Understanding the Nuveen AMT-Free Municipal Credit Income Fund (NVG)

What this ETF is trying to do

The Nuveen AMT-Free Municipal Credit Income Fund (NVG) is an ETF listed on the NYSE. While specific holdings are not listed in this report, the fund's name suggests it focuses on municipal credit income.

What the numbers show

When looking at an ETF, it is important to understand two different types of returns: price return and total return.

• Price Return: This measures only the change in the share price. For NVG, the year-to-date (YTD) price return is approximately -9.32%. The one-year price return was approximately -5.98%.

• Total Return: This includes both the share price changes and the cash distributions paid out to investors.

Because of these distributions, the total return numbers look different from the price return numbers. For example, while the one-year price return was -5.98%, the one-year total return was actually positive at approximately 1.39%. Over three years, the price return was about 6.10%, but the total return was much higher at approximately 31.32%.

Based on an estimated price from roughly one year ago of $12.21, the current price is $11.48.

Income and distribution explanation

This ETF has a distribution yield of approximately 8.26%. This means the fund pays out a significant amount of cash relative to its price. These distributions usually happen monthly, often on a Friday. In the last 12 months, there were 12 distributions totaling $0.948 per share.

It is important to remember that a high distribution yield does not mean the investor earned that same percentage as total return. You must look at the total return to see how the investment performed overall.

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. NVG has an erosion score of 75, which is labeled as "mild price erosion." This is a measurement of risk and does not necessarily mean the fund's value has collapsed.

Pros

• The fund provides a high distribution yield of approximately 8.26%.

• The three-year total return has been positive at approximately 31.32%.

• It receives an income rating grade of "A."

Cons

• The fund has experienced a share-price decline recently, with a YTD price return of approximately -9.32%.

• The five-year total return is negative at approximately -13.10%.

• There is a "mild" erosion-risk score of 75.

Beginner takeaway

For new investors, NVG shows how price and income work differently. Even when the share price goes down (price return), the cash paid out to you can help make the overall result (total return) positive. However, always keep an eye on erosion-risk scores and remember that high yields do not guarantee that the share price will stay stable.