Understanding the Invesco California AMT-Free Municipal Bond ETF (PWZ)

What this ETF is trying to do

The Invesco California AMT-Free Municipal Bond ETF (ticker: PWZ) is an exchange-traded fund. While the specific holdings are not listed in this report, this type of ETF generally focuses on municipal bonds from California that are free from certain tax rules (AMT-free).

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 has changed.

• Total return includes both the price changes and the cash distributions (dividends) paid out to investors.

Based on the data provided:

• Year-to-Date (YTD): The price return is approximately -7.62%. However, the total return is higher at -4.93%.

• One Year: The price return was approximately -6.84%, while the total return was approximately -3.26%.

• Three Years: The price return was approximately -3.63%, but the total return was positive at 6.91%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The price was approximately $24.00, and the current price is $22.32.

Income and distribution explanation

Some investors look for ETFs that pay regular cash. This ETF has a distribution yield of approximately 4.07%. It usually pays out money monthly, having made 12 distributions over the last year. Most of these payments occurred on Mondays.

It is important to remember that a high distribution yield is not the same as total return. While distributions provide cash, 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. StockValueFinder uses an "erosion-risk score" to measure this risk.

This ETF has an erosion score of 75, which is labeled as "mild price erosion." This means there has been some mild decline in the share price. However, there is no "severe erosion-risk flag" for this ETF.

Pros

• The three-year total return is positive at 6.91%, meaning the combination of price changes and distributions has grown over that period.

• The ETF provides regular monthly income with a 4.07% distribution yield.

Cons

• The share price has seen a decline in the short term (year-to-date and one-year periods).

• There is a "mild" erosion-risk score, indicating some price deterioration.

Beginner takeaway

When studying PWZ, it is helpful to look at both the share price and the total return. While the share price has gone down recently, the total return is often higher because of the monthly cash distributions. Always remember that receiving regular income does not prevent the share price from falling.