Understanding the XLCI ETF

What this ETF is trying to do

The XLCI is an Exchange Traded Fund (ETF) that focuses on providing income. It is categorized as an "option income" ETF. This means it uses specific financial strategies to try and generate cash for investors. Its main goal is to provide regular payments, often referred to as distributions.

What the numbers show

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

• Price Return: This measures only the change in the share price. For the year, the one-year price return was approximately -7.05%. Year-to-date (YTD), the price return was approximately -7.37%.

• Total Return: This includes both the price changes and the cash distributions paid out. The one-year total return was approximately 3.93%, and the YTD total return was approximately 0.56%.

To visualize the price change, we can look at an estimated price from roughly one year ago, which was $25.11. The current price is $23.34. This shows that while the share price has gone down, the total return (which includes cash payments) is higher than the price return alone.

Income and distribution explanation

This ETF has a high distribution yield of approximately 11.68%. This number describes the cash payments relative to the ETF's price. These distributions are usually paid out monthly, with 12 payments recorded over the last year. Most of these payments have occurred on Mondays.

It is important to remember that a high distribution yield does not mean you earned that same percentage as your total return. You must look at the "total return" figure to see how much you actually gained or lost including those payments.

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. This ETF has an erosion score of 75, which is labeled as "mild price erosion." While the share price has declined, there is no "severe erosion-risk flag" present for this fund.

Pros

• The ETF provides a high distribution yield, which can provide regular cash income.

• The total return is positive even though the share price has declined.

Cons

• The share price has experienced a decline (negative price return).

• There is a "mild" erosion-risk score, meaning the price has shown some downward movement.

Beginner takeaway

For new investors, XLCI shows how price and income work differently. Even when the share price of an ETF goes down, the total return can be positive if the cash distributions are large enough. However, high yields can sometimes come alongside a falling share price, so it is important to look at both numbers together.

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*Note: This report is for educational purposes only and does not constitute financial advice. It does not recommend buying, selling, or holding this ETF.*