Understanding the Invesco DB US Dollar Index Bullish Fund (UUP)

What this ETF is trying to do

The Invesco DB US Dollar Index Bullish Fund (UUP) is an ETF designed to track the performance of the U.S. Dollar. Investors often look at this type of fund when they want exposure to the strength of the dollar against a basket of other currencies.

What the numbers show

The current price of UUP is $29.02. Looking at how the share price has moved, we can see different trends over various timeframes:

• Year-to-Date (YTD): The price return has been approximately 7.36%.

• One Year: The share-price return was about 3.53%. However, when including distributions, the one-year total return was approximately 7.08%.

• Three Years: The share-price return was approximately -2.39%. When including distributions, the three-year total return was approximately 12.23%.

• Five Years: The five-year total return was approximately 33.20%.

It is important to note that "price return" only tracks the change in the share price, while "total return" includes the impact of distributions.

Income and distribution explanation

UUP has a distribution yield of approximately 3.19%. This means the cash distributions represent about 3.19% of the ETF's price. The trailing distributions over the last year totaled approximately $0.93 per share.

The distribution frequency is described as "irregular" or "less frequent," with only one payout recorded in the last 12 months. Because these payments do not happen on a regular schedule, investors should not rely on them as a steady stream of monthly income.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the fund's underlying assets). The supplied data is sufficient to evaluate price erosion, but it does not include enough historical NAV-per-share data to confirm or rule out NAV erosion.

However, we can look at the "erosion-risk score." UUP has an erosion score of 94, which is labeled as "Stable / sideways," and the erosion severity is rated as "good." There is no severe erosion-risk flag for this fund.

Pros

• The fund shows a positive total return over the one-year, three-year, and five-year periods.

• The erosion-risk measurements suggest the fund is currently considered stable.

Cons

• The distribution frequency is irregular, meaning payments are not predictable.

• The three-year price return was negative, even though the total return was positive due to distributions.

Beginner takeaway

UUP is an ETF focused on the U.S. Dollar. While it provides some cash distributions, they are not paid out on a regular schedule. When looking at this fund, it is helpful to distinguish between the share price movement (price return) and the overall performance including cash payments (total return).