ETF Education Report: DIREXION DAILY F BEAR 1X ETF (FRDD)

What this ETF is trying to do

The FRDD ETF is an "inverse" ETF. This means it is designed to move in the opposite direction of a specific market index. When that index goes down, this ETF is generally designed to go up.

What the numbers show

The current price of FRDD is $21.38. To understand how the price has changed, we can look at different timeframes:

• Year-to-Date (YTD): The price return so far this year is approximately 6.11%. When you include distributions, the YTD total return is approximately 6.24%.

• One Year: Over the last year, the share-price return was approximately -1.35%. However, the one-year total return was approximately 0.09%.

It is important to know that "price return" only tracks the change in the share price. "Total return" is a different measurement that includes both the price change and any cash distributions paid out to investors.

If you had invested in this ETF at the estimated price from roughly one year ago ($21.67), your share price would have changed by the amounts listed above.

Income and distribution explanation

Some investors look for ETFs that pay out cash, known as distributions. FRDD has a distribution yield of approximately 1.36%. In the last 12 months, it made two distributions. The frequency of these payments is described as irregular or less frequent.

Remember, a distribution yield tells you how much cash was paid out relative to the price, but it is not the same thing as your total return.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF decreases over time. StockValueFinder uses an "erosion-risk score" to measure this risk.

FRDD has an erosion score of 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag for this ETF. This means the current data does not show a high risk of significant price deterioration due to erosion.

Pros

• The ETF has a positive total return for the past year (0.09%).

• The erosion-risk score suggests the price movement has been relatively stable or sideways.

Cons

• The one-year share-price return was negative (-1.35%).

• The income rating for this ETF is a "D" grade, with an income rating score of 52.

Beginner takeaway

When looking at inverse ETFs like FRDD, it is important to distinguish between price return and total return. While the share price might go down, the total return (which includes cash payments) might be different. Always look at both numbers to get a full picture of how the ETF has performed.