ETF Education Report: WisdomTree Mortgage Plus Bond Fund (MTGP)

What this ETF is trying to do

The WisdomTree Mortgage Plus Bond Fund (MTGP) is an Exchange Traded Fund (ETF) traded on the NYSE. While specific holdings are not listed in this report, this type of fund generally focuses on bond-related investments.

What the numbers show

When looking at an ETF, it is important to understand the difference between "price return" and "total return."

• Price Return: This measures only the change in the share price.

• Total Return: This includes both the share price changes and the money paid out through distributions.

For MTGP, the numbers show different trends depending on the time frame:

• Year-to-Date (YTD): The price return is approximately -5.90%, while the total return is approximately -2.98%.

• One Year: The price return was approximately -6.11%, while the total return was approximately -1.80%.

• Three Years: The price return was approximately 1.24%, while the total return was much higher at approximately 14.41%.

To visualize the price change, we can look at an estimated price from roughly one year ago, which was about $44.64. The current price is $41.92.

Income and distribution explanation

Some investors look at ETFs for regular cash payments, known as distributions. MTGP has a distribution yield of approximately 4.74%. This means the fund paid out about $1.98 in trailing distributions per share. These payments usually happen monthly, often on Tuesdays.

It is important to remember that a high distribution yield does not mean you are earning that same amount as your total return. Total return is the most accurate way to see how much value an investment has actually gained or lost over time.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases. StockValueFinder uses an "erosion-risk score" to measure this risk. MTGP has an erosion score of 75, which is labeled as "mild price erosion." This is a measurement of risk and does not necessarily mean the fund's value has collapsed. There is no severe erosion-risk flag for this ETF.

Pros

• The fund provides regular monthly distributions.

• Over a three-year period, the total return was positive at approximately 14.41%.

Cons

• The one-year and year-to-date price returns have been negative.

• The fund shows a "mild" erosion-risk score.

Beginner takeaway

When studying MTGP, notice that the total return is higher than the price return in several periods. This happens because the distributions add value back to the overall return. However, because the share price has declined recently, investors should look at both the yield and the price movement to understand the full picture.