Understanding the F/M US Treasury 7 Year Note ETF (USVN)

What this ETF is trying to do

The USVN ETF is designed to track U.S. Treasury 7-year notes. These are essentially loans made to the United States government. Investors use these types of ETFs to get exposure to government debt.

What the numbers show

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

• Price Return: This only tracks how much the share price itself has changed.

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

For USVN, the numbers show different trends depending on how much time has passed:

• Year-to-Date (YTD): The price return is approximately -5.30%, while the total return is approximately -2.82%.

• One Year: The price return is approximately -5.73%, while the total return is approximately -2.12%.

• Three Years: The price return is approximately -3.09%, but the total return is much higher at approximately 9.09%.

To give you an idea of the price movement, the estimated price from roughly one year ago was $48.82. The current price is $46.03.

Income and distribution explanation

Some investors look for ETFs that pay out regular cash. This is called the distribution yield. For USVN, the distribution yield is approximately 3.95%. This ETF usually pays out money monthly, with 12 payments made over the last year.

It is important to remember that a high distribution yield does not mean you are guaranteed to make money. Even if an ETF pays you cash, the share price could still go down.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF decreases over time. StockValueFinder uses an erosion-risk score to measure this risk.

USVN has an erosion score of 75, which is labeled as "mild price erosion." This means there has been some mild deterioration in the price. However, this is not flagged as a "severe erosion-risk."

Pros

• The ETF provides regular monthly distributions.

• Over a three-year period, the total return was positive at approximately 9.09%, even though the share price itself declined during that time.

Cons

• The share price has seen a decline in the short term (both year-to-date and over the last year).

• There is a "mild" erosion-risk score present.

Beginner takeaway

When studying USVN, notice how the total return is often higher than the price return. This happens because the cash distributions help offset some of the losses from the falling share price. Always look at both the price movement and the total return to get the full picture of how an ETF is performing.