ETF Education Report: Templeton Emerging Markets Fund (EMF)

What this ETF is trying to do

The Templeton Emerging Markets Fund (EMF) is an Exchange Traded Fund (ETF) traded on the NYSE. While the specific investment strategy isn't listed in the data, the name suggests it focuses on 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* any cash distributions (dividends) paid out to investors.

For EMF, the numbers show growth in both areas:

• Year-to-Date (YTD): The price return is approximately 30.30%, while the total return is approximately 34.73%.

• One Year: The price return is approximately 34.40%, while the total return is approximately 47.25%.

• Three Years: The price return is approximately 92.79%, while the total return is approximately 144.77%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The price was approximately $16.51, and the current price is $22.19.

Income and distribution explanation

Some investors look for ETFs that pay out cash, known as distributions. EMF has a distribution yield of approximately 7.64%. This means the cash paid out is about 7.64% of the current share price.

The fund usually pays these distributions quarterly, and it has made four payments over the last 12 months. The trailing distributions (the total cash paid out per share) were approximately $1.70. It is important to remember that a high distribution yield does not guarantee future payments or protect your original investment.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF decreases over time. Some investors worry that high payouts might cause this. However, for EMF, 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

• The fund has shown positive price returns and total returns over the one-year and three-year periods.

• It provides a significant distribution yield of approximately 7.64%.

Cons

• The data provided does not list any Top Holdings, so the specific companies owned by the fund are unknown from this report.

Beginner takeaway

When studying EMF, 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 investors. While this fund has a high distribution yield, always remember that price changes and cash payments are two different parts of an investment's performance.