ETF Education Report: VANECK EMERGING MARKETS HIGH YIELD BOND ETF (HYEM)

What this ETF is trying to do

The VANECK EMERGING MARKETS HIGH YIELD BOND ETF (ticker: HYEM) is an exchange-traded fund. Based on its name, it focuses on high-yield bonds from emerging markets.

What the numbers show

When looking at an ETF, it is important to understand the difference between "price return" and "total return."

• Price Return: This only measures how much the share price has gone up or down.

• Total Return: This includes both the change in share price and the money paid out through distributions.

For HYEM, the numbers show a difference between these two:

• Year-to-Date (YTD): The price return is approximately -1.16%, but the total return is approximately 3.46%.

• One Year: The price return is approximately -2.24%, while the total return is approximately 4.63%.

• Three Year: The price return is approximately 9.77%, while the total return is much higher at approximately 33.69%.

To visualize the price change, we can look at an estimated price from roughly one year ago, which was $20.11. The current price is $19.66.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 6.91%. This means the amount of cash paid out is about 6.91% relative to the ETF's 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 exact percentage as their total return. You must look at the "total return" figure to see the full picture of how the investment performed including those payments.

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. HYEM has an erosion score of 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag for this ETF.

Pros

• The ETF has a high income rating grade of "A."

• The total returns over one, three, and five years are positive.

Cons

• The share-price return (the actual price of the ETF) has been negative for both the year-to-date and one-year periods.

Beginner takeaway

For new investors, the main lesson here is to distinguish between price and total return. While the share price of HYEM has declined slightly over the last year, the total return remained positive because of the cash distributions paid out to investors. Always look at the total return to understand the full performance of an income-focused ETF.