ETF Education Report: First Trust MLP and Energy Income Fund (FEI)

What this ETF is trying to do

The First Trust MLP and Energy Income Fund (FEI) is an Exchange Traded Fund (ETF) listed on the NYSE. While the specific investment strategy is not detailed in the provided data, the name suggests a focus on energy and MLP (Master Limited Partnership) income.

What the numbers show

It is important to understand the difference between "price return" and "total return." Price return only tracks how much the share price changes. Total return includes both the price change and the money paid out through distributions.

As of May 3, 2024, the current price is $9.83. Based on data from roughly one year ago, the estimated price was approximately $7.41.

Here is how the fund has performed:

• Year-to-Date (YTD): The price return is 14.70%, while the total return is 17.27%.

• One Year: The price return is 32.66%, while the total return is 41.67%.

• Three Year: The price return is 31.24%, while the total return is 63.46%.

Because the total return numbers are higher than the price return numbers, we can see that distributions have added value to the overall performance.

Income and distribution explanation

This ETF provides cash distributions to investors. The trailing distributions are $0.55. The distribution yield is approximately 5.60%. This yield represents the cash paid out relative to the current ETF price. The fund usually pays out monthly, with 11 distributions recorded over the last 12 months.

NAV erosion explanation

"NAV erosion" refers to a situation where the value of the underlying assets in the fund decreases over time. When an ETF's share price falls significantly, it can be a sign of risk to the principal (the original money invested).

For this fund, the erosion-risk score is 100, and the label is "No price erosion detected." The erosion severity is rated as "good," and there is no severe erosion-risk flag. This means the current data does not show signs of substantial price deterioration or high risk regarding the fund's value.

Pros

• The fund has shown positive price returns over the one-year and three-year periods.

• The total return is higher than the price return, meaning distributions have contributed to growth.

• It offers a regular distribution yield of approximately 5.60%.

Cons

• The provided data does not list any specific Top Holdings, so the exact companies inside the fund are unknown from this report.

• Investors should remember that a high distribution yield does not guarantee the share price will stay stable.

Beginner takeaway

When looking at an ETF like FEI, always look at both the price return and the total return. The price tells you how the share value moved, but the total return shows you how much you actually earned including the cash payments. While distributions provide income, they are separate from the share price movement.