What this ETF is trying to do

The FIRST TRUST BLOOMBERG SHAREHOLDER YIELD ETF (ticker: SHRY) is an exchange-traded fund designed to invest in companies that provide shareholder yield. This ETF holds a variety of different stocks, including companies like MetLife Inc and PayPal Holdings Inc. As of the latest data, the fund holds 51 different companies in total.

What the numbers show

When looking at how this ETF has performed, it is important to look at two different types of returns: price return and total return.

• Price Return: This measures only the change in the share price. The year-to-date (YTD) price return is approximately 8.59%. Over the last year, the price return was about 6.78%. Looking further back, the three-year price return was approximately 46.98%.

• Total Return: This includes both the share price changes and the money paid out through distributions. The YTD total return is approximately 9.78%, while the one-year total return was about 8.63%. The three-year total return was approximately 54.62%.

Because the total return is higher than the price return, it shows that distributions have added to the overall value of the investment.

Income and distribution explanation

SHRY provides cash payments to investors, known as distributions. The current distribution yield is approximately 1.63%. This means the amount of cash paid out is 1.63% relative to the current ETF price. The trailing distributions over the last year totaled approximately $0.74 per share.

The fund usually pays these distributions on a quarterly basis, having made 4 payments over the last 12 months. Most of these payments have historically occurred on Thursdays.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the assets held by the fund). The supplied data is sufficient to evaluate price erosion, but it does not include enough historical NAV-per-share data to confirm or rule out NAV erosion.

However, we can look at the "erosion-risk score" to see how the share price is behaving. SHRY has an erosion score of 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.

Pros

• Positive Returns: The ETF has shown positive price returns and total returns over the one-year and three-year periods.

• Low Erosion Risk: Based on the supplied erosion score, there are no signs of significant price deterioration.

• Diversification: The fund holds 51 different companies, which helps spread investment across various sectors.

Cons

• Moderate Yield: The distribution yield of 1.63% may be considered low for investors specifically looking for very high immediate income.

Beginner takeaway

SHRY is an ETF that focuses on shareholder yield. For a new investor, the most important thing to notice is the difference between price return and total return. While the share price itself has grown, the "total return" is even higher because it includes the cash distributions paid out to shareholders. Currently, the fund shows no signs of price erosion according to its risk score.