ETF Education Report: BlackRock Floating Rate Income Trust (BGT)

What this ETF is trying to do

The BlackRock Floating Rate Income Trust (BGT) is an exchange-traded fund (ETF) traded on the NYSE. While the specific investment strategy isn't detailed in the data, it is categorized as an ETF designed to provide income to 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 BGT, the share price has gone down over several timeframes. The one-year price return was approximately -11.74%, and the year-to-date (YTD) price return was approximately -5.12%.

• Total Return: This is a more complete picture because it includes the value of distributions (cash payments) made to investors. Even though the share price fell, the total return figures show a different story. For example, the three-year total return was approximately 26.90%, and the YTD total return was approximately 4.72%.

To visualize the price change, an investor's share price was estimated to be roughly $12.18 one year ago, compared to the current price of $10.75.

Income and distribution explanation

BGT focuses on providing cash to investors through distributions. The distribution yield is approximately 13.43%. This means the amount of cash paid out is high relative to the current share price. These payments usually happen monthly, with 12 payments made over the last year.

It is important to remember that a high distribution yield does not mean you have earned that much in total profit. You must look at the total return to see how the share price and the cash payments worked together.

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 score" to measure this risk. BGT has an erosion score of 75, which is labeled as "mild price erosion." This indicates a mild risk regarding the stability of the share price over time.

Pros

• The ETF provides a high distribution yield of approximately 13.43%.

• The three-year total return is positive at approximately 26.90%, showing that distributions have added significant value despite the falling share price.

Cons

• The ETF has experienced a share-price decline over the last year (-11.74%) and year-to-date (-5.12%).

• There is a "mild" erosion-risk score of 75.

Beginner takeaway

For new investors, BGT is an example of why you cannot look at yield alone. While the share price has dropped, the total return (which includes the cash payments) has remained positive in several timeframes. Always distinguish between the price of a share and the total amount of money you might earn including distributions.