New Eaton Vance Fund to Invest in MBS

Eaton Vance Corp., Boston, has announced a $2 billion initial public offering of common shares of a closed-end fund that will invest in mortgage-backed securities, among others.Eaton Vance Limited Duration Fund issued 101 million shares at an initial price of $20 per share and will trade on the American Stock Exchange under the symbol EVV, the company said. Eaton Vance said the fund plans to use financial leverage initially equal to about 34% of gross assets, which would bring the fund's total assets to approximately $3 billion. "With interest rates on U.S. Treasuries recently at 40-year lows, many investors are increasingly concerned about the possibility of rising rates associated with economic recovery," said James B. Hawkes, chairman and chief executive officer of Eaton Vance. "In the current environment, it may be prudent for investors to shorten the duration of their portfolios to reduce exposure to future changes in interest rates." The company said the fund expects to maintain a duration of two to four years under normal conditions. In addition to MBS, it will invest in senior, secured floating-rate loans and corporate bonds that are below investment-grade quality.