ETF Education Report: SMI 3FOURTEEN REAL ASSET ALLOCATION ETF (RAA)

What this ETF is trying to do

The SMI 3FOURTEEN REAL ASSET ALLOCATION ETF (ticker: RAA) is an exchange-traded fund listed on the NASDAQ. While specific holdings are not listed in the current data, this type of ETF generally aims to manage a collection of real assets.

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.

• Total Return: This includes both the change in share price and any cash distributions (dividends) paid out to investors.

For RAA, the numbers show growth in both areas:

• Year-to-Date (YTD): The price return is approximately 9.73%, while the total return is approximately 10.77%.

• One Year: The price return is approximately 11.78%, while the total return is approximately 14.25%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The price was approximately $26.99, and the current price is $30.17.

Income and distribution explanation

Some investors look for ETFs that pay out cash, known as distributions. RAA has a distribution yield of approximately 2.07%. This means the cash paid out is about 2.07% of the ETF's price. Over the last 12 months, there were 4 distributions, which usually happen on a quarterly basis.

It is important to remember that a distribution yield is not the same as total return. A high yield does not guarantee that an investor's total investment will grow.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF decreases significantly over time. StockValueFinder uses an erosion-risk score to help measure this risk.

For RAA, the erosion score is 100, which is labeled as "No price erosion detected." The erosion severity is rated as "good," and there is no severe erosion-risk flag present. This means the data does not show signs of the price deteriorating in a way that suggests high erosion risk.

Pros

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

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

• The erosion-risk measurements currently show no signs of significant price deterioration.

Cons

• The data provided does not list any specific top holdings, so the exact assets owned by the fund are unknown from this report.

• The income rating grade is a "C," which suggests the distribution level may be moderate rather than high.

Beginner takeaway

When studying RAA, notice the difference between how much the share price went up and the total return. Because the total return is higher than the price return, it shows that the cash distributions helped increase the overall value. Always remember to look at both price movement and distributions together to get a full picture of how an ETF is performing.