NAV Erosion Leaderboard
Which high-yield ETFs are burning through principal? See burn rates, ratings, and sustainability scores for every major income fund.
What You’ll Learn
- NAV erosion rankings and burn-rate status for high-yield ETFs.
- How to spot yield traps vs sustainable income.
- Which funds are toxic, at risk, healthy, or star performers.
Institutional Research Brief
DivAgent defines Burn Rate as the difference between a fund's Stated Yield and its actual Total Return. A positive burn rate indicates NAV erosion. We categorize funds into four risk states: Toxic (Burn > 20%), At Risk (5-20%), Healthy (-3% to 5%), and Star (Burn < -3%).
Toxic
Burn > 20%
At Risk
Burn 5-20%
Healthy
Burn -3% to 5%
Star
Burn < -3%
Understanding Burn Rate
Burn Rate = Stated Yield - Total Return
A positive burn rate means the fund is paying out more than it earns. The difference comes from NAV erosion - essentially returning your own principal disguised as income.
- Toxic (Burn > 20%): Unsustainable. You're losing principal rapidly.
- At Risk (5-20%): Concerning. Monitor closely and consider reducing exposure.
- Healthy (-3% to 5%): Sustainable. Income roughly matches earnings.
- Star (< -3%): Growing NAV. Income is exceeded by capital appreciation.
Why This Matters for Your Portfolio
A 50% yield with 40% burn rate gives you only 10% effective yield - and you're depleting principal. A 10% yield with -2% burn rate (NAV growing) gives you 12% total return with growing principal. The second option is almost always better for long-term investors.
Related Glossary Terms: