What this ETF is trying to do

The INVESCO KBW PREMIUM YIELD EQUITY REIT ETF (ticker: KBWY) is an exchange-traded fund that focuses on Real Estate Investment Trusts, often called REITs. This ETF holds a collection of different companies involved in real estate. According to the Top Holdings list, some of the largest companies in this fund include Innovative Industrial Properties Inc, Millrose Properties Inc Class A, and Park Hotels & Resorts Inc. Because the holdings can change over time, it is important to check for updates regularly.

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 example, the one-year price return for KBWY was approximately 6.19%. The year-to-date (YTD) price return was approximately 9.13%. However, the three-year price return was approximately -4.69%.

• Total Return: This is a more complete measure because it includes the impact of distributions (cash paid out to investors). The YTD total return was approximately 16.41%, and the one-year total return was approximately 16.07%. Even though the price went down over three years, the three-year total return was approximately 24.12%.

An estimated price from roughly one year ago was $15.86, while the current price is $16.84.

Income and distribution explanation

This ETF is known for providing cash distributions. The distribution yield is approximately 8.78%. This means the amount of cash paid out is high relative to the ETF's price. These distributions usually happen monthly, with 12 payments recorded over the last year. Most of these payments have been made on Mondays.

It is important to remember that a high distribution yield is not the same as total return. While distributions provide cash income, they do not guarantee that your original investment will stay the same value.

NAV erosion explanation

"NAV erosion" is a term used to describe when the underlying value of an ETF's assets decreases over time. Some investors worry that high payouts might cause this. However, for KBWY, the erosion-risk score is 100, and the label states "No price erosion detected." There is no severe erosion-risk flag for this ETF.

Pros

• High Yield: The fund offers a high distribution yield of approximately 8.78%.

• Strong Total Returns: While the share price has fluctuated, the total returns (which include distributions) have been positive over the one-year and three-year periods.

Cons

• Price Volatility: The three-year price return was negative, meaning the share price itself dropped during that time.

• Complexity: Investors must distinguish between the cash they receive and the actual change in the share price.

Beginner takeaway

KBWY is an ETF that focuses on real estate and provides regular monthly cash distributions. When studying this fund, remember that the share price can move up or down independently of the cash payments you receive. Always look at the total return to see how both price changes and distributions work together.