Allspring Utilities and High Income Fund (ERH)

What this ETF is trying to do

The Allspring Utilities and High Income Fund (ERH) is an exchange-traded fund (ETF). While the specific investment strategy details are not listed in the holdings, the name suggests it focuses on utility companies and seeks to provide high levels of income to its investors.

What the numbers show

It is important to understand that "price return" and "total return" are different. Price return only tracks how much the share price moves. Total return includes both the price movement and the cash distributions paid out to investors.

Based on the data:

• Year-to-Date (YTD): The price return is approximately -12.52%. However, the YTD total return is approximately -6.67%.

• One Year: The one-year price return is approximately -14.90%. The one-year total return is approximately -7.36%.

• Three Year: Over the last three years, the price return is approximately 10.71%, while the total return is much higher at approximately 41.84%.

To visualize the price change, an investor's share price was estimated to be roughly $12.15 one year ago. The current price is $10.34.

Income and distribution explanation

This ETF has a distribution yield of approximately 9.93%. This means the fund pays out a significant amount of cash relative to its share price. These distributions usually happen monthly, with Thursday being the most common day for payments. Over the last 12 months, the trailing distributions were approximately $1.03 per share.

It is important to remember that a high distribution yield does not mean an investor earned that percentage as their total return. Total return is the most accurate way to see how much value was actually gained or lost.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases. While a falling share price does not always mean NAV is eroding, we can look at the "erosion-risk score" to see how a fund is performing.

This ETF has an erosion score of 75, which is labeled as "mild price erosion." This indicates a mild level of risk regarding price deterioration. However, there is no "severe erosion-risk flag" for this fund.

Pros

• The fund has a high distribution yield of approximately 9.93%.

• It has shown strong total returns over a three-year period of approximately 41.84%.

Cons

• The fund has experienced a share-price decline over the last year.

• Both the YTD and one-year total returns have been negative.

Beginner takeaway

When looking at high-income ETFs like ERH, it is helpful to look at both the distribution yield and the total return. A high yield provides cash, but if the share price is falling significantly, it can impact your overall investment value. Always check the total return to see how much you are actually gaining or losing after all factors are considered.