ETF Education Report: WTMY

What this ETF is trying to do

The WisdomTree High Income Laddered Municipal Fund (WTMY) is an exchange-traded fund (ETF). Based on its name, this fund focuses on providing income through municipal bonds.

What the numbers show

When looking at an ETF, it is important to understand two different types of returns: price return and total return.

• Price Return: This measures only the change in the share price. For WTMY, the year-to-date (YTD) price return is approximately -6.09%. The one-year price return is approximately -5.96%.

• Total Return: This includes the share price change plus any cash distributions (dividends) paid out. The YTD total return is approximately -3.28%, and the one-year total return is approximately -2.16%.

Because the total return numbers are higher than the price return numbers, it shows that the cash distributions helped offset some of the share-price decline.

To visualize this, if you had invested in the shares at the estimated price from roughly one year ago ($25.41) and the price is now $23.89, the share price alone has gone down.

Income and distribution explanation

This ETF has a distribution yield of approximately 4.19%. This number describes the cash distributions relative to the current ETF price. The fund usually pays out money monthly, with 12 payouts recorded over the last year.

It is important to remember that a high distribution yield is not the same as total return. While distributions provide cash income, they do not guarantee that your original investment will stay the same value.

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.

WTMY has an erosion score of 75, which is labeled as "Mild price erosion." This is a measurement of risk and does not necessarily mean the fund's value has definitely collapsed, but it indicates a trend of mild price deterioration. There is no "severe erosion-risk flag" for this fund.

Pros

• The fund provides regular cash distributions (usually monthly).

• The total return is higher than the price return, meaning distributions are helping to cushion the share-price decline.

Cons

• The fund has experienced both a YTD and a one-year share-price decline.

• The erosion-risk score indicates "mild price erosion."

Beginner takeaway

When looking at income-focused ETFs like WTMY, don't just look at the distribution yield. Always check the total return to see how the share price is performing alongside those payments. A fund can pay out cash even while its share price is falling.