ETF Education Report: INVESCO EQUAL WEIGHT 0-30 YEAR TREASURY ETF (GOVI)

What this ETF is trying to do

The GOVI ETF is an exchange-traded fund that focuses on U.S. Treasury bonds. These are loans made to the government with different lengths of time until they are paid back, ranging from 0 to 30 years. This specific fund uses an "equal weight" approach, meaning it tries to give similar importance to different bonds within its group.

What the numbers show

When looking at an ETF, it is important to separate "price return" from "total return."

• Price Return: This measures only the change in the share price. For GOVI, the one-year price return was approximately -9.48%. The year-to-date (YTD) price return was approximately -8.33%.

• Total Return: This is a more complete picture because it includes the value of distributions (cash payments) received. The one-year total return was approximately -5.91%, and the YTD total return was approximately -5.61%.

To see how the price has moved, we can look at an estimated price from roughly one year ago, which was $27.90. The current price is $25.26. While the short-term numbers show a decline, the three-year total return was approximately 6.46%.

Income and distribution explanation

Some investors look for ETFs that pay out cash. This is called the distribution yield. GOVI has a distribution yield of approximately 4.16%. These payments are usually made monthly, and the fund has made 12 payments over the last year.

It is important to remember that a high distribution yield does not mean you are making a profit. Even if an ETF pays you cash, the share price could still be falling.

NAV erosion explanation

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

Pros

• The fund provides regular cash distributions (usually monthly).

• The three-year total return shows a positive result of approximately 6.46%.

Cons

• The one-year and year-to-date price returns have been negative.

• There is a "mild" erosion-risk score of 75.

Beginner takeaway

When studying GOVI, notice the difference between the share price and the total return. The share price has gone down, but the total return is slightly higher because it includes the cash distributions paid to investors. Always remember that receiving regular income does not guarantee that the price of your investment will stay the same.