Understanding the Invesco New York AMT-Free Municipal Bond ETF (PZT)

What this ETF is trying to do

The PZT ETF is an exchange-traded fund that focuses on municipal bonds from New York. These are essentially loans made to local government entities. This specific fund is "AMT-free," which is a technical term related to how certain tax rules apply to these bonds.

What the numbers show

When looking at an ETF, it is important to know the difference between "price return" and "total return."

• Price Return: This only tracks how the share price changes. For PZT, the one-year price return was approximately -5.19%. The year-to-date (YTD) price return was approximately -5.42%.

• Total Return: This includes the share price changes *plus* any cash distributions paid out to investors. The one-year total return was approximately -1.60%, and the YTD total return was approximately -3.00%.

Because the total return is higher than the price return, it shows that the cash distributions helped offset some of the share-price decline. Looking further back, the three-year total return was approximately 6.18%, even though the three-year price return was -3.68%.

Income and distribution explanation

Some investors look for ETFs that pay out regular cash. PZT has a distribution yield of approximately 3.93%. This means the amount of cash distributed is about 3.93% of the current share price. These distributions usually happen monthly, and over the last 12 months, there were 12 payouts.

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. PZT has an erosion score of 75, which is labeled as "mild price erosion." While the share price has seen some declines, there is no severe erosion-risk flag for this ETF.

Pros

• The fund provides regular monthly distributions.

• The total return over three years has been positive (approximately 6.18%), even though the share price itself went down during that time.

Cons

• The fund has experienced a share-price decline over the last year and year-to-date.

• The erosion-risk score indicates "mild price erosion."

Beginner takeaway

When looking at PZT, it is important to distinguish between the price of the shares and the total return. While the share price has dropped recently, the cash distributions provided to investors helped make the total return less negative. Always remember that a high distribution yield does not guarantee that the share price will stay stable.