ETF Education Report: KRANESHARES HANG SENG TECH INDEX ETF (KTEC)

What this ETF is trying to do

The KRANESHARES HANG SENG TECH INDEX ETF (KTEC) is an exchange-traded fund that focuses on technology companies. Based on its top holdings, it provides exposure to various large tech firms, such as Alibaba Group Holding Ltd and Tencent Holdings Ltd.

What the numbers show

The current price of KTEC is $12.25. To understand how the price has changed, we can look at an estimated price from roughly one year ago, which was approximately $18.88.

It is important to understand the difference between "price return" and "total return":

• Price Return measures only the change in the share price. For KTEC, the one-year price return was approximately -35.12%. The year-to-date (YTD) price return was approximately -21.78%.

• Total Return includes both the share price change and any distributions (cash payments) made to investors. The one-year total return was approximately -32.98%, and the YTD total return was approximately -21.78%.

Over a longer period, the three-year total return was approximately 3.82%, while the five-year total return was approximately -35.22%.

Income and distribution explanation

KTEC has a distribution yield of approximately 4.29%. This number describes the cash distributions relative to the ETF price. However, a high yield does not mean an investor earned that percentage as their total return. In this case, the distributions are described as "irregular" or "less frequent," with one payout recorded in the last 12 months.

NAV erosion explanation

This ETF has a "severe erosion-risk flag." This means that StockValueFinder's screening rules detected significant price deterioration. The data shows an erosion score of 30, which is labeled as "significant price erosion."

"NAV erosion" refers to a decline in the Net Asset Value of the fund. While a falling market price is a "share-price decline," an erosion score is used as a measurement to flag risks regarding the stability of the fund's value.

Pros

• The ETF provides exposure to a wide variety of major technology companies.

• It offers a distribution yield of approximately 4.29%.

Cons

• The ETF has experienced significant share-price declines over the last year.

• There is a severe erosion-risk flag due to significant price deterioration.

• The distribution frequency is irregular.

Beginner takeaway

When looking at ETFs like KTEC, it is important to remember that a high distribution yield can exist even when the share price is falling. Investors should look at both the price return and the total return to get a full picture of performance. Additionally, a severe erosion-risk flag is a signal to pay close attention to how much the share price has declined over time.