Understanding the Global X Variable Rate Preferred ETF (PFFV)

What this ETF is trying to do

The Global X Variable Rate Preferred ETF (PFFV) is an exchange-traded fund listed on the NYSE. While the specific holdings are not listed in this report, ETFs like this generally aim to provide investors with regular income through distributions.

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 the change in the share price. For PFFV, the share price has seen some declines. The one-year price return was approximately -5.89%, and the year-to-date (YTD) price return was approximately -1.53%.

• Total Return: This measures the overall change, including the money paid out to investors through distributions. Because of these payments, the total return numbers are higher than the price returns. For example, the one-year total return was approximately 1.90%, and the YTD total return was approximately 3.26%.

The current price of one share is $21.88. An estimated price from roughly one year ago was approximately $23.25.

Income and distribution explanation

This ETF is designed to provide regular cash payments, known as distributions. The distribution yield is approximately 8.14%. This means the amount of cash distributed is high relative to the current share price. These payments usually happen monthly, with 12 distributions recorded over the last year.

It is important to remember that a high distribution yield does not mean you have earned that same percentage in 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. StockValueFinder uses an "erosion-risk score" to measure this risk. PFFV has an erosion score of 75, which is labeled as "mild price erosion." This is a measurement of risk and does not mean the fund's value has definitely collapsed. There is no severe erosion-risk flag for this ETF.

Pros

• The ETF provides a high distribution yield of approximately 8.14%.

• The total return figures (which include distributions) have been positive over the one-year, year-to-date, and three-year periods.

Cons

• The share price has experienced declines (price return) over the one-year and three-year periods.

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

Beginner takeaway

For new investors, the main lesson here is to distinguish between price and total return. While the share price of PFFV has gone down recently, the total return has stayed positive because of the cash distributions paid to investors. Always look at the total return to get a full picture of how an income-focused ETF is performing.