Understanding the Invesco Electric Vehicle Metals Commodity Strategy No K-1 ETF (EVMT)

What this ETF is trying to do

The Invesco Electric Vehicle Metals Commodity Strategy No K-1 ETF (ticker: EVMT) is an exchange-traded fund listed on the NASDAQ. Based on its name, it focuses on commodities related to electric vehicles. According to the most recent data, its largest holding is the Invesco Premier US Government Money Inst, which makes up 79.42% of the 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 only tracks how much the share price changes. Total return includes both the price change and any cash distributions (dividends) paid out.

Here is what the data shows for EVMT:

• Year-to-Date (YTD): The YTD price return is approximately 5.80%. The YTD total return is also approximately 5.80%.

• One Year: The one-year price return was approximately 12.43%. However, the one-year total return was higher, at approximately 26.31%. This shows that distributions added to the overall value.

• Three Years: The three-year price return was approximately -6.28%. Despite the share price falling over this period, the three-year total return was approximately 15.20%.

To visualize the price change, an investor who held shares a year ago would have seen the estimated price move from approximately $15.96 to the current price of $17.94.

Income and distribution explanation

EVMT has a distribution yield of approximately 11.15%. This means the fund pays out a significant amount of cash relative to its price. The trailing distributions were approximately $2.00 per share.

It is important to note that the distribution frequency is "irregular" or "less frequent," with only one payout recorded in the last 12 months. While a high yield can provide cash income, it is not the same as total return.

NAV erosion explanation

"NAV erosion" refers to a situation where the value of the underlying assets in the fund decreases significantly over time. StockValueFinder uses an "erosion score" to measure this risk. For EVMT, the erosion score is 100, and the label states "No price erosion detected." The erosion severity is rated as "good," and there is no severe erosion-risk flag.

Pros

• Higher Total Returns: In the one-year and three-year periods, the total return was higher than the price return, meaning distributions helped boost overall performance.

• No Erosion Warning: The fund does not currently show signs of significant price erosion according to the provided risk scores.

Cons

• Price Volatility: The three-year price return was negative (-6.28%), meaning the share price itself decreased over that timeframe even though total returns were positive.

• Irregular Income: The distributions are not paid out on a regular, predictable schedule.

Beginner takeaway

When looking at EVMT, remember that the share price and the total return tell different stories. While the share price may go up or down, the total return accounts for the cash paid out to investors. High distribution yields can be attractive for income, but they do not guarantee that the share price will stay stable.