Understanding the GRANITESHARES YIELDBOOST GOLD MINERS ETF (NUGY)

What this ETF is trying to do

The GRANITESHARES YIELDBOOST GOLD MINERS ETF (ticker: NUGY) is an exchange-traded fund listed on the NASDAQ. This ETF uses an option income strategy, which means it uses financial tools called options to try to generate extra cash for the fund.

What the numbers show

When looking at NUGY, it is important to look at two different types of performance: price return and total return.

• Price Return: This measures only the change in the share price. Year-to-date (YTD), the price return for NUGY is approximately -50.54%. This means the cost of one share has dropped significantly since the start of the year.

• Total Return: This measures the share price change *plus* any cash distributions paid out to investors. The YTD total return is approximately -7.05%.

Because the total return (-7.05%) is much higher than the price return (-50.54%), it shows that the cash distributions helped offset some of the share-price decline.

Income and distribution explanation

NUGY is characterized by very high distributions. The distribution yield is approximately 120.67%. This number describes the cash paid out relative to the current ETF price.

The fund provides very frequent payouts. In the last 12 months, there were 47 distributions. These payments are "weekly-like" in frequency, with the most common day for a payout being Friday. It is important to remember that a very high distribution yield does not mean an investor earned that same percentage as their total return.

NAV erosion explanation

Some investors look at high-yield funds to see if they are experiencing "NAV erosion." NAV (Net Asset Value) refers to the actual value of the assets held by the fund.

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. While we can see a significant share-price decline (the price people pay for the ETF), we cannot use this alone to prove that the underlying NAV has declined.

Pros

• High Cash Flow: The fund provides very frequent, weekly-like distributions.

• Distribution Impact: The cash paid out has helped improve the total return compared to the share price alone.

Cons

• Share-Price Decline: The ETF has experienced a large YTD price return of approximately -50.54%.

• High Volatility in Returns: There is a large gap between the falling share price and the total return.

Beginner takeaway

NUGY is an option-income ETF that pays out cash very frequently. While the distributions are very high, the share price has dropped significantly this year. When researching ETFs like this, always look at the total return rather than just the distribution yield to see how the share price changes affect your overall investment.