ETF Education Report: CGIB

What this ETF is trying to do

The Capital Group International Bond ETF (USD-Hedged) is an exchange-traded fund (ETF) that trades on the NYSE. Based on its name, this fund focuses on international bonds while using a "USD-hedged" strategy, which is a way to manage how changes in foreign currency values affect the fund.

What the numbers show

When looking at an ETF, it is important to understand two different types of returns: price return and total return.

• Price Return: This measures only the change in the share price. For CGIB, the year-to-date (YTD) price return is approximately -1.66%. The one-year price return is also approximately -1.66%.

• Total Return: This includes the price change plus any cash distributions (dividends) paid out. The YTD total return is approximately -0.78%, and the one-year total return is approximately -0.22%.

Because the total return numbers are higher than the price return numbers, it shows that the cash distributions helped offset some of the share-price decline.

To give you an idea of price movement, the estimated price from roughly one year ago was $25.36. The current price is $24.94.

Income and distribution explanation

Some investors look at ETFs for regular cash payments, known as distributions. CGIB has a distribution yield of approximately 1.47%. This means the cash distributed is about 1.47% of the current share price.

The fund usually pays these distributions monthly, with 12 payments recorded over the last year. Most of these payments have been made on Fridays. While distributions provide cash income, they are not the same as total return, and they do not guarantee that your original investment will stay at 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. It is important to note that a falling share price does not always mean the NAV is eroding.

StockValueFinder uses an erosion-risk score to measure this risk. CGIB 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 provides regular monthly cash distributions.

• The erosion-risk score suggests the fund's value has been relatively stable or "sideways" rather than rapidly declining.

Cons

• The share price has seen a decline over the last year.

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

Beginner takeaway

When studying CGIB, remember that price returns and total returns tell different stories. The share price has gone down, but the cash distributions have helped make the total return slightly better than the price return alone. Always look at both numbers to see the full picture of how an ETF is performing.