Understanding the BLUEMONTE LONG TERM BOND ETF (BLTD)

What this ETF is trying to do

The BLUEMONTE LONG TERM BOND ETF (ticker: BLTD) is an exchange-traded fund that trades on the NYSE. Based on its name, this fund focuses on long-term bonds.

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 how much the share price has changed.

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

For BLTD, the numbers show a decline in both areas:

• Year-to-Date (YTD): The price return is approximately -7.88%. However, the total return is approximately -5.11%.

• One Year: The price return is approximately -9.82%, while the total return is approximately -5.79%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The price was approximately $25.97, and the current price is $23.42.

Income and distribution explanation

Some investors look at ETFs for regular cash payments, known as distributions. BLTD has a distribution yield of approximately 4.70%. This means the cash distributed is about 4.70% of the current share price.

The fund usually pays these distributions monthly, with 11 payments made over the last 12 months. While these payments provide cash, they are not the same as total return. A high yield does not mean an investor is making money if the share price is falling.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases. While a falling market price does not always mean the NAV has declined, we can look at "erosion-risk" measurements to see how the price is behaving.

BLTD has an erosion score of 75, which is labeled as "mild price erosion." This is a measurement of risk regarding how the price has moved, rather than a confirmed collapse of the fund's value. There is no "severe erosion-risk flag" for this ETF.

Pros

• The fund provides regular cash distributions, which usually occur on a monthly basis.

Cons

• The fund has experienced both share-price declines and negative total returns over the last year.

• The income rating for this fund is a "D" grade.

Beginner takeaway

When evaluating an ETF like BLTD, remember that a distribution yield tells you about cash payments, but it doesn't tell the whole story. You must also look at the total return to see how the share price and the distributions work together. In this case, even with cash payments, the total return has been negative over the past year.