ETF Education Report: VANECK FALLEN ANGEL HIGH YIELD BOND ETF (ANGL)

What this ETF is trying to do

The VANECK FALLEN ANGEL HIGH YIELD BOND ETF (ticker: ANGL) is an exchange-traded fund. While the specific holdings are not listed in this report, this type of ETF generally focuses on "fallen angel" bonds. These are bonds that were once considered very high quality but have since had their credit ratings lowered.

What the numbers show

It is important to understand that there are two ways to look at how an ETF performs: price return and total return.

• Price Return: This only tracks the change in the share price.

• Total Return: This includes both the share price changes AND the cash distributions (dividends) paid out to investors.

For ANGL, the numbers show a difference between these two:

• Year-to-Date (YTD): The price return is approximately -4.14%, but the total return is +0.18%.

• One Year: The price return is approximately -4.87%, while the total return is +1.51%.

• Three Year: The price return is approximately 3.42%, while the total return is much higher at 24.88%.

If you look at the price alone, it has gone down over the last year. However, when you include the cash paid out to investors, the total return is positive. Based on an estimated price from roughly one year ago of $29.59, the current price is $28.15.

Income and distribution explanation

This ETF provides regular cash payments, known as distributions. The distribution yield is approximately 6.74%. This means the amount of cash paid out is quite high relative to the share price. These distributions usually happen monthly, with Monday being the most common day for payments.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF decreases over time. Some investors worry that high payouts might come at the expense of the fund's value. However, for ANGL, 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 ETF has a high income rating grade of "A."

• The total return over three years (24.88%) is significantly higher than the price-only return, showing that distributions add value to the overall performance.

Cons

• The share price has experienced a decline over the last year (a one-year price return of approximately -4.87%).

• Investors should remember that a high distribution yield does not guarantee the share price will stay the same.

Beginner takeaway

When looking at ANGL, it is helpful to distinguish between the share price and the total return. While the share price has dropped recently, the total return remains positive because of the cash distributions paid to investors. Always remember that high yields are one part of the story, and looking at total return provides a more complete picture.