ETF Education Report: ISHARES MSCI PHILIPPINES ETF (EPHE)

What this ETF is trying to do

The ISHARES MSCI PHILIPPINES ETF (ticker: EPHE) is an exchange-traded fund designed to track the performance of companies in the Philippines. It allows investors to gain exposure to that specific country's market through a single investment.

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 the change in the share price.

• Total Return: This includes both the share price changes and any cash distributions (dividends) paid out.

For EPHE, the numbers show a decline in both categories over different timeframes:

• Year-to-Date (YTD): The price return is approximately -8.55%, while the total return is approximately -6.87%.

• One Year: The price return is approximately -9.56%, while the total return is approximately -7.18%.

• Three Years: The price return is approximately -7.31%, while the total return is approximately -0.61%.

• Five Years: The five-year total return is approximately -18.82%.

To visualize the price change, if you look at an estimated price from roughly one year ago of $25.20 and compare it to the current price of $22.79, you can see the share-price decline.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 2.98%. This number describes the cash paid out relative to the current ETF price. Over the last 12 months, there were two distributions totaling approximately $0.68 per share. The frequency of these payments is described as irregular or less frequent.

It is important to remember that a distribution yield is not the same as total return. While distributions provide cash, they do not guarantee that your original investment will stay the same value.

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. EPHE 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, but it indicates a trend of mild price deterioration.

Pros

• Provides exposure to the Philippine market.

• Offers a distribution yield of approximately 2.98%.

Cons

• The ETF has experienced negative price returns and total returns over the one-year, three-year, and five-year periods.

• The erosion-risk score indicates mild price erosion.

Beginner takeaway

When studying EPHE, notice the difference between the share price and the total return. Because the total return is higher (less negative) than the price return, it shows that the cash distributions helped offset some of the share-price decline. However, the overall trend for this ETF has been downward over the periods measured. Always remember that high yields do not protect against a falling share price.