What this ETF is trying to do

The iShares U.S. Basic Materials ETF (ticker: IYM) is an exchange-traded fund that focuses on the basic materials sector. This means it invests in companies that provide the raw ingredients used to make many different products.

Based on its top holdings, this fund includes companies like Linde PLC, Newmont Corp, and Freeport-McMoRan Inc. These are some of the largest companies in its portfolio, though the list provided is only a partial view of all 42 holdings. Please remember that what an ETF owns 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 change and any cash distributions (dividends) paid out to investors.

According to the data:

• Year-to-Date (YTD): The price return is approximately 17.88%, while the total return is approximately 18.88%.

• One Year: The price return was approximately 21.68%, and the total return was approximately 23.33%.

• Three Years: The price return was approximately 43.07%, and the total return was approximately 50.52%.

To visualize this, the current price is $181.49. The estimated price from roughly one year ago was approximately $149.15.

Income and distribution explanation

This ETF pays out cash to investors, which is known as a distribution. The distribution yield is currently approximately 1.27%. This number describes the cash payments 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 some investors look for 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 significantly. Some investors worry about this because they want to make sure their original investment stays stable while they collect income.

For this ETF, the erosion-risk score is 100, and the label indicates "No price erosion detected." There is no severe erosion-risk flag for this fund.

Pros

• Strong Returns: The fund has shown positive price returns and total returns over the one-year and three-year periods.

• Low Erosion Risk: The data shows a "good" erosion severity rating, meaning no price erosion was detected.

Cons

• Partial Information: The list of top holdings is only a partial list, so you are not seeing every company the ETF owns.

• Lower Yield: The distribution yield is approximately 1.27%, which may be lower than what some income-focused investors seek.

Beginner takeaway

The IYM ETF tracks companies in the basic materials sector. It has shown growth in both its share price and its total return over the last few years. While it provides some cash income through distributions, the main driver of its performance has been the increase in share price. Always remember to look at both price returns and total returns to get the full picture of how an ETF is performing.