ETF Education Report: Macquarie Energy Transition ETF (PWER)

What this ETF is trying to do

The Macquarie Energy Transition ETF (PWER) is an exchange-traded fund that focuses on the energy transition. It holds a variety of companies in its portfolio. Based on the Top Holdings provided, these include companies like ERO Copper Corp, Hudbay Minerals Inc, and Valero Energy Corp. Because the list of holdings is partial, these are just some of the companies the fund invests in, not all of them.

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 how much the share price has changed. For PWER, the year-to-date (YTD) price return is approximately 26.69%. The one-year price return is approximately 33.45%.

• Total Return: This includes the price change plus any cash distributions (dividends) paid out. The YTD total return is approximately 27.51%, and the one-year total return is approximately 35.09%.

The current price of the ETF is $44.36. An estimated price from roughly one year ago was approximately $33.24.

Income and distribution explanation

Some investors look for "income," which is cash paid out by the ETF. This is called the distribution yield. For PWER, the distribution yield is approximately 1.11%. Over the last 12 months, there were 3 distributions. The frequency of these payments is described as irregular or less frequent. It is important to remember that a distribution yield tells you how much cash was paid out, but it is not the same thing as your total return.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases significantly. Some investors worry about this because they want to keep their original investment amount stable. For PWER, the erosion-risk score is 100, and the label states "No price erosion detected." There is no severe erosion-risk flag for this ETF.

Pros

• The ETF has shown positive price returns both year-to-date and over the last year.

• The total return is higher than the price return, meaning the distributions added value to the overall performance.

• The erosion-risk measurement is rated as "good."

Cons

• The distribution frequency is irregular, meaning payments do not happen on a steady schedule.

• The income rating grade is a "C," which suggests the income level may not be high for those seeking regular cash flow.

Beginner takeaway

PWER has experienced growth in its share price over the last year. When studying this ETF, remember to look at both the price return and the total return to see the full picture of how the investment performed. Always distinguish between the cash you receive from distributions and the actual change in the share price.