What this ETF is trying to do

The iShares U.S. Regional Banks ETF (ticker: IAT) is an exchange-traded fund that focuses on regional banks in the United States. Instead of buying just one bank, this ETF allows investors to gain exposure to a group of different banking companies.

Based on the Top Holdings provided, some of the largest companies in this fund include PNC Financial Services Group Inc (15.04%), U.S. Bancorp (15.02%), and Truist Financial Corp (9.78%). Please note that this is a partial list of the 33 total holdings, and holdings can change over time.

What the numbers show

When looking at how this ETF has performed, 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 changes and the money paid out through distributions.

For IAT, the numbers show:

• Year-to-Date (YTD): The price return is approximately 4.24%, while the total return is approximately 6.15%.

• One Year: The price return was approximately 9.93%, while the total return was approximately 13.11%.

• Three Years: The price return was approximately 76.30%, while the total return was approximately 93.80%.

To give you an idea of price movement, the estimated price from roughly one year ago was $52.30. The current price is $57.49.

Income and distribution explanation

Some investors look for ETFs that pay out cash regularly. This is called a distribution yield. For IAT, the distribution yield is approximately 2.85%. This represents the cash distributions relative to the ETF's price.

The fund usually pays these distributions quarterly, and it has made 4 payments over the last 12 months. While these payments provide cash income, it is important to remember that a distribution yield is not the same as total return.

NAV erosion explanation

"NAV erosion" refers to a situation where the value of the underlying assets in the fund decreases over time. It is important not to confuse a falling share price with NAV erosion.

In the case of IAT, the erosion-risk score is 100, and the label indicates "No price erosion detected." The erosion severity is rated as "good," and there is no severe erosion-risk flag present.

Pros

• Strong Historical Returns: The fund has shown significant total returns over the last one, three, and five-year periods.

• Income Generation: The fund provides regular cash distributions with an "A" income rating grade.

Cons

• Sector Concentration: Because this ETF focuses specifically on regional banks, its performance is tied to how that specific part of the economy performs.

Beginner takeaway

The IAT ETF tracks a group of regional banks and provides both share-price growth and cash distributions. When studying this ETF, remember to look at the total return to see the full picture of how much value was created, rather than just looking at the share price or the distribution yield alone.