ETF Education Report: Invesco Quality Municipal Income Trust (IQI)

What this ETF is trying to do

Invesco Quality Municipal Income Trust (IQI) is an exchange-traded fund (ETF). While the specific investment goals are not detailed in the provided data, the name suggests it focuses on municipal income.

What the numbers show

When looking at an ETF, 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. For IQI, the year-to-date (YTD) price return is approximately -10.24%. The one-year price return is approximately -9.05%.

• Total Return: This includes both the share price changes and the cash distributions paid out to investors. The YTD total return is approximately -5.03%, and the one-year total return is approximately -1.94%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The price was approximately $9.83, and the current price is $8.94. This shows a decline in the share price over that period.

Looking further back, the three-year total return is approximately 25.86%, which shows how much the investment grew including distributions over a longer period. However, the five-year total return is approximately -9.77%.

Income and distribution explanation

Some investors look for ETFs that pay regular cash. This is called a distribution yield. IQI has a distribution yield of approximately 8.47%. This means the fund paid out about $0.76 in trailing distributions per share. These payments usually happen monthly, with Monday being the most common day for a distribution to occur.

It is important to remember that a high distribution yield does not mean the investor earned that same amount as total return. Total return is the most accurate way to see how much an investment actually grew or shrank.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases. While a falling share price is not the same thing as NAV erosion, we use "erosion scores" to measure risk.

IQI has an erosion score of 75, which is labeled as "mild price erosion." This is a measurement of risk, not a guarantee that the fund's value has collapsed. There is no severe erosion-risk flag for this ETF.

Pros

• The fund provides a relatively high distribution yield of approximately 8.47%.

• It has a history of positive total returns over a three-year period.

Cons

• The share price has seen a decline recently, as shown by the negative YTD and one-year price returns.

• The five-year total return is negative.

Beginner takeaway

When evaluating an ETF like IQI, don't look at the distribution yield alone. A high yield can sometimes happen even when the share price is falling. Always compare the price return (the cost of the share) with the total return (the price change plus the cash paid to you) to get the full picture.