Everything on this site, explained
Every measure, rule and tool, in plain words. Type to search: the list filters as you write.
Income and yield
TTM yield (distribution yield)
The distributions paid over the last twelve months divided by today's price. It looks backwards: if a fund cut its payout last month, the TTM yield still shows the old, higher figure for a while. For funds younger than a year the site annualises what they have paid so far and says so.
Distribution growth
How much the distribution itself has grown, measured on the amount per share rather than on the yield. A yield can rise simply because the price fell; a growing distribution cannot fake that.
Ex-date and payment date
The ex-date is the day the fund's price drops by the distribution and the payment is locked in; the payment date is when the cash reaches your account, usually a week or two later. Our simulations buy and sell on month-end prices and count a distribution from its ex-date.
Erosion and quality
Erosion
An option-income fund can pay a very high yield simply by returning your own capital. If the price keeps falling while the distributions flow, part of that income is your own capital coming back, minus tax.
Minimum reinvestment (stability)
The share of distributions that would have had to be reinvested to keep the price at its launch value. 0% means no erosion at all; 100% means every cent of income was needed just to stand still. It is the single most reliable signal we have found.
Quality Score
A 0-100 score comparing funds of the same type: 35% stability, 25% distribution growth, 20% yield (ignored when the fund is eroding; for bond funds, reduced in proportion to the erosion instead), 20% total return since launch. It is relative — a score of 70 means 'better than most of its peers', not 'good in absolute terms'.
Opportunity Score
Healthy and discounted. Stability earns up to 35 points; the discount from the 52-week high, the recovery potential and the RSI earn up to 55, but only in proportion to stability; market fear from the VIX adds up to 10. Bond funds are excluded because their prices move with interest rates.
Erosion gap
A covered-call fund's total return since launch minus that of the asset it writes options on. Giving up some upside is by design; a gap worse than 10 points means the income is costing more than it should.
Recovery factor
How much the price would have to rise to get back to its launch value. A fund down 40% needs +67% to recover, not +40%: that asymmetry is why erosion matters more than a single bad year.
Strategies
How the model portfolios work
A stable core of dividend and index ETFs, plus a satellite of covered-call funds reviewed at each month-end. Every purchase, sale and distribution is simulated on historical prices, in euro, with taxes and commissions applied if you set them.
The yield floor
Only funds paying at least 40% a year can enter the satellite, and a fund already held stays until its yield falls below 32%. If fewer funds meet the minimum than there are places, the places stay empty: no fund below the minimum is ever bought.
Anti-rotation rules
A fund is sold only when it drops below position 8 in the ranking (15 for Income Target 10), and never within three months of buying it. Fewer trades, less selling into weakness.
Pay out 100%, Pay out 50%, Reinvest 100%
Three versions of every strategy, same rules, different use of the income. Pay out 100% hands you every distribution and never buys back: the most cash today, a capital that erodes where the funds erode. Pay out 50% pays half and reinvests the other half, the site's default and the balance most income investors live with. Reinvest 100% buys shares with everything, like an accumulating fund: no cash, the most compounding. The return is almost the same in the three views; what differs is the split between what you keep and what stays invested.
Monthly income on €10,000 invested
The figure at the top of every strategy page. It is the income the portfolio generated over the last twelve months, as a monthly average, for every €10,000 of capital invested — before or after tax according to the switch. The line underneath says where that income went: paid to you, reinvested, or both. With "Pay out 100%" all of it is paid out but the capital is not replenished; with "Reinvest 100%" nothing is paid out and the capital grows. Below it, the same figure since the start of the strategy: the average month and the total, which is the honest answer to "how much has it given me over time". For strategies that add funds as they are launched (All IncomeShares, Core Seven) the base is the average capital actually invested during the period, so money that entered three months ago does not count as if it had been there all year.
Per €10k held vs per €10k invested
Two ways of saying how much a portfolio pays, and they differ because a portfolio is rarely worth exactly what was put in. "Per €10k held" divides the income by the portfolio's value — it is a yield, the measure used on the strategy cards, in the comparison and in our videos, because it lets portfolios of different sizes and ages be compared. "Per €10k invested" divides the same income by the capital put in — it is what an investor actually experiences. A portfolio that has grown shows a higher "invested" figure than "held"; one that has shrunk shows the opposite. Same euros of income, two denominators.
