Is my ETF’s yield too good to be true?

Link: Is my ETF’s yield too good to be true?

Quote1: ““If FIE’s net income and net realized capital gains in a year are insufficient to fund the regular distributions [of 4 cents a month or 48 cents annually], the balance of the regular distributions will constitute a return of capital to unitholders.”

Quote2: “Skill-testing question: How do you suppose all of those hefty ROC distributions have affected FIE’s unit price over the years? Well, on the fund’s inception date of April 16, 2010, FIE closed at $7.10. On Friday – 6 1/2 years later – the units closed at $6.65. So, an investor who held the units since the beginning would have collected the monthly distribution but taken a loss on the unit price.”

Quote3: “The lesson here is that ROC is not a free lunch. In exchange for getting a higher yield now, investors sacrifice some – or all – unit price appreciation over the long run. This isn’t necessarily a bad thing; some retirees, for example, might need the cash flow now and don’t mind dipping into their investment capital to get it. For these people, mutual funds or ETFs that pay a fixed monthly distribution that includes ROC can be an acceptable solution.The problem is that many investors don’t take the time to understand where their distributions are coming from. If you own a fund whose yield seems too good to be true, chances are you are paying for that yield out of your own capital without even realizing it.”