ETF Education Report: ETY

What this ETF is trying to do

The Eaton Vance Tax-Managed Diversified Equity Income Fund (ticker: ETY) is an ETF listed on the NYSE. While the specific investment strategy isn't detailed in the data, the name suggests it focuses on providing equity income in a tax-managed way.

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 only measures 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 ETY, the numbers show:

• Year-to-Date (YTD): The price return is approximately -8.28%, while the total return is approximately -2.50%.

• One Year: The price return is approximately -11.12%, while the total return is approximately -3.67%.

• Three Years: The price return is approximately 20.98%, while the total return is approximately 54.19%.

To visualize the price change, we can look at an estimated price from roughly one year ago, which was $15.83. The current price is $14.07.

Income and distribution explanation

This ETF provides regular cash payments to investors. The distribution yield is approximately 8.46%. This number describes the cash distributions relative to the current ETF price. These payments usually happen monthly, with 12 payments recorded over the last year.

It is important to remember that a high distribution yield does not mean an investor earned that same percentage as their total return. Total return is the most complete way to see how the investment performed overall.

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.

ETY 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 ETF has a history of positive total returns over three years (54.19%) and five years (48.60%).

• It offers a relatively high distribution yield of approximately 8.46%.

Cons

• The ETF has experienced a share-price decline over the last year and year-to-date.

• The erosion-risk score indicates "mild price erosion."

Beginner takeaway

When looking at ETFs like ETY, don't just look at the distribution yield. High yields can sometimes be accompanied by a falling share price. Always compare the price return (the change in the cost of one share) with the total return (the change in value including cash paid out) to get a full picture of how the fund is performing.