ETF Education Report: Direxion Daily CSCO Bear 1X ETF (CSCS)

What this ETF is trying to do

The CSCS ETF is an "inverse" fund. This means it is designed to move in the opposite direction of a specific stock. While most investors want stocks to go up, an inverse ETF is built to gain value when the underlying stock goes down.

What the numbers show

The current price of CSCS is $13.42. Looking at the past year, the numbers show a significant share-price decline.

• Price Return: This measures only the change in the share price. The one-year price return was approximately -45.74%. The year-to-date (YTD) price return was approximately -38.31%.

• Total Return: This measures the share-price change plus any distributions (cash payments) received. The one-year total return was approximately -44.13%, and the YTD total return was approximately -36.90%.

To visualize this, if you had used an estimated price of $24.73 one year ago, the share price has dropped significantly to its current level of $13.42.

Income and distribution explanation

This ETF has a distribution yield of approximately 3.69%. This represents the cash distributions paid out relative to the ETF's price. Over the last 12 months, there were 4 distributions, which usually happen every quarter. It is important to remember that a distribution yield is not the same as total return. A high yield does not mean an investor has earned that percentage in overall profit, especially if the share price is falling.

NAV erosion explanation

This ETF has a severe erosion-risk flag. This means that StockValueFinder's screening rules detected substantial price deterioration. The fund has an erosion score of 10, which is labeled as "Severe price erosion."

"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the assets held by the fund). While a falling market price is a "share-price decline," a severe erosion score is a measurement used to flag high risk regarding the stability of the fund's value.

Pros

• The ETF provides a distribution yield, which offers periodic cash payments to investors.

Cons

• The ETF has experienced a large share-price decline over the last year.

• There is a severe erosion-risk flag and a high erosion-risk score.

• The total return is negative for both the year-to-date and one-year periods.

Beginner takeaway

When looking at ETFs, it is important to look at both the price return and the total return. A fund might pay out cash (distribution yield), but if the share price is dropping quickly, the total return can still be negative. Always be aware of erosion-risk flags, as they indicate significant price deterioration.