NKX: Nuveen California AMT-Free Quality Municipal Income Fund

The NKX is an ETF designed to provide income through California municipal bonds that are "AMT-free." It is primarily used by investors seeking regular cash payments, though recent data shows a decline in its share price.

What the Numbers Show

The current price of NKX is $10.47. Looking at the past year, the fund has seen a share-price decline. The one-year price return is -15.87%, and the year-to-date (YTD) price return is -15.84%.

However, the total return—which includes both price changes and distributions—is slightly different. The one-year total return is -9.63%, and the YTD total return is -11.21%. Over a longer period, the three-year total return is 27.11%.

For a simple example, if you had invested $10,000 based on the estimated price from roughly one year ago ($12.44), the price-only decline would have reduced that principal to approximately $8,413, not counting any distributions received.

Income and Distribution Explanation

NKX is designed for income. It usually pays distributions monthly and has made 12 payments over the last year. The distribution yield is approximately 8.56%, with trailing distributions of $0.896 per share.

It is important for beginners to remember that a high distribution yield does not guarantee a profit. In this case, the distribution yield has not been enough to offset the share-price decline over the last year.

Price and NAV Erosion Explanation

The supplied data is sufficient to evaluate price erosion, but it does not include enough historical NAV-per-share data to confirm or rule out NAV erosion.

Regarding price-based evidence, NKX has an erosion-risk score of 55, which is labeled as "moderate price erosion." This means the fund's market price has shown a trend of decline that the screening tools flag as moderate.

Pros

• Regular Income: The fund provides consistent monthly distributions.

• Long-term Total Return: The three-year total return is positive at 27.11%.

Cons

• Recent Price Decline: Both the YTD and one-year price returns are negative.

• Income Grade: The fund has an income rating grade of "D."

• Price Erosion: There is a moderate price erosion risk based on the erosion score.

Beginner Takeaway

NKX provides a high distribution yield through monthly payments, which is attractive for those needing cash flow. However, the share price has fallen significantly over the last year. Investors should be aware that a high yield can exist even while the share price is dropping, meaning the total return may be lower than the yield suggests.