ETF Education Report: XTRACKERS MSCI EAFE HIGH DIVIDEND YIELD EQUITY ETF (HDEF)

What this ETF is trying to do

The HDEF ETF is designed to provide exposure to stocks that pay higher dividends. It focuses on companies in specific international markets (often referred to as EAFE markets).

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 HDEF, the one-year price return was approximately 11.93%. The year-to-date (YTD) price return was approximately 6.87%.

• Total Return: This includes the share price change *plus* the money paid out through distributions. The one-year total return was approximately 17.31%, and the YTD total return was approximately 10.55%.

Over a longer period, the three-year total return was approximately 62.01%. To visualize the price change, an investor could look at the estimated price from roughly one year ago, which was $29.59, compared to the current price of $33.12.

Income and distribution explanation

This ETF provides cash to investors through distributions. The distribution yield is approximately 4.47%. This number describes the cash payments relative to the current ETF price. Over the last 12 months, there were 5 distributions. While these payments provide cash income, it is important to remember that a high yield does not guarantee the investment will grow in value.

NAV erosion explanation

"NAV erosion" refers to a situation where the value of the underlying assets in the fund decreases over time. StockValueFinder uses an erosion-risk score to measure this risk. For HDEF, the erosion score is 100, which is labeled as "No price erosion detected." There is no severe erosion-risk flag for this ETF.

Pros

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

• The erosion-risk measurement is rated as "good."

Cons

• The specific top holdings were not supplied in the current data, so we cannot see which companies make up the portfolio.

• As with all stock investments, returns are not guaranteed.

Beginner takeaway

When studying HDEF, notice the difference between the price return and the total return. The total return is higher because it accounts for the cash distributions paid out to investors. Always look at both numbers to get a full picture of how an ETF has performed.