ETF Education Report: ABSOLUTE SELECT ETF (ABEQ)

What this ETF is trying to do

The ABSOLUTE SELECT ETF (ABEQ) is an exchange-traded fund listed on the NYSE. It holds a variety of different investments. Based on its top holdings, it includes companies like Berkshire Hathaway Inc Class B and various other stocks and securities.

What the numbers show

When looking at an ETF, it is important to understand two different types of returns: price return and total return.

• Price Return: This measures only how much the share price has changed.

• Total Return: This includes both the change in share price *and* any cash distributions (dividends) paid out.

For ABEQ, the numbers show:

• Year-to-Date (YTD): The price return is approximately 5.50%, while the total return is approximately 6.13%.

• One Year: The price return was approximately 6.90%, and the total return was approximately 8.21%.

• Three Year: The price return was approximately 38.73%, and the total return was approximately 45.21%.

To give you an idea of price movement, the estimated price from roughly one year ago was $35.38. The current price is $37.82.

Income and distribution explanation

Some investors look for "income," which is cash paid out by the ETF. ABEQ has a distribution yield of approximately 1.19%. This means the cash distributions are about 1.19% of the ETF's price. Over the last 12 months, there were two payouts. The frequency of these payments is described as irregular or less frequent.

NAV erosion explanation

"NAV erosion" refers to a situation where the value of the underlying assets in the fund decreases significantly over time. It is important to note that a falling share price does not always mean NAV erosion is happening. For this ETF, the erosion-risk score is 100, and the label states "No price erosion detected." There is no severe erosion-risk flag for this fund.

Pros

• The ETF has shown positive price returns and total returns over the one-year and three-year periods.

• The erosion-risk measurement is rated as "good."

Cons

• The distribution frequency is irregular, meaning payments do not happen on a set schedule.

• The distribution yield is relatively low at approximately 1.19%.

Beginner takeaway

When studying ABEQ, notice that the total return is higher than the price return. This happens because the total return accounts for the extra cash paid out through distributions. Always remember that a high distribution yield can sometimes hide a falling share price, but in this specific case, the data shows both price and total returns have been positive.

***

*Disclaimer: This report is for educational purposes only. It does not provide financial advice. I am not recommending whether you should buy, sell, or hold this ETF.*