ETF Education Report: SIMPLIFY GOLD STRATEGY ETF (YGLD)

What this ETF is trying to do

The SIMPLIFY GOLD STRATEGY ETF (YGLD) is an exchange-traded fund listed on the NYSE. While the specific investment strategy details are not provided in this report, ETFs like this are designed to provide investors with exposure to specific market themes or assets.

What the numbers show

When looking at an ETF, it is important to understand the difference between "price return" and "total return."

• Price Return: This measures only the change in the share price. For YGLD, the year-to-date (YTD) price return is approximately -21.43%. The one-year price return is approximately -18.49%.

• Total Return: This includes both the share price changes and any cash distributions paid out. The YTD total return is approximately -15.12%, and the one-year total return is approximately -2.37%.

To see how the price has moved, we can look at an estimated price from roughly one year ago, which was $40.16, compared to the current price of $32.73.

Income and distribution explanation

This ETF has a high distribution yield of approximately 22.85%. This means the fund pays out a significant amount of cash relative to its share price. These distributions happen frequently; in the last 12 months, there were 11 payouts, and they usually occur monthly. Most of these payments have been made on Tuesdays.

It is important to remember that a high distribution yield does not mean the investor earned that percentage as a total return. Total return is the more complete picture of how much value was gained or lost.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases. While a falling share price does not always mean NAV is eroding, we use "erosion scores" to measure this risk.

YGLD has an erosion score of 55, which is labeled as "moderate price erosion." This indicates a moderate level of risk regarding the stability of the fund's value.

Pros

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

• Distributions are frequent, occurring 11 times over the last year.

Cons

• The ETF has experienced a share-price decline, with a one-year price return of approximately -18.49%.

• The total return has been negative over the last year (-2.37%).

• There is a moderate erosion-risk score of 55.

Beginner takeaway

When looking at high-yield ETFs, it is vital to look at both the distribution yield and the total return. A high cash payout can sometimes be accompanied by a falling share price. Always check the total return to see how the share price changes affect your overall investment value.