Share-split context: A minor share adjustment was recorded on May 19, 2021 with coefficient 1.007. Current price-return figures are already normalized to the current share basis.

ETF Education Report: abrdn Income Credit Strategies Fund (ACP)

What this ETF is trying to do

The abrdn Income Credit Strategies Fund (ticker: ACP) is an exchange-traded fund (ETF) listed on the NYSE. While the specific investment strategy is not detailed in the provided data, the fund's name and high distribution yield suggest it focuses on generating income for its investors.

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 ACP, the one-year price return was approximately -24.13%. The three-year price return was approximately -28.48%.

• Total Return: This includes both the share price changes and the money paid out to investors through distributions. The one-year total return was approximately -9.95%. Interestingly, the three-year total return was positive at approximately 19.57%.

This ETF has a history of forward splits. In a forward split, each old share becomes multiple new shares, and the price per share falls proportionally. This change does not create a gain or a loss for the investor; it is simply a structural adjustment.

Income and distribution explanation

ACP has a high distribution yield of approximately 20.77%. This means the fund pays out a large amount of cash relative to its share price. These distributions usually happen monthly, with Friday being the most common day for payouts. Over the last 12 months, the fund made trailing distributions of approximately $0.91 per share.

It is important to remember that a high distribution yield does not mean an investor earned that same percentage as a total return. You must look at the "total return" figure to see how the investment performed overall.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the assets held by the fund). While a falling share price is not the same thing as NAV erosion, we use an "erosion-risk score" to measure this risk.

ACP 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 fund offers a high distribution yield of approximately 20.77%.

• The three-year total return has been positive at approximately 19.57%.

Cons

• The fund has experienced share-price declines, including a one-year price return of approximately -24.13%.

• The fund has a moderate erosion-risk score.

Beginner takeaway

High yields can be very attractive, but they can also be misleading. An investor should always look at the total return—which includes both price changes and distributions—rather than just the yield. Because ACP has experienced share-price declines, it is important to understand how those declines affect the overall value of your investment.