ETF Education Report: GLOBAL X DOW 30 COVERED CALL & GROWTH ETF (DYLG)

What this ETF is trying to do

The GLOBAL X DOW 30 COVERED CALL & GROWTH ETF (ticker: DYLG) is an exchange-traded fund. Based on its name and holdings, it focuses on companies within the Dow Jones Industrial Average. It aims to provide a mix of growth and income through its investment strategy.

What the numbers show

It is important to understand the difference between price return and total return. Price return only tracks how much the share price changes. Total return includes both the share-price change and any cash distributions paid out.

• One-Year Performance: The one-year price return was approximately 7.88%. However, the one-year total return was higher, at approximately 18.57%.

• Year-to-Date (YTD): The YTD price return is approximately 7.99%, while the YTD total return is approximately 10.85%.

• Three-Year Performance: Over three years, the price return was approximately 14.10%, and the total return was approximately 52.04%.

To see how the share price changed, we can look at the estimated price from roughly one year ago, which was $26.64. The current price is $28.73. If you had invested $10,000 into the shares one year ago, your investment would have grown to approximately $10,788 based on the share-price change alone (before adding any distributions).

Income and distribution explanation

This ETF provides cash distributions, which are often paid out monthly. Over the last 12 months, there were 13 distributions. The distribution yield is approximately 8.97%. This number describes the cash payments relative to the ETF's price. While a high yield provides cash income, it does not guarantee that your original investment will stay the same value.

NAV erosion explanation

"NAV erosion" refers to a situation where the value of the underlying assets in the fund decreases significantly over time. When an ETF's share price falls heavily, it can destroy the principal (the original money put in).

For this ETF, the erosion-risk score is 100, and the label indicates "No price erosion detected." There is no severe erosion-risk flag for this fund. This means that, based on the provided measurements, the fund's price movement has not shown signs of the type of deterioration associated with high erosion risk.

Top Holdings

The following are the Top Holdings in this portfolio (note: this list is partial):

• THE GOLDMAN SACHS GROUP INC (11.55%)

• CATERPILLAR INC (9.33%)

• MICROSOFT CORP (5.48%)

• UNITEDHEALTH GROUP INC (4.67%)

• AMGEN INC (4.26%)

• ALPHABET INC CLASS A (4.20%)

• THE TRAVELERS COMPANIES INC (4.20%)

• VISA INC CLASS A (4.11%)

• SHERWIN-WILLIAMS CO (3.98%)

• JPMORGAN CHASE & CO (3.96%)

*Holdings can change over time.*

Pros

• The total return has been higher than the price return, meaning distributions have added value to the overall return.

• The erosion-risk measurements currently appear healthy.

Cons

• High distribution yields can sometimes be misleading if the share price is falling (though that is not the case here).

• Investors must remember that distributions are cash payments and do not guarantee the preservation of the original investment amount.

Beginner takeaway

When looking at ETFs like DYLG, always look at both the price return and the total return. The total return gives a more complete picture because it includes the cash you receive from distributions. While high yields can provide regular income, investors should monitor whether the share price is staying stable or falling, as a collapsing share price can offset the benefits of the income received.