The distributions keep arriving. The quarterly statements show income. Meanwhile, NAV declines quietly erode the principal that generates that income. By the time it's visible, the damage compounds. This guide teaches you to detect erosion before it becomes a crisis — using the same forensics methodology used to rank 20 ETFs by NAV stability.
Monthly distributions create the impression of a working portfolio. A 3-year NAV chart tells a different story. Most retirees check one and not the other.
When a fund distributes more than it earns, the excess comes from your own principal. It reduces your cost basis and eventually reduces the distributions themselves.
Six of the ten most popular high-yield retirement ETFs showed negative total return over 3 years. The yields were real. The total return was not.
Chapters marked Most Relevant are specifically applicable to your situation.
Why NAV declines while distributions are paid, and when it's acceptable vs. destructive.
Coverage ratios, earnings vs. distributions, the compounding destruction formula.
How to tell the difference on your 1099-DIV and why it matters.
How to read coverage ratios and what thresholds trigger concern.
From most stable to most erosive: the definitive ranking with 3-year data.
One real ETF's journey from $25 NAV to $11 over 36 months.
At what coverage ratio and NAV decline rate does a fund become uninvestable.
How to generate 8%+ yield with provably stable NAV across market cycles.
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6 of the 10 most popular high-yield retirement ETFs showed negative total return over 3 years despite advertising 10-15% yields.
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