Understanding the Nicholas Fixed Income Alternative ETF (FIAX)

What this ETF is trying to do

The Nicholas Fixed Income Alternative ETF (ticker: FIAX) is an exchange-traded fund listed on the NYSE. While the specific investment strategy is not detailed in the provided data, it is categorized as a fixed income alternative ETF.

What the numbers show

When looking at an ETF, it is important to understand the difference between "price return" and "total return."

• Price Return: This measures only the change in the share price.

• Total Return: This includes both the share price changes and the cash distributions (dividends) paid out to investors.

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

• Year-to-Date (YTD): The price return is approximately -5.34%, but the total return is +0.54%.

• One Year: The price return is approximately -5.60%, while the total return is +2.29%.

• Three Years: The price return is approximately -13.79%, while the total return is +9.24%.

To visualize the price change, we can look at an estimated price from roughly one year ago, which was $18.02. The current price is $17.01. This shows that while the share price has gone down, the total return (which includes distributions) has remained positive over the one-year and three-year periods.

Income and distribution explanation

This ETF provides regular cash payments to investors. The distribution yield is approximately 8.36%. This means the amount of cash paid out is high relative to the current share price. These distributions usually happen monthly, with 12 payments recorded over the last year.

It is important to remember that a high distribution yield does not mean an investor earned that same percentage as their total return. Total return is the most accurate way to see how much value was actually gained or lost.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF declines. StockValueFinder uses an "erosion score" to measure this risk. FIAX has an erosion score of 75, which is labeled as "mild price erosion." This is a measurement of risk and does not necessarily mean the fund's value has collapsed.

Pros

• The ETF provides a relatively high distribution yield of approximately 8.36%.

• The total return has been positive over the last year and the last three years, even though the share price itself has declined.

Cons

• The ETF has experienced a share-price decline over the one-year and three-year periods.

• The erosion score indicates a "mild" level of price erosion.

Beginner takeaway

When looking at an ETF like FIAX, don't just look at the dividend (distribution) yield. A high yield can sometimes happen even if the share price is falling. Always look at the total return to get a clearer picture of how the investment has performed over time, as this includes both price changes and the cash paid out to you.