ETF Education Report: Global X Alternative Income ETF (ALTY)

What this ETF is trying to do

The Global X Alternative Income ETF (ALTY) is an exchange-traded fund designed to provide income. It holds a variety of different investments, such as bonds and real estate funds. Based on the data, its top holdings include the Global X Emerging Markets Bond ETF and the Global X SuperDividend® REIT ETF. Because it holds many different things, it is considered a diversified fund.

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 only measures how much the share price itself has changed.

• Total Return: This includes both the change in share price *and* the money paid out through distributions.

For ALTY, the numbers show a difference between these two:

• Year-to-Date (YTD): The price return is approximately 1.17%, while the total return is higher at approximately 6.49%.

• One Year: The price return was approximately 2.16%, while the total return was approximately 10.29%.

• Three Years: The price return was approximately 11.14%, while the total return was much higher at approximately 40.22%.

An estimated price from roughly one year ago was $11.81. The current price is $12.07.

Income and distribution explanation

This ETF focuses on paying out cash to investors. The distribution yield is approximately 7.73%. This means the amount of cash paid out is high relative to the ETF's price. These payments usually happen monthly, and over the last 12 months, there were 12 payouts.

It is important to remember that a high distribution yield does not mean you have earned that same amount in total return. You must look at the total return to see how the investment performed overall.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases over time. Some investors worry about this because if the value of the fund drops too much, it can be hard to get your original investment back.

For ALTY, the erosion-risk score is 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag present. This suggests the fund's value has been relatively steady rather than rapidly declining.

Pros

• The fund provides a high distribution yield.

• The total returns over one, three, and five years have been positive.

• The erosion-risk measurements suggest the fund is currently stable.

Cons

• The price return (the change in share price) is lower than the total return, meaning much of the profit comes from the cash distributions.

• High-yield investments can sometimes be more complex than simple stock funds.

Beginner takeaway

ALTY is an ETF that focuses on providing regular cash payments (distributions). While the share price itself has grown slowly, the total return—which includes those cash payments—has been significantly higher. Always remember that a high yield is just one part of the story; you should also look at how the share price behaves and the total return to understand the full picture.