ETF Education Report: Invesco High Income 2024 Target Term Fund (IHTA)

What this ETF is trying to do

The Invesco High Income 2024 Target Term Fund (IHTA) is an ETF traded on the NYSE. While the specific investment strategy is not detailed in the provided data, the name suggests it focuses on providing high income to its investors.

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 only measures how much the share price has changed.

• Total Return: This includes both the change in share price and any cash distributions (dividends) paid out.

For IHTA, the numbers show:

• Year-to-Date (YTD): The price return is approximately 9.43%, while the total return is higher at approximately 16.31%.

• One Year: The price return is approximately 12.54%, while the total return is approximately 20.19%.

• Three Years: The price return has been approximately -23.61%, while the total return is approximately -9.37%.

To visualize the one-year price change, we can look at an estimated price from roughly one year ago, which was approximately $6.70. The current price is $7.54. If you had invested $10,000 into the share price alone one year ago, that investment would have grown to approximately $11,254 based on the price return.

Income and distribution explanation

This ETF has a distribution yield of approximately 6.51%. This number describes the cash distributions relative to the ETF's price. The fund has made 13 distributions over the last 12 months and usually pays them out monthly.

It is important to remember that a high distribution yield does not mean an investor earned that percentage as their total return. Distributions provide cash income, but they do not guarantee that your original investment (your principal) will stay the same value.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases over time. While a falling market price does not always prove that NAV has declined, we use "erosion-risk scores" to measure this risk.

IHTA has an erosion-risk score of 55, which is labeled as "moderate price erosion." This means there is a moderate level of risk regarding price deterioration.

Pros

• The ETF has shown positive total returns over the last year.

• It provides regular cash distributions, usually on a monthly basis.

Cons

• The three-year total return is negative, meaning the overall value (including distributions) has declined over that period.

• There is a moderate erosion-risk score, suggesting some price deterioration.

Beginner takeaway

When looking at high-income ETFs, always look at the total return, not just the distribution yield. A high yield can sometimes be misleading if the share price is falling significantly. Income investors often look for funds where the price stays steady or grows slightly, as a collapsing share price can cancel out the benefits of the cash income received.