ETF Education Report: Eaton Vance Risk-Managed Diversified Equity Income Fund (ETJ)

What this ETF is trying to do

The Eaton Vance Risk-Managed Diversified Equity Income Fund (ETJ) is an exchange-traded fund (ETF) listed on the NYSE. While the specific investment strategy is not detailed in the data, the fund's name suggests it focuses on providing equity income through a risk-managed approach.

What the numbers show

When looking at an ETF, it is important to separate "price return" from "total return." Price return only tracks how much the share price changes. Total return includes both the price change and any cash distributions paid out to investors.

Based on the data provided:

• Year-to-Date (YTD): The price return is approximately -6.12%. However, the YTD total return is 0.59%.

• One Year: The one-year price return is -8.00%, while the one-year total return is approximately 0.78%.

• Three Years: The three-year price return is about 7.95%, but the three-year total return is much higher at approximately 40.87%.

To visualize the price change, we can look at an estimated price from roughly one year ago, which was about $9.00. The current price is $8.28. This shows that the share price has declined over the last year, even though the total return (which includes distributions) remained slightly positive.

Income and distribution explanation

This ETF has a distribution yield of approximately 9.43%. This means the fund pays out a significant amount of cash relative to its 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 is not the same as total return. While these payments provide cash income, 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. In this report, we use an "erosion-risk score" to measure this risk.

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

Pros

• The fund provides a high distribution yield of approximately 9.43%.

• The three-year total return has been quite strong at approximately 40.87%.

Cons

• The share price has seen declines, such as the -8.00% one-year price return.

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

Beginner takeaway

For new investors, ETJ shows a big difference between price movement and total return. While the share price has gone down over the last year, the total return stayed positive because of the cash distributions. Always remember that high yields can come alongside a falling share price.