What this ETF is trying to do

The Virtus Stone Harbor Emerging Markets Total Income Fund (EDI) aims to provide income from emerging markets. Based on its name, the fund focuses on generating total income for its investors.

What the numbers show

The current price of one share is $5.02. Based on an estimated price from roughly one year ago of about $4.74, we can look at how the value has changed.

If you had invested $10,000 exactly one year ago, your investment would have grown to approximately $10,590.69 based only on the share-price movement, before adding any distributions.

Here is a breakdown of the returns:

• One-Year Return: The one-year price return (the change in share price only) was approximately 5.91%. However, the one-year total return (which includes distributions) was much higher at approximately 24.23%.

• Year-to-Date (YTD): The YTD price return is about 2.87%, while the YTD total return is about 20.67%.

• Three-Year Return: Over the last three years, the share-price decline was significant at -45.38%. The three-year total return was also negative at approximately -17.25%.

Income and distribution explanation

This ETF has a distribution yield of approximately 16.73%. This number describes the cash distributions relative to the ETF price. In the last 12 months, the fund paid out $0.84 in trailing distributions. These payments usually happen monthly.

It is important to understand that a high distribution yield does not mean an investor earned that same percentage as a total return. Also, receiving regular cash distributions does not guarantee that your original investment (your principal) will stay safe.

NAV erosion explanation

This ETF has a severe erosion-risk flag and an erosion score of 10, which is labeled as "Severe price erosion."

"NAV erosion" refers to a decline in the value of the underlying assets in the fund. When a share price falls significantly—as seen with the -45.38% price return over the last three years—it can destroy your principal. Principal is the original amount of money you invested.

Because of this risk, many income investors prefer ETFs where the share price stays steady or goes up slightly. If a share price collapses, even high distributions might not be enough to make up for the loss in the value of the investment.

Pros

• The one-year total return was approximately 24.23%.

• The fund offers a high distribution yield of approximately 16.73%.

Cons

• There is a severe erosion-risk flag.

• The three-year price return shows a significant share-price decline of -45.38%.

• The three-year total return is negative.

Beginner takeaway

When looking at ETFs, always distinguish between price return (how much the share price moved) and total return (the share price movement plus any distributions). A very high distribution yield can be misleading if the share price is also falling. Always look at the total return to see how the investment performed overall.