ETF Education Report: Nuveen California Quality Municipal Income Fund (NAC)

What this ETF is trying to do

The Nuveen California Quality Municipal Income Fund (NAC) is an ETF listed on the NYSE. While the specific investment strategy is not detailed in the provided data, the name suggests it focuses on municipal income, which often involves bonds from the state of California.

What the numbers show

It is important to understand that "price return" and "total return" tell different stories. Price return only tracks how the share price changes. Total return includes both the price change and the cash distributions paid out to investors.

• Year-to-Date (YTD): The price return is approximately -9.91%. However, the total return for this period is -4.83%.

• One Year: The price return was approximately -6.17%, while the total return was approximately 0.98%.

• Three Year: The price return was approximately 4.83%, but the total return was much higher at approximately 29.30%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The price was approximately $11.34, and the current price is $10.64.

Income and distribution explanation

This ETF has a distribution yield of approximately 8.14%. This means the fund pays out a significant amount of cash relative to its share price. These distributions usually happen monthly, with Friday being the most common day for payments. Over the last 12 months, the trailing distributions were $0.866 per share.

Investors often look for high yields to get regular cash, but it is important to remember that a high yield does not guarantee the investment will grow in value.

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. This ETF has an erosion score of 75, which is labeled as "mild price erosion." While the share price has declined in certain periods, there is no severe erosion-risk flag for this fund.

Pros

• The fund has a high income rating grade of "A."

• The three-year total return shows significant growth (approximately 29.30%) when including distributions.

Cons

• The fund has experienced a share-price decline in the year-to-date and one-year periods.

• The five-year total return is approximately -9.14%, meaning the overall value including distributions has declined over a longer period.

Beginner takeaway

When looking at NAC, it is helpful to distinguish between the share price and the total return. While the share price has dropped recently, the total return (which includes the cash paid to you) tells a different story. Always remember that high distributions provide cash, but they do not protect the original amount you invested from price declines.