What this ETF is trying to do

ETHI, the Defiance Leveraged Long Income Ethereum ETF, is a fund designed for investors interested in cryptocurrency-related income. It is a leveraged fund, which means it uses borrowed money or other tools to increase its exposure. It also uses option income strategies to try to generate cash for investors.

What the numbers show

The current price of one share is $5.30. An estimated price from roughly one year ago was $18.68. This shows that the share price has dropped significantly over the last 12 months.

When looking at performance, it is important to look at two different numbers:

• One-year price return: The change in the share price alone was -71.63%.

• One-year total return: This includes both the price change and the cash distributions. This figure was -62.71%.

So far this year (YTD), the price return is -13.70%, while the total return is -10.02%.

Income and distribution explanation

This ETF has a very high distribution yield of 49.34%. This means the fund pays out a large amount of cash relative to its share price. These payments are usually made monthly, and there were 16 distributions in the last 12 months.

However, beginners should know that a high distribution yield can be misleading. A high yield does not mean you earned that percentage as your total return. You must look at the total return to see how much your actual investment value changed.

NAV erosion explanation

The supplied data is sufficient to evaluate price erosion, but it does not include enough historical NAV-per-share data to confirm or rule out NAV erosion.

Based on the available information, the fund has an erosion-risk score of 10, which is labeled as "Severe price erosion." Because of this high score and the recent price trends, a severe erosion-risk flag has been triggered. This is a measurement used to show that the share price has been dropping significantly.

Pros

• High Distribution Yield: The fund offers a very high percentage of cash distributions.

• Frequent Payouts: The fund typically pays out income on a monthly basis.

Cons

• Significant Price Decline: The share price has fallen by more than 70% over the last year.

• Erosion Risk: The fund has a severe erosion-risk flag and a high erosion-risk score.

• Complexity: This is a leveraged, crypto-related fund, which can be more volatile.

Top Holdings

The fund's holdings can change over time. As of the most recent update, the top holding is:

• FIRST AMERICAN GOVERNMENT OBLIGS X (1.50%)

Beginner takeaway

When researching ETFs like ETHI, it is important to look past the high distribution yield. While receiving regular cash payments can be attractive, you must also check if the share price is falling. If the share price drops faster than the cash you receive, your total investment value will still go down.