Stock Analysis & Valuation Eaton Vance Senior Floating-Rate Trust (EFR)

• Previous Close: $11.22
• Sector Valuation Confidence Level: High

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	35.10	213
Intrinsic value (DCF)	10.98	-2
Graham-Dodd Method	0.28	-97
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Eaton Vance Senior Floating-Rate Trust (NYSE: EFR) is a closed-end fixed income mutual fund managed by Eaton Vance Management, specializing in senior, secured floating-rate loans. The fund primarily invests in U.S. fixed-income markets, targeting high-yield, leveraged loans that adjust with benchmark interest rates, providing investors with protection against rising rates. EFR benchmarks its performance against the S&P/LSTA Leveraged Loan Index, offering exposure to a diversified portfolio of below-investment-grade corporate debt. As part of the financial services sector, EFR appeals to income-focused investors seeking floating-rate instruments with lower duration risk. With a market cap of approximately $347 million, the fund has demonstrated stable revenue generation and consistent dividend payouts, making it a relevant option in the asset management space for yield-seeking portfolios.

Investment Summary

Eaton Vance Senior Floating-Rate Trust (EFR) presents an attractive investment opportunity for income-oriented investors, particularly in rising interest rate environments, due to its focus on floating-rate loans. The fund's net income of $51.7 million and dividend yield of $1.09 per share underscore its ability to generate stable cash flows. However, its below-investment-grade credit exposure introduces credit risk, and its low beta (0.425) suggests limited correlation with broader equity markets, which may reduce volatility but also growth potential. The absence of debt and solid operating cash flow ($27.9 million) enhance financial stability, but investors should weigh the fund's niche focus against broader fixed-income alternatives.

Competitive Analysis

Eaton Vance Senior Floating-Rate Trust (EFR) competes in the leveraged loan CEF space by offering a specialized portfolio of senior secured floating-rate loans, which provides a competitive edge in rising rate environments. Its benchmark alignment with the S&P/LSTA Leveraged Loan Index ensures transparency and comparability. However, EFR's small market cap (~$347M) may limit economies of scale compared to larger peers. The fund's zero-debt structure and Eaton Vance's management expertise bolster its risk-adjusted appeal, but its reliance on below-investment-grade borrowers exposes it to default risks. Competitors with broader mandates or higher-rated holdings may appeal to more risk-averse investors, while EFR's niche focus attracts those prioritizing interest rate hedging and high yield.

Major Competitors

• Blackstone Strategic Credit Fund (BGB): Blackstone Strategic Credit Fund (BGB) is a larger competitor with a diversified portfolio of leveraged loans and high-yield bonds. Its Blackstone affiliation provides robust credit research capabilities, but its expense ratio is higher than EFR's. BGB's broader mandate includes non-floating-rate assets, which may reduce its rate-hedging appeal.
• Apollo Tactical Income Fund (AIF): Apollo Tactical Income Fund (AIF) focuses on opportunistic credit investments, including floating-rate loans. Apollo's distressed debt expertise gives it an edge in credit selection, but its performance is more volatile than EFR's. AIF's higher yield comes with greater risk, appealing to aggressive investors.
• BlackRock Floating Rate Income Strategies Fund (FRA): BlackRock Floating Rate Income Strategies Fund (FRA) offers a similar floating-rate loan strategy but with BlackRock's global resources. FRA's larger scale may provide better liquidity, though its fees are competitive with EFR. Both funds target the S&P/LSTA Index, but FRA's broader investor base may dilute yield potential.