ETF Education Report: SOFI ENHANCED YIELD ETF (THTA)

What this ETF is trying to do

The SOFI ENHANCED YIELD ETF (THTA) is an exchange-traded fund listed on the NYSE. Based on its name, this fund focuses on providing yield to investors.

What the numbers show

When looking at an ETF, it is important to understand the difference between "price return" and "total return."

• Price Return: This measures only the change in the share price. For THTA, the year-to-date (YTD) price return is approximately 3.17%. The one-year price return is approximately 3.78%.

• Total Return: This measures the overall performance, including both share price changes and the money paid out as distributions. THTA's YTD total return is approximately 11.59%, and its one-year total return is approximately 15.69%.

Because the total return is higher than the price return, it shows that the distributions added significant value to the overall performance.

To visualize the price change, we can look at an estimated starting point. The estimated price from roughly one year ago was $15.13. The current price is $15.70.

Income and distribution explanation

This ETF provides regular cash payments, known as distributions. The distribution yield is approximately 10.62%. This number describes the cash payments relative to the current ETF price. THTA usually pays these out monthly, with 12 payments recorded over the last year.

It is important to remember that a high distribution yield does not mean an investor earned that exact percentage as their total return. Total return is the more complete picture of how much value was gained.

NAV erosion explanation

"NAV erosion" refers to a situation where the value of the underlying assets in the fund decreases. Investors often watch this because they want to make sure their original investment (the principal) stays stable while they collect income.

For THTA, the erosion-risk score is 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag present. This suggests the fund's price trend has been relatively stable according to these measurements.

Pros

• The fund shows a significant difference between price return and total return, meaning distributions have contributed to overall gains.

• The erosion-risk score suggests the fund is currently categorized as stable or sideways.

Cons

• The top holdings data was not supplied, so the specific companies inside the fund are unknown from this report.

• Total return data for the three-year period was not supplied.

Beginner takeaway

When looking at high-yield ETFs like THTA, always look at the total return rather than just the distribution yield. The distribution yield tells you about the cash payments, but the total return tells you how the investment actually performed including those payments. Additionally, checking the erosion-risk score can help you understand if the fund's price is staying relatively steady while it pays out income.