ETF Education Report: Virtus Convertible & Income 2024 Target Term Fund (CBH)

What this ETF is trying to do

This ETF, trading under the ticker CBH on the NYSE, is an asset-type known as an ETF. While the specific investment strategy is not detailed in the provided data, the name suggests it focuses on convertible securities and income.

What the numbers show

When looking at this fund, 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. For example, the one-year price return was approximately 4.85%. The year-to-date (YTD) price return was approximately 5.33%.

• Total Return: This is a different measurement that includes distributions. According to the data, the one-year total return was approximately 9.56%, and the YTD total return was approximately 7.75%.

We can also look at an estimated price from roughly one year ago, which was approximately $8.76. The current price is $9.19. To see how share prices affect an investment, imagine you had $10,000 invested in the shares one year ago. Based only on the 4.85% price return, that $10,000 would have grown to approximately $10,485 before any distributions were added.

Income and distribution explanation

This ETF provides cash distributions. The distribution yield is approximately 4.18%. This number describes the cash paid out relative to the current share price. These payments are frequent; the fund had 10 payouts over the last 12 months and usually pays out monthly. It is important to remember that receiving regular cash distributions does not guarantee that your original investment (your principal) will stay the same value.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases over time. The StockValueFinder erosion-risk score for this fund is 75, which is labeled as "Mild price erosion." This is an erosion-risk measurement, not proof that the Net Asset Value (NAV) has definitely collapsed. A severe erosion-risk flag was not detected for this fund.

Pros

• The fund has shown positive total returns over the last year and year-to-date.

• It provides regular cash distributions, which can be helpful for those seeking income.

Cons

• The three-year price return shows a decline of approximately -10.91%.

• While the total return was positive over three years, the share price itself has dropped significantly over that long period.

Beginner takeaway

When looking at ETFs that pay income, high yields can sometimes be misleading. Investors often look for funds where the share price stays steady or goes up slightly. If a share price drops significantly, it can "eat away" at your original investment, even if you are receiving cash payments. Always distinguish between the share-price movement (price return) and the overall performance including cash payments (total return).