What this ETF is trying to do

The John Hancock Tax-Advantaged Global Shareholder Yield Fund (ticker: HTY) is an ETF. Based on its name, the fund focuses on providing "shareholder yield." This usually means it looks for ways to give cash back to investors.

What the numbers show

It is important to understand that there are two ways to look at how an ETF performs: price return and total return.

• Price return only tracks how much the share price changes.

• Total return includes both the price change and any cash distributions (payments) the fund gave to investors.

Over the last year, the share price of HTY went up by approximately 2.89%. However, the total return was much higher at 17.84% because it includes the cash payments made to shareholders.

Looking at the last three years, the share price has actually dropped by about 22.27%. Even with that big drop in price, the total return for those three years was 10.85% because of the cash distributions.

To give you an idea of how prices change, we can look at an estimated price from roughly one year ago, which was about $4.85. If you had invested $10,000 at that estimated price, your shares would be worth about $10,284 today based on the current price of $4.99. This shows a price return, but it does not include the extra cash you would have received from distributions.

Income and distribution explanation

This ETF has a high distribution yield of approximately 12.83%. This means the fund paid out a large amount of cash relative to its share price. In the last 12 months, the fund paid out $0.64 per share. These payments usually happen every three months (quarterly).

While high distributions provide cash income, they do not guarantee that your original investment will stay the same value. A high yield can exist even if the share price is falling.

NAV erosion explanation

The fund has an erosion-risk score of 55, which is labeled as "moderate price erosion."

"NAV erosion" is a term used when the actual value of the assets held inside the fund decreases over time. While a falling market price is not always proof that the NAV is dropping, this moderate score suggests there is a risk of price deterioration. For income investors, it is often better to find funds where the price stays steady or goes up, rather than funds where the share price collapses.

Pros

• The one-year total return was quite high at 17.84%.

• The fund provides a high distribution yield of 12.83%.

Cons

• The share price has seen a significant decline over the last three years (-22.27%).

• There is a moderate erosion-risk score.

Beginner takeaway

When looking at HTY, remember that a high distribution yield can be misleading if the share price is falling. Always look at both the price return and the total return to see the full picture of how the fund is performing.