Distribution yield of the funds held
The second tile on a strategy page. It is not the portfolio's income: it is what the funds in portfolio right now pay, each one's distributions of the last twelve months divided by its price at the last month-end, weighted by how much of it the portfolio holds. It answers "what do the funds I hold today yield?" and moves when the satellite rotates into higher- or lower-yielding funds. It differs from the income tile because the portfolio held other funds during the year and bought them at other prices.
Why the performance chart barely moves between Pay out 100%, 50% and Reinvest 100%
The performance chart and the return figures are total return: a distribution counts as return the moment the fund pays it, whether you pocket it or buy more shares with it. So the three payout views draw almost the same line — the strategy earns the same, you only decide where the money goes. The small differences you do see come from compounding: reinvested income buys shares that pay further income. What changes a lot between the views is the chart "Portfolio value over time": with Pay out 100% the value of the shares falls while the income received piles up, with Reinvest 100% the shares grow and nothing is received. Taxes, on the other hand, move every chart, because they take money out of the system.
Why the satellite rotates
Each strategy page shows the ranking the strategy saw at the last month-end and the reason for every entry and exit: dropped out of the top 8, yield fell below the floor, or kept because it was bought less than three months ago.
The satellite's breaking point
Our own tests show the trade-off is not linear. Going from no satellite to 20% costs about half a point of yearly return and triples the income. Going to 68% costs nine points. Between 20% and 40% the arithmetic turns against you.
What did not work
Three failures worth knowing: selecting inside IncomeShares did worse than holding all of it once tax is counted; ranking by income per unit of risk filled the portfolio with the most speculative names; and a defensive portfolio built from calmer dividend funds still fell more than the market in 2020.
Risk measures
Time-weighted return (TWR)
The return of the strategy itself, stripped of the effect of when capital went in. It lets you compare strategies that invested different amounts at different times.
Max drawdown
The largest fall from a previous peak, measured on month-end values. It answers: what was the worst stretch to sit through?
Volatility
How much monthly returns swing around their average, expressed per year. High volatility is not the same as loss, but it is what makes people sell at the wrong moment.
Sharpe and Sortino
Return divided by risk. Sharpe counts all the swings; Sortino counts only the downward ones, ignoring the volatility that worked in your favour. We use a risk-free rate of 0%, so the numbers are for comparing strategies with each other.
Calmar ratio
Yearly return divided by the worst fall: how much return for the worst pain endured.
Beta and correlation
How strongly a strategy moves with the S&P 500. Beta below 1 means it moves less; correlation near 1 means it moves at the same times.
Yield on cost
The income of the last twelve months against what you actually paid, not against today's value. A fund bought at 10 that now pays 1.20 a year yields 12% on your cost, whatever the price does.
Income growth
How fast the income itself has grown each year. It is the measure that matters if you plan to live on the distributions: income growing above inflation keeps its purchasing power.
Income growth, and what it really measures
The income growth shown for a portfolio is the growth of the cash it pays, comparing the first full year with the last. It moves for three reasons at once: the funds raising their distributions, you owning more shares because income was reinvested or new money was added, and funds entering or leaving in the strategies that rotate. With reinvestment switched on, most of it usually comes from owning more shares. To see the part that belongs to the funds themselves, run the same simulation with "Pay out all income": the share count stays still and what is left is the growth of the distributions.
Income growth versus a fund's dividend CAGR
They answer different questions. A fund's dividend CAGR, on its own page, is the growth of the distribution per share: the quality of the fund, whatever you invested. The income growth of a portfolio is the growth of the cash you receive, which also depends on how many shares you hold. Good dividend funds have grown their distribution between 3% and 7% a year on our data; a portfolio that reinvests can show far more than that without a single fund having raised anything.
