ETF Education Report: HARBOR EMERGING MARKETS EQUITY ETF (EPEM)

What this ETF is trying to do

The HARBOR EMERGING MARKETS EQUITY ETF (EPEM) is an exchange-traded fund that focuses on companies in emerging markets. Based on its top holdings, the fund has significant exposure to large international companies, such as Taiwan Semiconductor Manufacturing Co Ltd and Samsung Electronics Co Ltd.

What the numbers show

When looking at how this ETF has performed, it is important to understand two different types of returns: price return and total return.

• Price Return: This measures only the change in the share price. For EPEM, the year-to-date (YTD) price return is approximately 33.60%. The one-year price return is approximately 36.28%.

• Total Return: This includes the share price change plus any distributions (cash payments) made to investors. The YTD total return is approximately 33.60%. The one-year total return is higher than the price return, at approximately 41.41%.

To visualize this, we can look at the estimated price from roughly one year ago, which was $22.92. The current price is $31.24.

Income and distribution explanation

This ETF provides some cash income through distributions. The distribution yield is approximately 2.74%. This number describes the cash payments relative to the current ETF price. It is important to remember that a distribution yield is not the same as total return. While distributions provide cash, they are separate from the growth of the share price itself. In the last 12 months, this ETF had one distribution payment.

NAV erosion explanation

"NAV erosion" refers to a situation where the value of the underlying assets in the fund decreases significantly. StockValueFinder uses an erosion-risk score to help monitor this. For EPEM, the erosion score is 100, and the label indicates "No price erosion detected." There is no severe erosion-risk flag for this ETF.

Pros

• The fund has shown strong positive price returns over the last year.

• The one-year total return (which includes distributions) is higher than the one-year price return.

• The erosion-risk measurement is rated as "good."

Cons

• The distribution frequency is described as irregular or less frequent.

• The income rating grade is a "C."

Beginner takeaway

EPEM is an ETF that tracks emerging market companies. It has experienced significant share-price growth recently. When studying this fund, remember that the total return is a more complete picture of performance than the price return alone because it accounts for cash distributions. Always remember that high yields or price changes do not guarantee future results.