY) - A Solid 20-Year Track Record

Eaton Vance Tax-Managed Diversified Equity Income Fund (NYSE:ETY) is a closed-end fund with a solid history, incepted in November 2006. The fund has a decent track record of performance and has just short of one year from completing 20 years. It is managed by a team of experienced professionals with a proven track record in managing diversified equity portfolios. ETY is an excellent options fund with a consistent history of outperforming the market. It offers investors a diversified portfolio of stocks with a focus on income generation. ETY has a low expense ratio and a stable dividend payout, making it an attractive option for investors looking for a reliable source of income.

Eaton Vance Tax-Managed Diversified Equity Income Fund (NYSE:ETY), established in November 2006, is a closed-end fund with a solid track record of performance. The fund, which is just shy of completing 20 years, has navigated various market environments, including the financial crisis and Great Recession of 2008-2009. It is managed by a team of experienced professionals with a proven track record in managing diversified equity portfolios. ETY is an excellent options fund with a consistent history of outperforming the market.

The fund invests in a diversified portfolio of common stock, particularly focusing on large-cap, high-growth stocks. It holds approximately 60 positions, with the top 10 representing over 45% of the portfolio. Similar to the S&P 500, the technology sector is the fund's largest sector in terms of exposure. ETY's primary investment objective is to provide current income and gains, with a secondary objective of capital appreciation. It achieves this by investing in dividend-paying common stocks and writing call options on a portion of its portfolio value.

ETY's performance has been robust. From January 2008 to August 2025, the fund returned roughly 10.2% annually, compared to 10.7% for the S&P 500. Over the past 10, 5, 3, and 1-year periods, the fund has returned 11.32%, 15.10%, 19.92%, and 13.21% respectively, on a net asset value (NAV) basis. The fund's distribution yield, as of September 5, 2025, stood at 7.50% on the market price and 7.64% on the NAV, reflecting its commitment to providing steady income.

The fund's financial health is solid. It generates significant income, primarily from capital gains, as its net investment income (NII) is minimal. The fund covers its distributions from realized and unrealized capital gains, with the NII making up only about 5% of the total distribution amount. The fund's distribution payout has increased from $0.0805 to $0.0992 per share, an increase of nearly 23%, reflecting its commitment to consistent payouts.

ETY's valuation is somewhat expensive, trading at a small premium of 2.57% to its NAV. However, this is not the only factor to consider when determining the fund's valuation. The fund's top holdings include Microsoft (MSFT), Nvidia (NVDA), Apple (AAPL), Amazon (AMZN), Meta (META), Broadcom (AVGO), and Alphabet (GOOGL), among others. The fund uses call options on the S&P 500 index to manage volatility and reduce downside risk.

In conclusion, Eaton Vance Tax-Managed Diversified Equity Income Fund (ETY) is a solid investment option for those seeking a reliable source of income. Its consistent performance, low expense ratio, and stable dividend payout make it an attractive choice for investors looking for a diversified equity portfolio with a focus on income generation.