What this ETF is trying to do

The FIRST TRUST WATER ETF (FIW) is an exchange-traded fund designed to provide exposure to the water industry. It invests in companies involved in various aspects of water technology and services. According to its top holdings, the fund includes companies like Agilent Technologies Inc, Waters Corp, and Ferguson Enterprises Inc. Please note that the list of holdings provided is partial and represents only a portion of the total 38 holdings in the fund. Holdings can change over time.

What the numbers show

The current price of FIW is $105.09. When looking at how the share price has moved, we can see different trends depending on the time frame:

• Year-to-Date (YTD): The price return is approximately -3.27%.

• One Year: The one-year price return is approximately -6.88%. An estimated price from roughly one year ago was $112.86.

• Three Year: The three-year price return is approximately 27.09%.

It is important to distinguish between price return and total return. Price return only measures the change in the share price. Total return includes both the share price changes and any distributions paid out. For FIW, the total returns are as follows:

• YTD Total Return: Approximately -2.75%.

• One Year Total Return: Approximately -6.19%.

• Three Year Total Return: Approximately 29.81%.

Income and distribution explanation

FIW provides cash distributions to investors. The distribution yield is approximately 0.76%. This number describes the cash paid out relative to the current ETF price. The fund usually pays distributions on a quarterly basis, with 4 payments recorded over the last 12 months.

While distributions provide cash income, they are not the same as total return. A high yield does not guarantee that an investor will earn that percentage as a total return, nor does it guarantee the preservation of the original investment amount.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the assets held by the fund). 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.

Regarding price erosion (the decline in the market price of the shares), the fund has an erosion-risk score of 75, which is labeled as "Mild price erosion." However, there is no severe erosion-risk flag for this ETF.

Pros

• Long-term growth: The fund has shown a strong three-year total return of approximately 29.81%.

• Specific industry focus: It provides targeted exposure to the water sector through a variety of companies.

Cons

• Recent price declines: The fund has experienced negative price returns both year-to-date and over the last year.

• Mild price erosion: The data indicates a mild level of price erosion.

Beginner takeaway

When researching FIW, it is helpful to look at both the share price and the total return. While the share price has declined recently, the three-year total return shows how much value was created when including distributions. Always remember that a distribution yield tells you about cash payments, but it does not tell the whole story of how the investment's value is changing.