What this ETF is trying to do

The abrdn Emerging Markets Equity Income Fund Inc (AEF) is an Exchange Traded Fund (ETF) that trades on the AMEX exchange. Based on its name, this fund focuses on providing income from stocks in emerging markets.

What the numbers show

When looking at an ETF, it is important to understand two different types of returns: 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 AEF, the numbers show growth in both areas:

• Year-to-Date (YTD): The price return is approximately 35.29%, while the total return is approximately 46.33%.

• One Year: The price return was approximately 45.47%, and the total return was approximately 61.39%.

• Three Years: The price return was approximately 102.13%, and the total return was approximately 166.83%.

The current price of one share is $9.47. An estimated price from roughly one year ago was $6.51. If you had invested $10,000 into the share price alone one year ago, that value would have grown based on the 45.47% price return.

Income and distribution explanation

This ETF is designed to pay out cash to investors. The distribution yield is approximately 9.29%. This number describes the cash distributions relative to the current ETF price. Over the last 12 months, the fund had four payouts, totaling $0.88 per share. These payments usually happen on a quarterly basis, often on Tuesdays.

It is important to remember that a high distribution yield does not mean the investor earned that exact percentage as their total return. You must look at the "total return" figure to see the full picture of how the investment performed including those payments.

NAV erosion explanation

"NAV erosion" refers to a situation where the value of the underlying assets in the fund decreases over time. Some investors worry that high payouts might cause this. However, for AEF, the erosion-risk score is 100, and the label states "No price erosion detected." There is no severe erosion-risk flag for this fund.

Pros

• Strong Total Returns: The fund has shown significant total returns over the one-year and three-year periods.

• High Income Potential: The fund has a high income rating grade of "A" with a distribution yield of approximately 9.29%.

Cons

• No Top Holdings Listed: There is currently no data available regarding the specific companies held within this fund.

Beginner takeaway

When looking at AEF, notice the difference between the price return and the total return. The total return is higher because it accounts for the cash distributions paid to shareholders. While the fund offers a high distribution yield, always check the total return and the erosion-risk score to understand how the share price is behaving alongside those payments.