What this ETF is trying to do

KBWD (Invesco KBW High Dividend Yield Financial ETF) is designed to invest in companies within the financial sector that pay high dividends. This ETF focuses on providing regular income to investors through these dividend payments.

What the numbers show

The current price of one share of KBWD is $11.31. An estimated price from roughly one year ago was about $13.53.

When looking at this ETF, it is important to understand two different types of returns: price return and total return. Price return only tracks how much the share price changes. Total return includes both the share price changes and the cash distributions paid out to investors.

The numbers show a gap between these two:

• One-Year: The one-year price return was -16.41%, but the one-year total return was -4.56%.

• Three-Year: The three-year price return was -26.61%, while the three-year total return was positive at 6.77%.

• Year-to-Date (YTD): The YTD price return is -17.23% and the YTD total return is -8.53%.

Income and distribution explanation

KBWD has a high distribution yield of 15.16%. This means the ETF pays out a large amount of cash relative to its share price. These payments are usually made monthly, with 12 distributions recorded over the last year. The trailing distributions were $1.7145 per share. While high yields can provide steady cash, they do not guarantee that the overall value of your investment will grow.

NAV erosion explanation

The supplied data is sufficient to evaluate price erosion, but it does not include enough historical NAV-per-share data to confirm or rule out NAV erosion.

The ETF has an erosion-risk score of 55, which indicates "moderate price erosion." This is a measurement used to track how much the market price of the shares has declined over time.

Pros

• High Yield: The ETF offers a high distribution yield of 15.16%.

• Monthly Income: It typically provides monthly cash distributions.

• Three-Year Total Return: Despite falling share prices, the three-year total return was positive at 6.77%.

Cons

• Share-Price Decline: The ETF has experienced significant share-price declines over the last year and three years.

• Erosion Risk: There is a moderate erosion-risk score.

• Negative YTD Performance: Both the price return and total return are currently negative for the year.

Beginner takeaway

KBWD is an ETF that focuses on high income through monthly distributions. However, investors should notice that while the cash payments (total return) help, the actual share price has been falling significantly. High distribution yields can sometimes be accompanied by a declining share price.

Top Holdings:

• FS KKR Capital Corp (4.23%)

• Orchid Island Capital Inc (4.12%)

• Invesco Mortgage Capital Inc (4.07%)

• Goldman Sachs BDC Inc (3.93%)

• Armour Residential REIT Inc (3.82%)