What this ETF is trying to do

The VANECK BDC INCOME ETF (ticker: BIZD) is an exchange-traded fund designed to provide exposure to Business Development Companies (BDCs). These are companies that often lend money to other businesses. This ETF aims to provide income to its investors through regular distributions.

What the numbers show

When looking at BIZD, it is important to separate "price return" from "total return." Price return only tracks how the share price moves. Total return includes both the price movement and the cash distributions paid out to investors.

• Year-to-Date (YTD): The price return is down approximately 13.12%. However, the YTD total return is down only 4.71%.

• One-Year: The one-year price return is approximately -15.27%, while the one-year total return is approximately -4.42%.

• Three-Year: The three-year price return is approximately -19.48%. Interestingly, the three-year total return is positive at 13.04%.

Based on an estimated price from roughly one year ago of $14.54, the current price is $12.32.

Income and distribution explanation

BIZD is known for its distribution yield, which is currently 12.66%. This number describes the cash distributions relative to the ETF's price. The fund usually pays out on a quarterly basis, with 4 payments recorded over the last 12 months.

It is important to remember that a high distribution yield does not mean an investor earned that same percentage as a total return. While the distributions provide cash income, they do not guarantee that your original investment will stay at the same value.

NAV erosion explanation

The supplied data is sufficient to evaluate price erosion, but it does not include enough historical NAV-per-share data to confirm or rule out NAV erosion.

We can, however, look at "price erosion," which is the decline in the market price of the shares. The fund has an erosion-risk score of 55, which is labeled as "moderate price erosion." This means the share price has shown some downward movement over time.

Pros

• High Distribution Yield: The fund offers a high distribution yield of approximately 12.66%.

• Positive Long-Term Total Return: While the share price has declined over three years, the three-year total return remains positive at 13.04%.

Cons

• Share-Price Decline: The ETF has experienced negative price returns over the last year and year-to-date.

• Moderate Price Erosion: The fund has a moderate erosion-risk score, indicating the share price has trended downward.

Beginner takeaway

For those researching BIZD, the main takeaway is the difference between cash income and share price movement. The ETF provides a high distribution yield, but this has been accompanied by a decline in the share price. When looking at this fund, investors often compare the cash they receive (distributions) against the change in the stock price to understand the total return.