ETF Education Report: Templeton Emerging Markets Income Fund Inc (TEI)

What this ETF is trying to do

Templeton Emerging Markets Income Fund Inc (TEI) is an Exchange Traded Fund (ETF) traded on the NYSE. While the specific investment strategy is not detailed in the data, the name suggests it focuses on providing income from emerging markets.

What the numbers show

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

Here is what the data shows for TEI:

• Year-to-Date (YTD): The price return is approximately -2.33%, but the total return is 4.62%.

• One Year: The price return was approximately 2.77%, while the total return was much higher at approximately 17.95%.

• Three Years: The price return was approximately 34.90%, and the total return was approximately 90.83%.

To visualize the price change, we can look at an estimate from roughly one year ago. The estimated price was $6.13, and the current price is $6.30.

Income and distribution explanation

This ETF has a high distribution yield of approximately 14.20%. This means the fund pays out a significant amount of cash relative to its share price. These distributions usually happen monthly, with Friday being the most common day for payments. Over the last 12 months, there were 12 payouts.

It is important to remember that a high distribution yield does not mean an investor earned that same percentage as total return. You must look at the "total return" figure to see how the investment performed overall 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. Investors often look for stability in their principal (the original money they put in).

For TEI, the erosion-risk score is 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag present.

Pros

• The fund shows a high total return over one, three, and five-year periods.

• It provides regular monthly income.

• The erosion-risk measurements suggest the fund is currently stable.

Cons

• The year-to-date price return is negative, meaning the share price has dropped recently.

• The fund's top holdings are not listed in the current data.

Beginner takeaway

When looking at ETFs like TEI, always distinguish between the share price and the total return. A falling share price can be offset by high distributions, which is why the total return might still be positive even if the price return is negative. High yields can be helpful for income, but they do not guarantee that the share price will stay the same.