ETF Education Report: Virtus Stone Harbor Emerging Markets Income Fund (EDF)

What this ETF is trying to do

The Virtus Stone Harbor Emerging Markets Income Fund (EDF) is an exchange-traded fund (ETF). While the specific holdings are not listed in this report, ETFs like this one generally aim to provide income to investors by investing in different types of assets.

What the numbers show

It is important to understand that there are two ways to look at how an ETF performs: price return and total return.

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

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

For EDF, the numbers show a difference between these two:

• Year-to-Date (YTD): The price return is approximately 5.23%, while the total return is much higher at approximately 16.64%.

• One Year: The price return is approximately 2.95%, while the total return is approximately 18.34%.

• Three Years: The price return is approximately 18.86%, while the total return is approximately 83.24%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The estimated price was about $5.08, and the current price is $5.23.

Income and distribution explanation

This ETF has a high distribution yield of approximately 13.77%. This number describes the cash distributions relative to the ETF's price. The fund usually pays out money monthly, with 12 distributions recorded over the last year.

It is important to remember that a high distribution yield does not mean an 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" is a term used to describe when the value of the underlying assets in a fund decreases over time. Some investors worry about this because they want to make sure their original investment stays stable while they collect income.

For EDF, 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. This means the current data does not show a pattern of significant price deterioration related to erosion risks.

Pros

• The fund shows a high total return over one, three, and five-year periods.

• It provides regular monthly distributions.

Cons

• The price return (the change in share price) is lower than the total return, meaning much of the value comes from the distributions.

Beginner takeaway

When looking at ETFs that pay high amounts of cash, always distinguish between the share price and the total return. A high distribution yield can be helpful for income, but it is important to check the total return and the erosion-risk score to understand how the fund's value is behaving overall.