Understanding the Nuveen Preferred and Income ETF (NPFI)

What this ETF is trying to do

The Nuveen Preferred and Income ETF, known by its ticker symbol NPFI, is an exchange-traded fund (ETF) listed on the NASDAQ. While the specific investment strategy isn't detailed in the data, the name suggests it focuses on preferred securities and generating income for investors.

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 how much the share price has changed.

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

For NPFI, the numbers show a difference between these two:

• Year-to-Date (YTD): The price return is approximately -4.56%, meaning the share price has dropped. However, the YTD total return is approximately -0.10%.

• One Year: The one-year price return is approximately -5.19%. However, the one-year total return is approximately 1.16%.

To visualize the price change, we can look at an estimated price from roughly one year ago, which was $26.37. The current price is $25.00. If you had invested $10,000 based only on the share price, that amount would have decreased due to the price decline.

Income and distribution explanation

NPFI provides cash distributions to investors. The distribution yield is approximately 6.75%. This means the amount of cash paid out is about 6.75% relative to the current ETF price. These payments happen frequently; over the last 12 months, there were 12 distributions, and they usually occur on a monthly basis.

It is important to remember that a high distribution yield does not mean an investor earned that same percentage as a total return. Total return is the most accurate way to see how much value was actually gained or lost.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases over time. StockValueFinder uses an "erosion-risk score" to measure this risk. NPFI has an erosion score of 75, which is labeled as "mild price erosion." While the share price has declined, there is no severe erosion-risk flag for this ETF.

Pros

• The ETF provides regular monthly income through distributions.

• The one-year total return is positive (1.16%), even though the share price itself went down.

Cons

• The ETF has experienced a share-price decline over the last year.

• The erosion-risk score indicates "mild price erosion."

Beginner takeaway

When looking at NPFI, notice that the share price has fallen, but the total return (which includes the cash paid to you) tells a different story. High yields can be helpful for income, but they do not guarantee that the share price will stay the same. Always look at both price return and total return to get the full picture.