Understanding the FIRST TRUST SMALL CAP BUYWRITE INCOME ETF (FTKI)

What this ETF is trying to do

The FTKI is an Exchange Traded Fund (ETF). This type of investment holds a group of different stocks. Based on its name, this specific fund focuses on "small cap" companies. Small cap usually means smaller companies rather than giant ones. It also uses a strategy called "buywrite," which is a way to try and generate extra money for the fund.

What the numbers show

As of July 16, 2026, the current price of one share is $20.0258. Looking back at the past year, the price has grown. One year ago, the estimated price was about $18.6481. This means the price itself went up by 7.3879% over the last year.

When you look at "total return," which includes both price changes and the money paid out to investors, the number is even higher. The one-year total return was 20.8486%. This year so far (YTD), the total return has been 12.5287%.

Income and distribution explanation

Some people invest in ETFs specifically to get regular payments, which are called distributions. FTKI has a distribution yield of 11.3104%. This means the amount of money paid out relative to the share price is quite high.

The fund usually pays these amounts monthly. Over the last 12 months, there were 12 payouts. Most of these payments have happened on Thursdays. It is important to remember that a high yield alone can be misleading. A high percentage doesn't always mean the investment is "better"; it just tells you how much cash is being sent out.

NAV erosion explanation

"NAV erosion" is a term used when the value of the fund's underlying assets keeps dropping over time. Think of it like a leaking bucket. If an ETF pays out more money than it earns, the share price might start to fall lower and lower. This can destroy your "principal," which is the original money you put in.

However, for FTKI, no price erosion was detected. The erosion score is listed as "good," meaning the price has not been collapsing.

Pros

• The fund has shown a strong total return of over 20% in the last year.

• It provides regular monthly income.

• The share price has been growing rather than shrinking.

Cons

• The yield is very high, which can sometimes hide risks.

• Small cap stocks can be more volatile (change price quickly) than large companies.

Beginner takeaway

Income investors usually prefer ETFs that go sideways (stay at the same price) or move slightly up. They do this because they want to keep their original investment safe while collecting the cash payments. If an ETF's price collapses, it can wipe out the gains made from the income. For FTKI, the data shows the price has been rising along with the payments.