ETF Education Report: TCW Transform Systems ETF (PWRD)

What this ETF is trying to do

The TCW Transform Systems ETF (ticker: PWRD) is an exchange-traded fund listed on the NASDAQ. While the specific investment strategy isn't detailed in the data, it holds a variety of companies across different sectors. Based on its Top Holdings, the fund includes companies like GE Aerospace, Vertiv Holdings Co, and Applied Materials Inc. These holdings represent a partial list of the 35 total companies held in the fund.

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 only tracks how much the share price has changed. Total return includes both the price change and any cash distributions (dividends) paid out.

Here is how PWRD has performed:

• Year-to-Date (YTD): The price return is approximately 12.62%, while the total return is approximately 12.67%.

• One-Year: The price return was approximately 9.41%, and the total return was approximately 9.46%.

• Three-Year: The price return was approximately 115.24%, and the total return was approximately 117.56%.

To give you an idea of price movement, the current price is $108.29. The estimated price from roughly one year ago was approximately $98.98.

Income and distribution explanation

Some investors look for "income," which is cash paid out by the ETF. PWRD has a distribution yield of approximately 5.63%. This number describes the cash distributions relative to the ETF's price. It is important to remember that a high distribution yield is not the same as total return.

The data shows that distributions for this ETF are "irregular" or "less frequent," with one payout recorded in the last 12 months.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the assets held by the fund). Some ETFs lose value because they pay out more cash than they earn. However, for PWRD, 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 fund has shown positive price returns and total returns over the one-year and three-year periods.

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

Cons

• Distributions are irregular and do not happen on a regular schedule.

• The list of holdings provided is only a partial list of the total companies held.

Beginner takeaway

When studying PWRD, notice that the total return is slightly higher than the price return. This happens because the fund pays out distributions in addition to the share price increasing. Always remember that while distributions provide cash, they are different from the overall growth of your investment.