Understanding the Invesco High Yield Systematic Bond ETF (GTOQ)

What this ETF is trying to do

The Invesco High Yield Systematic Bond ETF (GTOQ) is an exchange-traded fund that focuses on high-yield bonds. Investors often look at these types of funds when they are looking for regular cash payments, though it is important to remember that all investing involves risk.

What the numbers show

When looking at an ETF, it is important to understand the difference between price return and total return.

• Price Return: This measures only how much the share price has changed.

• Total Return: This includes both the change in share price *and* the money paid out through distributions.

For GTOQ, the numbers show a difference between these two:

• Year-to-Date (YTD): The price return is approximately -3.88%, but the total return is +1.17%.

• One Year: The price return is approximately -4.27%, while the total return is +2.58%.

• Three Year: The price return is approximately 2.04%, while the total return is much higher at approximately 26.24%.

The current price of the ETF is $21.80. Based on an estimated price from roughly one year ago of approximately $22.75, the share price has seen some decline, even though the total return remains positive due to distributions.

Income and distribution explanation

This ETF is designed to provide regular income. The distribution yield is approximately 7.12%. This number describes the cash payments relative to the ETF's price.

The fund usually pays out money monthly, with 12 payments recorded over the last year. Most of these payments have occurred on Mondays. While a high yield can provide cash income, it is not the same as total return, and a high yield does not guarantee that your original investment will stay the same value.

NAV erosion explanation

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

GTOQ 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 present for this ETF.

Pros

• Higher Total Returns: The total return figures are higher than the price return figures, meaning distributions have added value.

• Regular Income: The fund has a high distribution yield and a history of frequent (monthly) payments.

• Stable Risk Score: The erosion-risk score suggests the fund is currently stable or moving sideways rather than showing significant deterioration.

Cons

• Price Declines: The share price has seen negative returns over the year-to-date and one-year periods.

• Empty Holdings Data: There is no data currently available regarding the specific companies or bonds held within this fund.

Beginner takeaway

When looking at GTOQ, it is helpful to see how distributions can help offset a falling share price. While the price of a single share may go down, the total return (which includes the cash paid to you) can still be positive. Always remember that a high distribution yield is not a guarantee of profit or the preservation of your original investment.