ETF Education Report: ISHARES AGENCY BOND ETF (AGZ)

What this ETF is trying to do

The ISHARES AGENCY BOND ETF (ticker: AGZ) is an exchange-traded fund that trades on the NYSE. While specific holdings are not listed in this report, this type of ETF generally focuses on agency bonds.

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 only measures how much the share price has gone up or down.

• Total Return: This includes both the change in share price and the money paid out through distributions (dividends).

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

• Year-to-Date (YTD): The price return is approximately -3.62%. However, the total return is -0.99%.

• One Year: The price return is approximately -3.48%. The total return is a positive 0.06%.

• Three Year: The price return is approximately 1.01%, while the total return is much higher at 12.52%.

To visualize the price change, we can look at an estimated price from roughly one year ago, which was $110.09. The current price is $106.26.

Income and distribution explanation

Some investors look for ETFs that pay out regular cash. AGZ has a distribution yield of approximately 3.71%. This means the fund paid out $3.94 in trailing distributions relative to its price. These payments usually happen monthly, with Monday being the most common day for a payout.

It is important to remember that a distribution yield tells you how much cash was paid out, but it is not the same thing as your total return.

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. AGZ 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 for this ETF.

Pros

• The fund has a high income rating grade of "A."

• Over a three-year period, the total return was positive (12.52%), even though the share price itself stayed mostly flat.

Cons

• The share price has seen some declines recently, such as the year-to-date price return of -3.62%.

Beginner takeaway

When studying AGZ, notice how the total return is often higher than the price return. This happens because the distributions help offset some of the share-price declines. Always look at both the price movement and the total return to get a full picture of how an ETF is performing.