ETF Report: Miller/Howard High Income Equity Fund (HIE)

What this ETF is trying to do

The Miller/Howard High Income Equity Fund, known by its ticker symbol HIE, is an exchange-traded fund (ETF). This type of fund is designed to provide income to its investors. It focuses on finding ways to generate regular payments while also participating in the growth of the stock market.

What the numbers show

As of November 20, 2024, the current price of HIE is $12.56. Looking back at the past year, the fund has seen significant growth. The price one year ago was estimated to be about $10.12. This means the price alone grew by 24.11% over the last twelve months.

When you look at "total return," which includes both price changes and the money paid out to investors, the one-year return is even higher at 31.16%. The fund has also performed well this year, with a year-to-date total return of 23.86%.

Income and distribution explanation

Some investors look for ETFs that pay them regular "allowances" called distributions. HIE has a distribution yield of 4.87%. This means the fund has paid out $0.61 per share over the last 12 months. These payments usually happen once a month, with 12 payments made in the last year.

It is important to remember that a high yield alone can be misleading. A high percentage might look good, but you must also look at whether the actual price of the ETF is staying healthy or falling.

NAV erosion explanation

"NAV erosion" is a term used when the value of the fund's underlying assets drops because the fund is paying out more money than it is actually earning. Think of it like a person spending all their savings to pay for a monthly subscription; eventually, the savings run out.

If an ETF has severe erosion, the share price can collapse from a high price to a much lower price. This destroys "principal," which is the original money you put in. However, for HIE, no price erosion was detected. The data shows a "good" status for its erosion score.

Pros

• The fund has shown strong total returns over one, three, and many years.

• It provides regular monthly income through distributions.

• There is currently no sign of the price being destroyed by erosion.

Cons

• Investors must watch if the high distributions eventually cause the share price to drop.

• Returns in the past do not guarantee what will happen in the future.

Beginner takeaway

Income investors usually prefer ETFs that go sideways (stay at the same price) or move slightly up. They prefer this because they want their original investment to stay safe while they collect the monthly payments. If an ETF's price collapses, the money lost from the falling price can be much larger than the money gained from the distributions. Always look at both the yield and the price history together.