ETF Education Report: X-Square Municipal Income Tax Free ETF (ZTAX)

What this ETF is trying to do

The X-Square Municipal Income Tax Free ETF (ZTAX) is an exchange-traded fund listed on the NYSE. While the specific investment strategy is not detailed in the provided data, the name suggests it focuses on municipal income.

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.

• Total Return: This includes both the share price changes and the money paid out to investors through distributions.

For ZTAX, the numbers show different results depending on which you look at:

• Year-to-Date (YTD): The price return is approximately -5.89%, while the total return is -1.57%.

• One Year: The price return was approximately -2.45%, but the total return was a positive 2.04%.

• Three Years: The price return was approximately -1.95%, while the total return was a much higher 12.49%.

To visualize the price change, we can look at an estimated price from roughly one year ago, which was $24.72. The current price is $24.12.

Income and distribution explanation

This ETF provides cash payments called distributions. The distribution yield is approximately 4.81%. This number describes the cash payments relative to the current ETF price. Over the last 12 months, the trailing distributions were approximately $1.16 per share. These payments usually happen quarterly, and in the last year, there were 4 payouts.

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

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases. Investors often care about this because they want to keep their original investment (the principal) stable while collecting income.

For ZTAX, 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 approximately 12.49%.

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

Cons

• The share price has seen declines in the year-to-date, one-year, and three-year price return categories.

Beginner takeaway

When evaluating an ETF like ZTAX, don't just look at the share price or just the dividend yield. The total return is a more complete picture because it combines both. Also, keep an eye on the erosion-risk score to understand how stable the fund's value has been over time.

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*Disclaimer: This report is for educational purposes only. It does not provide financial advice and does not recommend buying, selling, or holding any security.*