What this ETF is trying to do

The DEFIANCE NASDAQ 100 INCOME TARGET ETF (QQQT) is an exchange-traded fund listed on the NASDAQ. Based on its name and holdings, it focuses on providing income. Its top holding is the INVESCO QQQ TRUST, which makes up 99.82% of the fund. It also has a very small amount (0.1%) in FIRST AMERICAN GOVERNMENT OBLIGS X.

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 only measures how much the share price itself has changed. For QQQT, the one-year price return was approximately -1.19%. The year-to-date (YTD) price return is approximately 5.04%.

• Total Return: This includes both the price changes and the money paid out to investors through distributions. The one-year total return was approximately 21.04%, and the YTD total return was approximately 20.00%.

To see how the price changed over a year, we can look at the estimated price from roughly one year ago, which was $18.53. The current price is $18.31.

Income and distribution explanation

This ETF has a high distribution yield of approximately 19.81%. This number describes the cash payments made to investors relative to the ETF's price. These distributions are usually paid out monthly, with 12 payments recorded over the last year.

It is important to remember that a high distribution yield is not the same as total return. While the 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. Investors often care about this because they want their original investment (the principal) to remain stable while they collect income.

For QQQT, the erosion-risk score is 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag present. This means the fund's price trends do not currently trigger a high-risk warning for erosion.

Pros

• High Yield: The fund offers a high distribution yield of approximately 19.81%.

• Strong Total Return: While the share price saw a small decline over the last year, the total return (which includes distributions) was positive at approximately 21.04%.

Cons

• Price Fluctuations: The one-year price return was negative (approximately -1.19%), meaning the share price itself dropped slightly even though total returns were positive.

• Concentration: The fund is almost entirely invested in one holding (QQQ).

Beginner takeaway

When looking at ETFs like QQQT, always distinguish between the share price and the total return. A fund can have a falling share price but still provide a high total return if the cash distributions are large. High yields can be attractive for income, but they should always be viewed alongside the fund's erosion-risk score and price history.