ETF Education Report: VANECK PREFERRED SECURITIES EX FINANCIALS ETF (PFXF)

What this ETF is trying to do

The VANECK PREFERRED SECURITIES EX FINANCIALS ETF (PFXF) is an exchange-traded fund. Based on its name, it focuses on preferred securities but excludes the financial sector.

What the numbers show

When looking at an ETF, it is important to know the difference between "price return" and "total return." Price return only tracks how much the share price changes. Total return includes both the price change and any cash distributions paid out to investors.

Here is what the data shows for PFXF:

• Year-to-Date (YTD): The price return is approximately 0.51%. However, the total return is higher at approximately 4.52%.

• One Year: The price return was a loss of approximately -1.00%. Despite this share-price decline, the one-year total return was approximately 5.03%.

• Three Years: The price return was approximately 8.50%, while the three-year total return was much higher at approximately 33.62%.

To visualize the price change, the estimated price from roughly one year ago was $17.93. The current price is $17.75.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 5.98%. This means the amount of cash paid out is about 5.98% of the current share price. These payments usually happen monthly, and over the last 12 months, there were 12 payouts.

It is important to remember that a high distribution yield is not the same as total return. While distributions provide cash income, they do not guarantee that your original investment will stay the same value.

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.

For PFXF, the erosion-risk score is 94. This is labeled as "Stable / sideways," and the erosion severity is rated as "good." There is no severe erosion-risk flag for this ETF.

Pros

• The ETF has a high income rating grade of "A."

• The total returns over one, three, and five years have been positive.

Cons

• The one-year price return shows a slight decline in the share price.

• There is no data provided for specific top holdings to show exactly what companies are in the fund.

Beginner takeaway

When looking at PFXF, notice that even when the share price went down slightly over the last year, the total return remained positive because of the cash distributions. This shows how distributions can add value to an investment even when the price itself is not rising. Always look at both price return and total return to get the full picture.