ETF Education Report: DEMOCRATIC LARGE CAP CORE ETF (DEMZ)

What this ETF is trying to do

The DEMOCRATIC LARGE CAP CORE ETF (ticker: DEMZ) is an exchange-traded fund that holds a variety of large companies. Based on its top holdings, it includes major names like Microsoft Corp, NVIDIA Corp, and Apple Inc. This list is a partial look at its holdings, meaning there are other companies in the fund as well.

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. For DEMZ, the one-year price return was approximately 16.35%. The three-year price return was approximately 85.88%.

• Total Return: This includes the share price change plus any cash distributions (dividends) paid out. The one-year total return was approximately 17.48%, and the three-year total return was approximately 90.37%.

To give you an idea of the price movement, the estimated price from roughly one year ago was $42.54. The current price is $49.50.

Income and distribution explanation

Some investors look for "income," which is cash paid out by the ETF. DEMZ has a distribution yield of approximately 0.84%. This means the cash distributed is about 0.84% of the ETF's price. The trailing distributions were approximately $0.42.

It is important to note that the distribution frequency for this ETF is described as "irregular" or "less frequent," with one payout recorded in the last 12 months.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases significantly. Some ETFs show signs of this, but DEMZ does not have a severe erosion-risk flag. In fact, the erosion score is 100, and the label indicates "No price erosion detected." This means the current data does not show signs of the price deteriorating in a way that suggests erosion.

Pros

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

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

Cons

• The distribution frequency is irregular, meaning you may not receive cash payments on a steady schedule.

• The distribution yield is relatively low at 0.84%.

Beginner takeaway

When studying DEMZ, notice the difference between its price return and its total return. The total return is higher because it accounts for the cash distributions paid to investors. While this ETF provides some income, its main growth has come from the increase in share price. Always remember that past performance does not guarantee what will happen in the future.