Liberty All-Star Equity Fund (USA)

The Liberty All-Star Equity Fund (USA) is an ETF designed to provide investors with a combination of share-price movement and regular income. It is currently characterized by a high distribution yield of approximately 11.41%, though its share price has seen some recent declines.

What the Numbers Show

The current price of USA is $5.87. To understand how the fund has performed, we look at two different types of returns: price return (the change in the share price) and total return (which includes the cash distributions paid to investors).

• Year-to-Date (YTD): The price return is -6.53%, but the total return is 1.60%.

• One Year: The price return is -7.85%, while the total return is 2.97%.

• Three Year: The price return is -2.00%, but the total return is 34.10%.

An estimated price from roughly one year ago was $6.37. These numbers show that while the share price has generally fallen over the short and medium term, the total return has remained positive because of the cash distributions.

Income and Distribution Explanation

USA pays distributions usually every quarter. Over the last 12 months, it has made 4 payments totaling $0.67 per share. This results in a distribution yield of 11.41%.

It is important for beginners to remember that a high distribution yield alone can be misleading. A high yield does not guarantee that the investor is making a profit, as the share price can still go down while the fund pays out cash.

Price and NAV Erosion Explanation

The supplied data is sufficient to evaluate price erosion, but it does not include enough historical NAV-per-share data to confirm or rule out NAV erosion.

Regarding price-based evidence, the fund has an erosion-risk score of 75, which is labeled as "mild price erosion." This means there has been some deterioration in the share price, but the "severe erosion-risk flag" is currently false.

Pros

• High Income: The fund offers a significant distribution yield of 11.41%.

• Positive Long-Term Total Return: Despite price drops, the three-year total return is 34.10%.

• Income Rating: It has an income rating grade of "B" with a score of 81.

Cons

• Falling Share Price: The price return has been negative over the YTD, one-year, and three-year periods.

• Price Erosion: The fund shows signs of mild price erosion.

Beginner Takeaway

The Liberty All-Star Equity Fund (USA) is a fund where the cash payments (distributions) are a major part of the overall return. While the share price has declined recently, the total return has stayed positive. Investors in high-yield funds generally watch for "principal stability," meaning they want to ensure the share price doesn't drop faster than the distributions can make up for it.