Understanding the F/M US Treasury 20 Year Bond ETF (UTWY)

What this ETF is trying to do

The UTWY ETF is an exchange-traded fund that focuses on U.S. Treasury bonds with a 20-year maturity. Investors often look at these types of funds to gain exposure to long-term government debt.

What the numbers show

When looking at an ETF, it is important to separate "price return" from "total return."

• Price Return: This measures only the change in the share price. For UTWY, the one-year price return was approximately -11.96%. The year-to-date (YTD) price return was approximately -10.30%.

• Total Return: This includes both the share price changes and the money paid out to investors through distributions. The one-year total return was approximately -7.76%, and the YTD total return was approximately -7.09%.

To see how the price has moved, we can look at an estimated price from roughly one year ago. The price was approximately $44.29, while the current price is approximately $39.00. Interestingly, while the short-term returns have been negative, the three-year total return was approximately 3.32%.

Income and distribution explanation

This ETF provides cash payments to investors, known as distributions. The distribution yield is approximately 5.11%. This means the amount of cash paid out is about 5.11% relative to the current ETF price. These payments usually happen monthly, with 12 payments made over the last year.

It is important to remember that a high distribution yield does not mean you are earning that much in total profit. You must look at the total return to see how the share price and distributions worked together.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases. StockValueFinder uses an "erosion-risk score" to measure this risk. UTWY has an erosion score of 75, which is labeled as "mild price erosion." While the share price has declined recently, this score is a measurement of risk rather than a definitive statement that the fund's value has collapsed. There is no severe erosion-risk flag for this ETF.

Pros

• The fund provides regular monthly cash distributions.

• The three-year total return has been positive at approximately 3.32%.

Cons

• The share price has seen a decline over the last year and year-to-date.

• The fund shows a "mild" erosion-risk score due to price movement.

Beginner takeaway

When looking at UTWY, remember that the share price and the cash distributions tell different stories. While the price of a single share has gone down over the last year, the total return (which includes the cash paid to you) was slightly better than the price return alone. Always check both numbers to understand how an investment is performing.