ETF Education Report: SPSK

What this ETF is trying to do

The SP FUNDS Dow Jones Global Sukuk ETF (ticker: SPSK) is an exchange-traded fund. While the specific holdings are not listed in this report, ETFs like this generally aim to provide exposure to a specific group of investments.

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 has changed.

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

For SPSK, the numbers show:

• Year-to-Date (YTD): The price return is approximately -4.74%, while the total return is approximately -2.23%.

• One Year: The price return is approximately -5.95%, while the total return is approximately -1.49%.

• Three Year: The price return is approximately 0.58%, while the total return is much higher at approximately 12.39%.

To give you an idea of the price movement, the estimated price from roughly one year ago was $18.49. The current price is $17.39.

Income and distribution explanation

Some investors look for ETFs that pay out regular cash. This is called the distribution yield. For SPSK, the distribution yield is approximately 4.85%. These payments are usually made monthly, with the most common day for a payment being Friday.

It is important to remember that a high distribution yield does not mean you are making that much money in total. As seen in the one-year data, an ETF can have a positive yield but still have a negative total return if the share price drops significantly.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF decreases. While a falling share price is not the same thing as NAV erosion, we use "erosion scores" to measure risk.

SPSK has an erosion score of 75, which is labeled as "Mild price erosion." This is considered a mild risk level, and there is no severe erosion-risk flag for this ETF.

Pros

• The ETF provides a distribution yield of approximately 4.85%.

• Over a three-year period, the total return has been positive at approximately 12.39%.

Cons

• The share price has declined over the last year (a one-year price return of approximately -5.95%).

• The total return has been negative for both the year-to-date and one-year periods.

Beginner takeaway

When studying SPSK, notice the difference between the share price and the total return. Because this ETF pays out regular distributions, the total return is often higher than the price return alone. However, because the share price has been falling recently, the total return has also been negative in the short term. Always look at both price and total returns to get the full picture.