ETF Education Report: Eaton Vance Floating-Rate Income Trust (EFT)

What this ETF is trying to do

The Eaton Vance Floating-Rate Income Trust (EFT) is an exchange-traded fund listed on the NYSE. While specific holdings are not listed in this report, ETFs like this generally aim to provide income to investors through regular distributions.

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 EFT, the numbers show different trends depending on how long you look:

• Year-to-Date (YTD): The price return is approximately -6.02%, while the total return is approximately -0.95%.

• One Year: The price return was approximately -10.08%, while the total return was approximately -2.39%.

• Three Years: The price return was approximately -12.60%, but the total return was a positive 16.14%.

To visualize the price change, if you had invested in this ETF when its estimated price was $11.80 one year ago, the price would have dropped to the current price of $10.61.

Income and distribution explanation

This ETF focuses on providing cash to investors. The distribution yield is approximately 8.56%. This means the amount of cash paid out is high relative to the current share price. These distributions usually happen monthly, with 12 payments recorded over the last year.

It is important to remember that a high distribution yield does not mean you have earned that much in total profit. You must look at the total return to see how the share price and distributions worked together.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases. StockValueFinder uses an "erosion-risk score" to measure this risk.

EFT has an erosion score of 75, which is labeled as "mild price erosion." This is a measurement of risk and does not mean the fund's value has definitely collapsed. There is no severe erosion-risk flag for this ETF.

Pros

• The three-year total return is positive at approximately 16.14%.

• It provides a high distribution yield of approximately 8.56%.

Cons

• The one-year and year-to-date price returns have been negative.

• There is a "mild" erosion-risk score of 75.

Beginner takeaway

When looking at EFT, notice that the share price has gone down over the last year, but the total return is higher than the price return because of the cash distributions. High yields can be helpful for income, but they do not guarantee that your original investment will stay the same value. Always look at both price return and total return to get the full picture.