Understanding the Invesco California Value Municipal Income Trust (VCV)

What this ETF is trying to do

The Invesco California Value Municipal Income Trust (VCV) is an Exchange Traded Fund (ETF). While the specific holdings are not listed in this report, this type of fund generally focuses on municipal income.

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 the money paid out through distributions.

For VCV, the numbers show different trends depending on the time frame:

• Year-to-Date (YTD): The price return is approximately -13.30%, while the total return is approximately -8.48%.

• One Year: The price return was approximately -8.44%, while the total return was approximately -1.63%.

• Three Years: The price return was approximately 7.58%, while the total return was much higher at approximately 31.22%.

To give you an idea of the price movement, the estimated price from roughly one year ago was $10.54. The current price is $9.65.

Income and distribution explanation

Some investors look for ETFs that pay out regular cash. This is called a "distribution yield." VCV has a distribution yield of approximately 8.03%. This means the fund paid out about $0.78 per share over the last 12 months. These payments usually happen monthly, often on a Monday.

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

NAV erosion explanation

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

VCV has an erosion score of 75, which is labeled as "mild price erosion." This is a measurement of risk, not a guarantee that the fund's value has collapsed. There is no "severe erosion-risk flag" for this ETF.

Pros

• The fund provides a relatively high distribution yield of approximately 8.03%.

• Over a three-year period, the total return was positive at approximately 31.22%.

Cons

• The fund has shown a share-price decline in both the one-year and year-to-date periods.

• The five-year total return is negative at approximately -9.63%.

Beginner takeaway

When looking at VCV, notice that the total return is usually higher than the price return. This happens because the distributions help offset some of the share-price declines. However, a high yield can sometimes be accompanied by a falling share price. Always look at the total return to get the full picture of how an investment has performed.