Nuveen Equity Premium Advantage Fund

The Nuveen Equity Premium Advantage Fund (JLA) is a closed-end fund managed by Nuveen Investments. The fund seeks to provide a high level of current income and gains from net index option premiums. The fund's secondary investment objective is to seek capital appreciation.

JLA invests in an equity portfolio that seeks to replicate the price movements of a 50%/50% combination of the S&P 500 Stock Index and the NASDAQ-100 Stock Index. The fund also sells S&P 500 and NASDAQ-100 index call options in the same 50%/50% ratio covering approximately 100% of the value of the fund's equity portfolio. The purpose of selling these call options is to enhance the risk-adjusted performance of the fund relative to an all equity portfolio.

Nuveen cites the following highlights of JLA:

(1) Attractive quarterly distributions;
(2) Capital appreciation, consistent with the Funds' index option strategy;
(3) A measure of downside protection in rapidly declining markets;
(4) Tax-advantaged income from an index option strategy and equity dividends.

The current quarterly distribution is $.2840 per share, for an annual rate of $1.136.  At a December 27, 2012 closing price of $11.84, JLA's yield is 9.6%.

The net asset value (NAV) as of December 26, 2012 was $13.28. The fund is trading at a 10.8% discount to its net asset value.

The annual expense ratios, reported by Nuveen as of November 30, 2012 were:

Management Fees   0.87%
Other Expenses       0.12%
Total                        0.99%.

Morningstar reports the annual expense ratio as .98%.

JLA has assets of $347,402,178.

I have made an initial purchase of JLA for a retirement income portfolio. I chose this closed end fund for the following reasons:

(1) A mutual fund adds diversification (and perhaps a degree of safety) to the portfolio.

(2) The fund does not use leverage. Some funds incur debt to enhance the yield. This is a risk I do not wish to take.

(3) The fund seeks to replicate (on a 50%/50% basis) the S&P 500 and the NASDAQ 100. I like the broad exposure.

(4) The expense ratio is less than 1%.

(5) The share price is trading at a discount (currently 10.8%) to the fund's net asset value.

(6) The yield vis-a-vis the net asset value (currently $13.28) is only 8.54%. I believe a yield of 10%+ runs the risk of not being sustainable over time.

There are many other possible closed-end funds to consider. This is not a recommendation to buy, but rather a suggestion for a fund to study. Everyone's situation is different. Do your own research and make your own decision.