ETF Education Report: DWS Strategic Municipal Income Trust (KSM)

What this ETF is trying to do

DWS Strategic Municipal Income Trust (ticker: KSM) is an ETF traded on the NYSE. While the specific investment strategy is not detailed in the provided data, municipal income funds generally focus on providing income through municipal bonds.

What the numbers show

It is important to understand the difference between price return and total return. Price return only tracks how much the share price changes. Total return includes both the price change and the distributions (cash payments) received.

According to the data:

• Year-to-Date (YTD): The YTD price return is approximately 16.47%. The YTD total return is higher, at approximately 19.76%.

• One Year: The one-year price return was approximately 27.05%. The one-year total return was approximately 31.44%.

• Three Years: Over the last three years, the three-year price return was approximately -18.82%, while the three-year total return was approximately -7.85%.

To see how the share price changed, we can look at an estimated price from roughly one year ago, which was approximately $7.93. The current price is $10.08. If you had invested $10,000 into the shares one year ago, your investment's value would have grown to approximately $12,705 based on the share-price change alone.

Income and distribution explanation

This ETF provides cash distributions. The distribution yield is approximately 3.14%. These payments are usually made monthly, with 12 distributions recorded over the last 12 months. Each trailing distribution was approximately $0.32.

It is important to remember that a high distribution yield does not guarantee an investor will earn that same percentage as a total return. Distributions provide cash income, but they do not guarantee that your original investment (your principal) will stay the same value.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value of the fund. While a falling market price is a share-price decline, it does not always mean the NAV has declined.

The StockValueFinder erosion-risk score for this ETF is 55, which is labeled as "Moderate price erosion." This is considered a moderate level of risk. There is no severe erosion-risk flag for this ETF.

Pros

• The ETF has shown positive total returns and price returns over the last year.

• It provides regular monthly cash distributions.

Cons

• The three-year price return and total return are both negative, showing a decline over a longer period.

• There is a moderate erosion-risk score.

Beginner takeaway

When looking at ETFs that pay income, it is helpful to look at both the share price and the total return. A high yield can sometimes be misleading if the share price is falling significantly. Income investors often look for stability, preferring funds where the price stays steady or grows slightly, rather than funds that experience significant price declines.