What this ETF is trying to do

NVDY is a single-stock ETF. This means it focuses on one specific area rather than many different companies. It uses an "option income strategy." This is a way of using financial tools called options to try and create regular income for the fund.

What the numbers show

The current price of NVDY is $12.77. The estimated price from roughly one year ago was approximately $16.58.

When looking at this ETF, it is important to understand that there are two different ways to measure performance:

• Price Return: This only measures how the share price moves up or down. For NVDY, the one-year price return was -22.98%, and the three-year price return was -38.87%.

• Total Return: This measures the share price changes plus any cash distributions paid out. Even though the share price fell, the one-year total return was 25.11%, and the three-year total return was 287.46%.

If you had $10,000 invested based only on the share price, that amount would have decreased because of the negative price returns. However, the total return shows a different picture because it includes the cash paid to investors.

Income and distribution explanation

NVDY has a high distribution yield of approximately 53.76%. This number describes the cash distributions relative to the ETF's price. These payments are very frequent, often happening on Thursdays.

It is important to remember that a high distribution yield does not mean an investor earned that same percentage as their total return. High yields can sometimes exist even when the share price is falling.

NAV erosion explanation

"NAV erosion" refers to a decline in the value of the fund's underlying assets. This ETF has an erosion-risk score of 55, which is labeled as "moderate price erosion." While a falling market price does not always prove that the Net Asset Value (NAV) has declined, this score is used as a measurement of erosion risk.

Top Holdings

The holdings in an ETF can change over time. According to the most recent data, the top holding listed is:

• FGXXX (First American Government Obligs X): 1.33%

Pros

• The ETF provides very frequent cash distributions.

• The three-year total return has been high at 287.46%.

Cons

• The ETF has experienced significant share-price declines.

• There is a moderate erosion-risk score.

Beginner takeaway

When studying ETFs like NVDY, always look at both the price return and the total return. The price return tells you how the share price moved, while the total return includes the cash distributions. A high distribution yield can provide frequent income, but it does not guarantee that the share price will stay the same or go up.