ETF Education Report: Virtus Diversified Income & Convertible Fund (ACV)

What this ETF is trying to do

The Virtus Diversified Income & Convertible Fund (ticker: ACV) is an exchange-traded fund (ETF) traded on the NYSE. While the specific investment strategy isn't detailed in the data, the name suggests it focuses on generating income through different types of investments.

What the numbers show

When looking at an ETF, it is important to understand the difference between "price return" and "total return."

• Price Return: This measures only how much the share price has changed.

• Total Return: This includes both the change in share price and the money paid out through distributions.

For ACV, the numbers show:

• Year-to-Date (YTD): The price return is approximately -2.51%, but the total return is approximately 3.55%.

• One Year: The price return was about 4.78%, while the total return was much higher at approximately 15.31%.

• Three Years: The price return was about 38.54%, and the total return was approximately 86.38%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The price was approximately $24.46, and the current price is $25.63.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 9.93%. This means the amount of cash paid out is about 9.93% of the current share price. These payments happen frequently; in the last 12 months, there were 13 distributions, and they usually occur on a monthly basis.

It is important to remember that a high distribution yield does not mean the investor earned that same amount as their total return. You must look at the "total return" figure to see how the investment performed overall.

NAV erosion explanation

"NAV erosion" refers to a situation where the value of the underlying assets in the fund decreases over time. Investors often care about this because they want to keep their original investment (the principal) stable while collecting income.

For ACV, the erosion-risk score is 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag present.

Pros

• The fund has a history of positive total returns over one, three, and five years.

• It provides regular cash distributions (usually monthly).

Cons

• The year-to-date price return is currently negative, meaning the share price has dropped slightly this year.

• The data provided does not list any specific top holdings to show exactly what companies the fund owns.

Beginner takeaway

When looking at ACV, notice that the total return is often higher than the price return. This happens because the fund pays out cash distributions. While the share price might move up or down on its own, the total return tells a fuller story of how the investment performed by including those cash payments.

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*Disclaimer: This report is for educational purposes only. It does not provide financial advice and does not recommend buying, selling, or holding this or any other security.*