ETF Education Report: XLSI

What this ETF is trying to do

The STATE STREET(R) CONSUMER STAPLES SELECT SECTOR SPDR(R) PREMIUM INCOME ETF (XLSI) is an exchange-traded fund. This specific fund is categorized as an "option income" ETF. This means it uses certain strategies to try and generate extra cash for investors.

What the numbers show

It is important to understand that "price return" and "total return" are two different things. Price return only tracks how much the share price moves up or down. Total return includes those price changes plus any cash distributions paid out.

For XLSI, the numbers show:

• Year-to-Date (YTD): The price return is approximately -2.87%, but the total return is approximately 6.83%.

• One-Year: The price return is approximately -4.22%, while the total return is approximately 8.43%.

To visualize this, if you look at the estimated price from roughly one year ago ($23.95) compared to the current price ($22.94), the share price has gone down. However, because of the cash paid out to investors, the total return remains positive.

Income and distribution explanation

This ETF has a high distribution yield of approximately 12.74%. This represents the cash distributed relative to the ETF's price. These distributions usually happen monthly, with 12 payments recorded over the last year.

While high yields can provide regular cash, they are not the same as total return. Investors should remember that a high distribution rate does not guarantee that your original investment will stay the same value.

NAV erosion explanation

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

XLSI has an erosion score of 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag present. This suggests that, based on these measurements, the fund's value is not showing signs of major instability.

Top Holdings

The fund's holdings can change over time. As of the latest update, the top holdings are:

• STATE STREET® CNSMRSTPSELSECTSPDR® ETF (98.84%)

• STATE STREET INSTL US GOVT MMKT TRUST (1.22%)

Pros

• The fund provides a high distribution yield.

• It has a history of monthly distributions.

• The erosion-risk measurements are currently rated as "good."

Cons

• The share price has experienced a decline over the last year.

• High distribution yields can sometimes be misleading if the share price is falling.

Beginner takeaway

When looking at XLSI, it is helpful to look at both the price and the total return. While the share price itself has gone down recently, the total return is positive because of the cash distributions paid to investors. Always remember that high income (yield) and share price movement are two different parts of an investment's performance.