Understanding the Invesco KBW Property & Casualty Insurance ETF (KBWP)

What this ETF is trying to do

The KBWP ETF is designed to track the performance of companies in the property and casualty insurance industry. Instead of buying just one insurance company, this ETF allows investors to gain exposure to a group of different companies that provide insurance for homes, cars, and businesses.

What the numbers show

When looking at an ETF, it is important to understand two different types of returns: price return (how much the share price changed) and total return (the price change plus any cash paid out to investors).

• Year-to-Date (YTD): The price return is down approximately 2.08%, while the total return is down about 0.58%.

• One-Year: The price return was approximately -0.44%, but the total return was positive at about 1.56%.

• Three-Year: The price return grew by approximately 46.40%, and the total return was even higher at about 54.44%.

• Five-Year: The total return over five years was approximately 79.12%.

To give you an idea of the price movement, the estimated price from roughly one year ago was $125.20. The current price is $124.65.

Income and distribution explanation

This ETF pays out cash to investors, which is called a distribution. The distribution yield is currently about 1.97%. This means the cash paid out is roughly 1.97% of the current share price. These payments usually happen quarterly, and there were 4 payments in the last 12 months. It is important to remember that a distribution yield tells you how much cash was paid, but it is not the same thing as your total return.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF decreases over time. StockValueFinder uses an erosion-risk score to measure this risk. For KBWP, the erosion score is 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag present.

Top Holdings

The following are some of the largest companies held by this ETF (note that this is a partial list):

• Chubb Ltd (8.38%)

• The Travelers Companies Inc (8.35%)

• Progressive Corp (8.01%)

• Marsh (7.56%)

• Aon PLC Class A (7.52%)

Pros

• The ETF has shown strong total returns over the last three and five years.

• It provides regular cash distributions (income).

• The erosion-risk measurement is currently rated as "good."

Cons

• The year-to-date price return has been negative.

• The share price has seen slight declines in both the short term and year-to-date.

Beginner takeaway

When looking at KBWP, it is helpful to distinguish between the share price and the total return. While the share price may go down slightly, the total return includes the cash distributions you receive, which can help offset some of those price changes. Always remember that a high distribution yield does not guarantee that the share price will stay stable.