Understanding the QUADRATIC INTEREST RATE VOLATILITY AND INFLATION HEDGE ETF (IVOL)

What this ETF is trying to do

The IVOL ETF is designed to act as a hedge. This means it is intended to help protect against certain changes in interest rate volatility and inflation.

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.

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

For IVOL, the numbers show a decline in both areas:

• Year-to-Date (YTD): The price return is approximately -15.19%, while the total return is approximately -13.12%.

• One Year: The price return is approximately -16.54%, while the total return is approximately -13.47%.

• Three Years: The price return is approximately -19.47%, while the total return is approximately -10.29%.

• Five Years: The five-year total return is approximately -30.14%.

To visualize the price change, the estimated price from roughly one year ago was $19.47. The current price is $16.25.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 4.10%. These payments usually happen monthly, with Thursday being the most common day for a payout.

It is important to remember that a distribution yield tells you how much cash was paid out relative to the price, but it is not the same as total return. A high yield does not mean an investor has made a profit if the share price is falling.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the assets held by the fund). While a falling market price is a "share-price decline," it does not always mean the NAV has dropped.

In this case, the ETF has an erosion-risk score of 55, which is labeled as "Moderate price erosion." This is a measurement used to track how much the price has been declining over time.

Pros

• The ETF provides regular cash distributions (usually monthly).

• It is designed to serve a specific purpose as an inflation and volatility hedge.

Cons

• The ETF has experienced share-price declines over the one-year, three-year, and five-year periods.

• The total return has been negative over these timeframes.

• It shows a moderate erosion-risk score due to price movement.

Beginner takeaway

When looking at IVOL, it is helpful to distinguish between the cash you receive from distributions and the actual change in the share price. While the ETF pays out a 4.10% distribution yield, the overall total return has been negative over several years because the share price has declined. Always look at both price return and total return to get a full picture of how an ETF is performing.