ETF Education Report: Invesco Trust for Investment Grade Municipals (VGM)

What this ETF is trying to do

The Invesco Trust for Investment Grade Municipals (ticker: VGM) is an ETF. While the specific holdings are not listed in this report, this type of fund generally focuses on municipal bonds. These are often used by investors looking for regular income.

What the numbers show

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

• Year-to-Date (YTD): The price return is approximately -6.75%. However, the YTD total return is -1.36%.

• One Year: The one-year price return was approximately -3.97%. The one-year total return was 3.52%.

• Three Year: The three-year price return was approximately 6.62%. The three-year total return was much higher at 31.35%.

To visualize the price change, we can look at an estimated price from roughly one year ago, which was $10.07. The current price is $9.67.

Income and distribution explanation

This ETF has a distribution yield of approximately 8.02%. This number describes the cash distributions relative to the ETF's price. The trailing distributions were approximately $0.78 per share. These payments usually happen monthly, often on a Monday.

It is important to remember that a high distribution yield does not mean an investor earned that exact percentage as their total return. You must look at the "total return" figure to see how the price changes and distributions worked together.

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 look like erosion, they are not always the same thing.

For this ETF, the erosion-risk score is 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 three-year total return has been positive at 31.35%.

• The fund provides regular monthly distributions.

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

Cons

• The year-to-date price return has been negative (-6.75%).

• The five-year total return is approximately -7.63%.

Beginner takeaway

When looking at an ETF like VGM, don't just look at the distribution yield. A high yield can sometimes be paired with a falling share price. Always compare the price return (how the share price moves) with the total return (the full picture including cash payments) to get a better understanding of how the investment has performed.