What this ETF is trying to do

The BITWISE COIN OPTION INCOME STRATEGY ETF (ticker: ICOI) is an exchange-traded fund that trades on the NYSE. While the specific investment goals are not listed in the provided data, the name suggests it uses a strategy involving coin options to generate income.

What the numbers show

The current price of one share is $10.37. Based on data from roughly one year ago, the estimated price was approximately $49.41.

When looking at how the fund has performed, it is important to look at two different numbers:

• One-year price return: This was -79.01%. This number only shows how much the share price itself changed.

• One-year total return: This was -52.27%. This number reflects the overall return, which includes the cash distributions paid to investors.

For example, if you had invested $10,000 into this ETF about a year ago, your investment would have dropped to approximately $2,099 based on the share-price decline alone, before accounting for any cash payments you received.

Year-to-date (YTD) numbers also show a decline. The YTD price return is -35.47%, while the YTD total return is -22.07%.

Income and distribution explanation

This ETF has a very high distribution yield of 202.94%. This means the fund pays out a large amount of cash relative to its share price. However, it is important to understand that a high distribution yield is not the same as a total return. A high yield can be misleading because you might receive cash payments even while the value of your original investment is shrinking.

NAV erosion explanation

This ETF has a "severe erosion-risk flag." The erosion-risk score is 10, which is labeled as "Severe price erosion," and the severity is listed as "severe."

"NAV erosion" refers to a situation where the value of the fund's underlying assets or its share price drops significantly. When an ETF's share price falls from a high point (like the estimated $49.41) to a much lower point (like $10.37), it can destroy your principal. Principal is the original amount of money you put into the investment. If the price drops too far, even large cash payments may not be enough to make up for the loss in value.

Pros

• The ETF offers a very high distribution yield, which provides frequent cash income.

Cons

• There has been a significant share-price decline.

• The fund shows a severe erosion-risk flag and a high erosion-risk score.

• Total returns have been negative over the last year.

Beginner takeaway

High yields can look attractive, but they do not guarantee you will make money. Income investors usually prefer ETFs where the share price stays steady or goes up slightly. When an ETF experiences severe price deterioration, the loss in share value can outweigh the cash you receive from distributions.