What this ETF is trying to do

The Capital Group Municipal High-Income ETF (CGHM) is an exchange-traded fund. Based on its name, it focuses on providing high income through municipal investments.

What the numbers show

When looking at an ETF, it is important to know the difference between "price return" and "total return."

• Price Return: This only tracks how much the share price itself has changed.

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

For CGHM, the numbers show:

• Year-to-Date (YTD): The price return is approximately -5.36%. However, the total return is higher at approximately -2.67%.

• One Year: The price return was approximately -4.87%, while the total return was approximately -1.04%.

To visualize the price change, we can look at an estimated price from roughly one year ago, which was $25.35. The current price is $24.12. If you had invested $10,000 based only on the share price, your investment would have decreased in value over the last year.

Income and distribution explanation

This ETF pays out cash to investors, which is called a distribution. The distribution yield is approximately 4.16%. This number describes the cash payments relative to the current ETF price.

The data shows that these distributions usually happen monthly, with 12 payments made over the last year. Most of these payments have occurred on Fridays. It is important to remember that a high distribution yield does not mean the investor earned that same percentage as their total return.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases over time. Investors often care about this because they want to keep their original investment (the principal) stable while collecting income.

For CGHM, the erosion-risk score is 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag present.

Pros

• The ETF provides regular monthly income distributions.

• The erosion-risk score suggests the fund is currently considered stable or sideways.

Cons

• Both the price return and the total return have been negative for the year-to-date period and the one-year period.

• The share price has declined compared to the estimated price from roughly one year ago.

Beginner takeaway

When studying an ETF like CGHM, remember that a falling share price and receiving cash distributions are two different things. While the share price has gone down, the total return (which includes the cash paid to you) is higher than the price return alone. Always look at the total return to get a fuller picture of how the investment has performed.