ETF Education Report: BlackRock Resources & Commodities Strategy Trust (BCX)

What this ETF is trying to do

The BlackRock Resources & Commodities Strategy Trust (BCX) is an Exchange Traded Fund (ETF). While the specific holdings are not listed in this report, the name suggests it focuses on resources and commodities.

What the numbers show

When looking at an ETF, it is important to understand two different types of returns: price return and total return.

• Price Return: This measures only how much the share price has changed.

• Total Return: This includes both the change in share price *and* any cash distributions (dividends) paid out to investors.

For BCX, the numbers show growth in both areas:

• Year-to-Date (YTD): The price return is approximately 7.29%, while the total return is higher at approximately 12.94%.

• One Year: The price return is approximately 14.48%, and the total return is approximately 22.99%.

• Three Years: The price return is approximately 33.41%, and the total return is approximately 67.40%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The price was approximately $10.29, and the current price is $11.78.

Income and distribution explanation

Some investors look for ETFs that pay out cash regularly. This is called the distribution yield. For BCX, the distribution yield is approximately 7.10%. This means the fund has paid out a significant amount of cash relative to its price.

The data shows that these distributions usually happen monthly, with payments often occurring on Fridays. It is important to remember that a high distribution yield does not guarantee the same return as the total return, and distributions are separate from the share price movement.

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 high-paying ETFs can suffer from this, which can make the share price drop.

However, for BCX, the erosion-risk score is 100, and the label states "No price erosion detected." There is no severe erosion-risk flag for this ETF.

Pros

• The fund has shown positive price returns over the last year and three years.

• The total return is higher than the price return, meaning distributions have added value to the overall performance.

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

Cons

• The specific top holdings are not provided in this data set, so the exact companies owned by the fund are unknown.

Beginner takeaway

When studying BCX, notice the difference between the share price and the total return. The total return is higher because it accounts for the 7.10% distribution yield. Always remember that while distributions provide cash, they are different from the growth of the share price itself.