ETF Report: TOUCHSTONE SECURITIZED INCOME ETF (TSEC)

What this ETF is trying to do

The TOUCHSTONE SECURITIZED INCOME ETF (TSEC) is an exchange-traded fund listed on the NYSE. While the specific investment strategy isn't detailed in the data, its name suggests it focuses on securitized income.

What the numbers show

It is important to understand that "price return" and "total return" are different things. Price return only tracks how the share price moves. Total return includes both the price movement and the cash distributions paid out to investors.

Here is what the data shows for TSEC:

• Year-to-Date (YTD): The price return is approximately -3.23%. However, the total return is positive at about 1.33%.

• One Year: The price return was approximately -3.85%, while the total return was about 3.34%.

• Three Years: The price return was approximately 0.18%, but the total return was much higher at about 21.16%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The estimated price was $26.34, and the current price is $25.33. This shows a share-price decline over that period.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 7.41%. This number describes the cash paid out relative to the ETF's price.

The data shows that TSEC usually pays distributions monthly, with 13 distributions recorded over the last year. Most of these payments occurred on Thursdays. It is important to remember that a high distribution yield does not mean an investor earned that same percentage as total return. You must look at the "total return" figure to see the full picture.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the assets held by the fund). While a falling share price can sometimes be related to erosion, they are not the same thing.

StockValueFinder uses an "erosion-risk score" to measure this risk. TSEC has an erosion score of 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag present.

Pros

• The ETF has a history of positive total returns over the one-year and three-year periods.

• It provides a significant distribution yield of approximately 7.41%.

Cons

• The ETF has experienced share-price declines (negative price returns) over the year-to-date and one-year periods.

Beginner takeaway

When looking at TSEC, notice the difference between the falling share price and the positive total return. Even though the price of a single share went down, the cash distributions helped make the total return positive. Always remember that high yields can be misleading if the share price is dropping significantly.