ETF Education Report: BlackRock Taxable Municipal Bond Trust (BBN)

What this ETF is trying to do

The BlackRock Taxable Municipal Bond Trust (BBN) is an ETF that trades on the NYSE. While the specific holdings are not listed in this report, ETFs like this generally focus on municipal bonds that are subject to taxes.

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 tracks how much the share price itself has changed.

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

For BBN, the numbers show different trends depending on how long you look:

• Year-to-Date (YTD): The price return is approximately -8.15%, while the total return is approximately -2.90%.

• One Year: The price return was approximately -8.21%, while the total return was approximately -1.23%.

• Three Years: The price return was approximately -2.28%, but the total return was a positive 20.61%.

To visualize the price change, the estimated price from roughly one year ago was $16.33. The current price is $14.99.

Income and distribution explanation

This ETF provides regular cash payments, known as distributions. The distribution yield is approximately 7.89%. This means the amount of cash paid out is about 7.89% relative to the current share price. These payments usually happen monthly, with Friday being the most common day for a distribution to occur.

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

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF decreases over time. StockValueFinder uses an "erosion-risk score" to measure this risk. BBN has an erosion score of 75, which is labeled as "mild price erosion." This is a measurement of risk and does not necessarily mean the fund's value has collapsed.

Pros

• The ETF has a history of providing regular monthly distributions.

• Over a three-year period, the total return was positive at approximately 20.61%.

Cons

• The share price has seen a decline over the last year.

• The one-year and year-to-date total returns have been negative.

Beginner takeaway

When looking at BBN, it is helpful to distinguish between the cash you receive (the yield) and the actual value of your shares (the price return). While the ETF provides a high distribution yield, the share price has declined recently. Always look at the total return to get the full picture of how an investment has performed.