USA is a closed-end fund that sometimes distributes return of capital, with 40% in 2022 and none in 2023.
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How to Avoid NAV Erosion
Armchair IncomeMay 3, 2026
The creator explains Net Asset Value (NAV) erosion, distinguishing between market-driven losses and fund-specific issues. They use Exxon Mobil (XOM) as an example of a passive fund affected by sector-specific market downturns, and Nvidia (NVDA) via an ETF (NVDY) as an example where the fund's structure (covered call) leads to underperformance compared to holding the underlying stock directly, despite high distributions.
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Nvidia's stock performance is the key driver for the NVDY ETF, which underperformed NVDA directly due to its income-focused strategy.
Exxon Mobil was a major holding in a passive fund that experienced NAV erosion due to market conditions, not fund management.
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