What this ETF is trying to do

The iShares Residential and Multisector Real Estate ETF (ticker: REZ) is an exchange-traded fund that focuses on real estate. It invests in different types of properties, such as residential buildings and other real estate sectors. Based on its top holdings, the fund has significant exposure to companies like Welltower Inc (22.61%) and Public Storage (7.70%). Because the list of holdings provided is partial, these represent the largest companies in the fund rather than all of them.

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 change in share price and any cash distributions (dividends) paid out.

For REZ, the numbers show:

• Year-to-Date (YTD): The price return is approximately 6.07%, while the total return is approximately 7.29%.

• One-Year: The price return is approximately 5.11%, while the total return is approximately 7.48%.

• Three-Year: The price return is approximately 34.02%, while the total return is approximately 43.94%.

To give you an idea of price movement, the estimated price from roughly one year ago was $83.40. The current price is $87.66.

Income and distribution explanation

Some investors look for ETFs that pay out cash, known as distributions. REZ has a distribution yield of approximately 2.22%. This means the cash distributed is about 2.22% of the ETF's price. Over the last 12 months, there were 3 payouts. The distributions are described as irregular or less frequent, often occurring on Tuesdays.

It is important to remember that a distribution yield is not the same as total return. While distributions provide cash, they are separate from the growth of the share price itself.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases significantly over time. Some investors worry about this because they want to make sure their original investment stays stable while they collect income.

For REZ, the erosion-risk score is 100, and the label states "No price erosion detected." The erosion severity is rated as "good," and there is no severe erosion-risk flag present.

Pros

• The fund has shown positive total returns over the one-year and three-year periods.

• The data shows no detected price erosion.

Cons

• Distributions are irregular and do not happen on a set monthly or quarterly schedule.

• The fund's holdings are concentrated, with one company (Welltower Inc) making up a large portion of the portfolio.

Beginner takeaway

When studying REZ, notice the difference between the price return and the total return. The total return is higher because it accounts for the cash distributions paid to investors. While the fund provides a distribution yield, always remember that high yields do not guarantee that the share price will go up. Always look at both the price movement and the total return to get a full picture of how an ETF is performing.