ETF Education Report: Eaton Vance Tax Advantaged Dividend Income Fund (EVT)

What this ETF is trying to do

The Eaton Vance Tax Advantaged Dividend Income Fund (ticker: EVT) 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 dividend income.

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. For EVT, the year-to-date (YTD) price return is approximately 11.16%. The one-year price return is about 15.85%, and the three-year price return is approximately 30.25%.

• Total Return: This includes the share price change plus any distributions (cash payments) received. The total return is always higher when the fund pays out cash. For EVT, the YTD total return is approximately 17.52%. The one-year total return is about 24.98%, and the three-year total return is approximately 65.93%.

To visualize the price change, we can look at an estimated price from roughly one year ago, which was $24.16. The current price is $27.99.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 7.06%. This number describes the cash payments relative to the current ETF price. These distributions usually happen monthly, with 12 payments recorded over the last year.

It is important to remember that a high distribution yield does not mean you earned that same percentage as your total return. You must look at the "total return" figure to see how much you actually gained including those cash payments.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases over time. Some investors worry that high cash payments might come at the expense of the fund's value.

However, for EVT, the erosion-risk score is 100, which is labeled as "No price erosion detected." The erosion severity is rated as "good," and there is no severe erosion-risk flag present.

Pros

• The fund has shown positive price returns over the last year and three years.

• The total return (which includes cash payments) has been significantly higher than the price return alone.

• The fund shows no detected price erosion based on current risk measurements.

Cons

• Data regarding the specific companies held in the fund (Top Holdings) was not supplied.

Beginner takeaway

When studying an ETF like EVT, always distinguish between the share price and the total return. The share price tells you how the cost of one unit is changing, while the total return shows you the full picture by including the cash distributions paid out to you. High yields can be attractive, but checking the total return and the erosion-risk score helps you see how the fund is performing overall.