ETF Education Report: GPRF

What this ETF is trying to do

The Goldman Sachs Access U.S. Preferred Stock and Hybrid Securities ETF (GPRF) is an exchange-traded fund. Based on its name, it focuses on preferred stocks and hybrid securities in the United States.

What the numbers show

When looking at an ETF, it is important to know 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 GPRF, the numbers show a decline in both areas:

• Year-to-Date (YTD): The price return is approximately -5.48%. However, the total return is slightly higher at approximately -1.24%.

• One Year: The price return is approximately -6.80%, while the total return is approximately -1.42%.

To give you an idea of the price movement, the estimated price from roughly one year ago was $51.35. The current price is $47.86.

Income and distribution explanation

Some investors look for ETFs that pay regular cash. This is called the "distribution yield." GPRF has a distribution yield of approximately 5.87%. These payments are usually made monthly, with the most recent data showing 12 distributions over the last year.

It is important to remember that a high distribution yield does not mean you are making a profit. As seen in the total return numbers above, even if an ETF pays out cash, the overall value of your investment can still go down if the share price drops significantly.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of an ETF's underlying assets declines over time. While a falling market price does not always mean the NAV is eroding, we use "erosion scores" to measure this risk.

GPRF has an erosion score of 75, which is labeled as "mild price erosion." This means the data shows a mild trend of price deterioration. However, there is no "severe erosion-risk flag" for this ETF.

Pros

• The ETF provides regular cash distributions, which occur usually on Mondays.

• The total return is higher than the price return, meaning the distributions helped offset some of the share-price decline.

Cons

• The ETF has experienced a share-price decline over the last year.

• Both the price return and total return have been negative for the year-to-date period and the one-year period.

• The erosion score indicates mild price erosion.

Beginner takeaway

When studying GPRF, it is helpful to look at both the price and the total return. While the ETF pays a distribution yield of about 5.87%, the negative total return shows that the drop in share price was larger than the cash paid out to investors. Always remember that high yields can exist even when the share price is falling.