ETF Education Report: First Trust Developed International Equity Select ETF (RNDM)

What this ETF is trying to do

The First Trust Developed International Equity Select ETF, trading under the ticker RNDM on the NASDAQ, is an exchange-traded fund. While the specific investment strategy is not detailed in the provided data, ETFs like this generally aim to provide exposure to stocks in developed international markets.

What the numbers show

The current price of RNDM is $50.35. Looking back at history, we can look at an estimated price from roughly one year ago, which was approximately $45.59.

It is important to understand the difference between price return and total return:

• Price Return: This measures only how much the share price changed. The one-year price return was approximately 10.44%. The year-to-date (YTD) price return was approximately 10.51%. Over three years, the price return was approximately 11.46%.

• Total Return: This measures the overall return, which includes the impact of distributions. The one-year total return was approximately 13.43%. The YTD total return was approximately 10.51%. Over three years, the total return was approximately 18.92%.

Because the total return is higher than the price return over the last year, it shows that distributions added value to the overall return.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 2.42%. Over the last 12 months, there were 3 distributions. The data describes the frequency of these payments as "irregular" or "less frequent." It is important to remember that a distribution yield is not the same as a total return. Distributions provide cash income, but they do not guarantee that your original investment (your principal) will stay the same value.

NAV erosion explanation

"NAV" stands for Net Asset Value, which is essentially the value of the assets held by the ETF. "NAV erosion" happens when the value of those underlying assets declines significantly over time.

For RNDM, the erosion-risk score is 100, and the label is "No price erosion detected." The erosion severity is described as "good," and there is no severe erosion-risk flag present. This means the data does not show signs of the substantial price deterioration that often leads to NAV erosion.

Pros

• The ETF has shown positive total returns over one, three, and year-to-date periods.

• The erosion-risk measurements suggest a stable price history without detected erosion.

Cons

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

• Total holdings information was not supplied in the current data.

Beginner takeaway

When looking at ETFs, always distinguish between the share price and the total return. The share price tells you what the ETF costs to buy, while the total return tells you how much you actually gained or lost when including cash payments. For this ETF, the total return has been higher than the price return, meaning distributions have contributed to the overall performance.