ETF Education Report: SCHARF GLOBAL OPPORTUNITY ETF (GKAT)

What this ETF is trying to do

The SCHARF Global Opportunity ETF (ticker: GKAT) is an exchange-traded fund that holds a variety of different companies. Based on its top holdings, it includes many large global businesses like Microsoft Corp, McKesson Corp, and Samsung Electronics Co Ltd. This ETF holds a total of 44 different companies.

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: This measures only the change in the share price.

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

For GKAT, the numbers show growth in both areas:

• Year-to-Date (YTD): The price return is approximately 8.65%, while the total return is approximately 9.25%.

• One-Year: The price return is approximately 9.69%, while the total return is approximately 10.55%.

To visualize this, we can look at an estimated price from roughly one year ago. The estimated price was about $40.55, and the current price is $44.48.

Income and distribution explanation

Some investors look for ETFs that pay out cash, known as distributions. GKAT has a distribution yield of approximately 0.73%. This means the cash paid out is about 0.73% of the ETF's price. The fund usually pays these out quarterly, and it has made 4 payments over the last 12 months.

It is important to remember that a distribution yield is not the same as total return. While distributions provide cash, they are just one part of how an investor might earn money from an ETF.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF decreases significantly over time. Some investors worry about this because they want their original investment to stay stable.

For GKAT, the erosion-risk score is 100, and the label states "No price erosion detected." There is no severe erosion-risk flag for this ETF.

Pros

• Positive Returns: Both the share price and the total return have increased over the last year.

• Diversification: The fund holds 44 different companies across various industries.

Cons

• Lower Yield: The distribution yield is relatively low at approximately 0.73%.

Beginner takeaway

When studying GKAT, notice the difference between price return and total return. The total return is higher because it accounts for the cash distributions paid to shareholders. This ETF has shown price growth over the last year and does not currently show signs of price erosion according to the provided data.

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*Note: This report is for educational purposes only and does not constitute financial advice. It does not recommend buying, selling, or holding this ETF.*