ETF Education Report: abrdn Healthcare Opportunities Fund (THQ)

What this ETF is trying to do

The abrdn Healthcare Opportunities Fund (ticker: THQ) is an ETF traded on the NYSE. While the specific investment goals are not listed in the data, it is categorized as an ETF and is not a leveraged, inverse, or crypto-related fund.

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 the change in the share price.

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

For THQ, the numbers show a difference between these two:

• Year-to-Date (YTD): The price return is approximately -2.40%, but the total return is 6.32%.

• One Year: The price return was approximately 10.08%, while the total return was much higher at 23.46%.

• Three Year: The price return was approximately 7.61%, while the total return was 48.86%.

To visualize the price change, we can look at an estimated starting point. The estimated price from roughly one year ago was $16.96. The current price is $18.67.

Income and distribution explanation

This ETF provides regular cash payments, known as distributions. The trailing distributions are $2.15. This results in a distribution yield of approximately 11.52%. The fund usually pays these out monthly, with 12 payments made over the last year.

It is important to remember that a high distribution yield does not mean an investor earned that same percentage in total return. Total return is the most complete way to see how much value was actually created.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF decreases over time. Some investors worry that high payouts might cause this. However, for THQ, the erosion-risk 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.

Pros

• The fund has a history of positive total returns over one, three, and five years.

• It offers a high distribution yield for those looking for regular cash income.

Cons

• The year-to-date price return is currently negative, meaning the share price has dropped recently even though the total return remains positive.

Beginner takeaway

When studying THQ, notice the gap between price return and total return. Because this fund pays out significant cash distributions, the total return is often much higher than the price return alone. Always look at the total return to get a full picture of performance, and remember that high yields are not a guarantee of future results.