Understanding the NEOS Enhanced Income Aggregate Bond ETF (BNDI)

What this ETF is trying to do

The NEOS Enhanced Income Aggregate Bond ETF (BNDI) is an investment fund that focuses on generating income. It uses strategies like covered calls to help provide cash to its investors.

What the numbers show

It is important to understand that "price return" and "total return" are two different things. Price return only tracks how the share price changes. Total return includes both the price change and the cash distributions paid out.

Here is what the data shows for BNDI:

• Year-to-Date (YTD): The price return is approximately -4.95%. However, the total return is -0.75%.

• One Year: The price return was approximately -4.86%, while the total return was 0.79%.

• Three Year: The price return was approximately -1.77%, but the total return was 16.30%.

To visualize the price change, we can look at an estimated example. Roughly one year ago, the price was estimated to be $47.51. The current price is $45.20. This shows a decline in the share price over that time.

Income and distribution explanation

BNDI has a distribution yield of approximately 6.03%. This means the fund pays out cash relative to its share price. These distributions usually happen monthly, and there were 12 payments in the last year.

While a high yield can provide regular cash, it is not the same as total return. Investors should remember that receiving cash distributions does not guarantee that the value of their original investment will stay the same.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases over time. StockValueFinder uses an "erosion-risk score" to measure this risk.

BNDI has an erosion score of 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag for this ETF.

Pros

• The fund has a history of positive total returns over the one-year and three-year periods, even when the share price itself went down.

• It provides a regular monthly distribution.

Cons

• The share price has seen declines in the year-to-date, one-year, and three-year price return categories.

• Total returns can be lower than the distribution yield suggests.

Beginner takeaway

When looking at BNDI, it is helpful to look at both the price and the total return. While the share price has moved lower in several timeframes, the total return (which includes the cash paid out to investors) has been positive over the last year and three years. Always remember that a high distribution yield is not a guarantee of total profit.