ETF Education Report: VANECK LONG/FLAT TREND ETF (LFEQ)

What this ETF is trying to do

The VANECK LONG/FLAT TREND ETF (LFEQ) is an exchange-traded fund listed on the NYSE. Based on its top holdings, this ETF focuses heavily on a single area. Its portfolio is almost entirely made up of one holding: the VANGUARD S&P 500 ETF, which makes up 99.85% of the fund.

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 how much the share price has changed.

• Total Return: This includes both the share price changes and any cash distributions (dividends) paid out.

For LFEQ, the numbers show growth in both areas:

• Year-to-Date (YTD): The price return is approximately 14.50%, and the total return is also approximately 14.50%.

• One Year: The price return was about 15.65%, while the total return was higher at approximately 16.69%.

• Three Years: The price return was about 63.34%, and the total return was approximately 68.58%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The price was approximately $53.63, and the current price is $62.03.

Income and distribution explanation

Some investors look for "yield," which is the cash an ETF pays out. LFEQ has a distribution yield of approximately 0.79%. This means the fund paid out trailing distributions of $0.49. The data shows that these payments happen irregularly or less frequently, with the most recent payment occurring on a Monday.

It is important to remember that a distribution yield is not the same as total return. While distributions provide cash, they are only one part of how an investment performs.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF decreases significantly over time. Investors often want to know if their principal (the original money they put in) is staying stable.

For LFEQ, the erosion-risk score is 100, and the label states "No price erosion detected." The erosion severity is rated as "good," and there is no severe erosion-risk flag present.

Pros

• The ETF has shown positive price returns and total returns over the one-year and three-year periods.

• The erosion-risk measurements suggest the price has remained stable rather than eroding.

Cons

• The fund is highly concentrated, with nearly 100% of its weight in a single holding.

• The distribution frequency is irregular, meaning investors cannot rely on a steady schedule of cash payments.

Beginner takeaway

When studying LFEQ, notice the difference between price return and total return. The total return is higher because it accounts for the cash distributions paid to investors. Always check the erosion-risk score to see if a fund's price is showing signs of significant decline.