Yield against yield on cost: what the ratio really says
The two figures share the same numerator — the income of the last twelve months — and differ only in what they divide it by: today's value, or the money you put in. Their ratio is therefore just the value of the portfolio against the capital invested, written the long way round. A yield on cost below the yield means the value has fallen below what was paid in, which sounds alarming and often is not: with the income paid out, the value falls by construction, because that money is in your bank account rather than in the portfolio. To judge whether a strategy holds up, read the coverage in the Sustainable Income screener, and the growth of the distributions next to the price. Those answer the question directly; the ratio only tells you where the capital sits.
Taxes and costs
How the tax profile works
By default everything is shown before tax, so the figures work for any European investor. Set your country under Taxes and the site recalculates strategies, the simulator and the projections with your rates. Nothing leaves your browser: the profile is a cookie on your device.
What the preset rates are
The top statutory rates on shares for individuals, from Tax Foundation Europe. Many investors pay less, and several countries tax funds under their own rules — Germany, Ireland, the Netherlands and Belgium in particular, where a warning appears.
Commission per trade
The fee your broker charges for one buy or one sell. It is applied to every trade, so a strategy that rotates often pays it more times.
Stamp duty and allowances
Some countries tax the value of the portfolio every year (Italy's 0.2%), others exempt a slice of income or gains. Both are in the profile and both are applied month by month.
Offsetting realised losses
In Italy the income and gains of certificates and ETNs (ETP, ETC) are redditi diversi: a loss you realise can be set against them for the current year and the four that follow. Harmonised ETFs cannot do it, because their income is redditi di capitale. The practice is to sell what is at a loss and buy it straight back, paying two commissions to bank the loss. Switch it on under Taxes and every net figure is recalculated.
Why distributions are taxed more heavily than sales
On a distribution you pay tax on the whole amount. On a sale you pay only on the gain, which after a few years is roughly half the value, so the effective cost is about half. It is the main reason an income portfolio struggles to beat an accumulating index after tax.
Government bonds at a lower rate
Italy taxes white-list government bonds at 12.5% instead of 26%. We know the government share of part of our bond universe; where we do not, the ordinary rate is applied, which errs against you rather than in your favour.
Tools
Portfolio Simulator
Pick funds and amounts and see how that portfolio would have behaved: income paid month by month, value over time, expected income from now on. The portfolio lives in the page address, so you can save or share it by copying the link.
FIRE projection
How many years until the income covers your expenses. The headline date uses a constant return; the scenario cards and the band draw months at random from the strategy's own history, 600 paths, so you can see how much the order of good and bad months matters.
Screeners
No Erosion lists funds paying without eating capital. Opportunity Score finds healthy funds trading at a discount. Momentum Recovery looks at the underlying asset, not the fund, to see whether it is gaining strength.
Data and method
Where the data comes from
Prices and distributions from the issuers and market data, stored locally and updated every evening. Fund reference data is completed with the EU ETF Universe dataset by Danimoth, used under the CC BY 4.0 licence.
Point-in-time rule
Every backtest decision uses only the data that existed on that date: no score, price or yield from the future ever enters a past decision.
Known limitations
The fund universe only contains products that exist today, so funds that closed are missing and results look better than reality. Many of these funds have short histories, all of them in a mostly rising market. Trades are assumed to happen at month-end prices with no spread or market impact.
Currencies
Amounts are converted to euro at the daily exchange rate. On a fund page you can switch between euro and the fund's trading currency; the distributions stay in the currency the issuer declares them in.
Benchmarks
Every strategy is shown against two references: global equity, which is what most European investors actually hold, and the S&P 500, which is the harder test. A 60/40 portfolio returned about 7.5% a year net over the same period, for context.
Why results change when we improve the method
Scores and rules are refined as we learn, and when that happens past results change too, because the backtest is recomputed from scratch. We say so rather than quietly restating history.
Nothing matches that word. Try a shorter one, like "yield" or "tax".
Still unclear?
Every page of the site carries its own explanation at the bottom, and the detailed metrics on a strategy page have a question mark next to each number. If something here is wrong or badly explained, tell us: an explanation nobody understands is a bug.