ETF Education Report: BlackRock Municipal Income Quality Trust (BYM)

What this ETF is trying to do

The BlackRock Municipal Income Quality Trust (ticker: BYM) is an ETF traded on the NYSE. While the specific investment goals are not detailed in this data, the name suggests it focuses on municipal income.

What the numbers show

It is important to understand the difference between price return and total return. Price return only tracks how much the share price changes. Total return includes both price changes and the money paid out to investors through distributions.

Here is what the data shows for BYM:

• Year-to-Date (YTD): The YTD price return is approximately 1.01%. However, the YTD total return is higher at approximately 2.03%.

• One-Year: The one-year price return was a decline of approximately -3.24%. When including distributions, the one-year total return was a gain of approximately 3.43%.

• Three-Year: The three-year price return was a decline of approximately -6.75%, while the three-year total return was a gain of approximately 10.17%.

To visualize the price change, we can look at an estimated price from roughly one year ago, which was approximately $11.42. The current price is $11.05. If you had invested $10,000 into the share price alone one year ago, that investment would be worth approximately $9,676 today before considering any distributions received.

Income and distribution explanation

This ETF provides cash distributions, which are usually paid out monthly. Over the last 12 months, there were 13 distributions. The distribution yield is approximately 6.53%. This number describes the cash payments relative to the current ETF price. It is important to remember that a high distribution yield is not the same as total return.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the assets held by the fund). While a falling market price is a "share-price decline," it does not always mean the NAV has declined.

For BYM, the erosion-risk score is 75, which is labeled as "mild price erosion." This is an erosion-risk measurement rather than proof that the NAV has definitely collapsed. There is no severe erosion-risk flag for this ETF.

Pros

• The fund has a positive total return over the last year and three years, even though the share price declined during those times.

• It offers a distribution yield of approximately 6.53%.

Cons

• The ETF has experienced share-price declines over the one-year and three-year periods.

• The erosion-risk score indicates mild price erosion.

Beginner takeaway

When looking at ETFs that pay regular income, it is helpful to look at both the price return and the total return. A share price can go down while the total return stays positive because of the cash distributions paid to investors. However, high yields can sometimes be accompanied by a declining share price.