ETF Education Report: VANECK AA-BB CLO ETF (CLOB)

What this ETF is trying to do

The VANECK AA-BB CLO ETF (ticker: CLOB) is an exchange-traded fund listed on the NYSE. While specific holdings are not listed in this report, ETFs like this generally aim to provide exposure to certain types of debt assets.

What the numbers show

When looking at an ETF, it is important to understand that "price return" and "total return" tell different stories.

• Price Return: This measures only the change in the share price. For CLOB, the year-to-date (YTD) price return is approximately -0.44%, and the one-year price return is approximately -0.76%. This means the share price has gone down slightly over these periods.

• Total Return: This includes both the share price changes and the money paid out to investors through distributions. The YTD total return is approximately 3.52%, and the one-year total return is approximately 5.51%.

Because the total return is higher than the price return, it shows that the distributions helped offset the slight drop in share price.

Income and distribution explanation

This ETF provides cash distributions to investors. The current distribution yield is approximately 6.15%. This means the amount of cash paid out is about 6.15% of the current share price. These payments happen frequently; in the last 12 months, there were 12 distributions, and they usually occur on a monthly basis. Most of these payments have been made on Mondays.

It is important to remember that a high distribution yield does not guarantee that an investor will earn that same percentage as a total return.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF decreases over time. Investors often look for stability in their principal (the original money put in).

StockValueFinder uses an "erosion-risk score" to measure this risk. CLOB 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 present for this ETF.

Pros

• The ETF has a positive total return over the last year, even though the share price itself declined slightly.

• It provides regular monthly distributions.

• The erosion-risk measurements suggest the fund is currently stable or moving sideways rather than experiencing significant value loss.

Cons

• The share price has seen a slight decline both year-to-date and over the last year.

• Total return data for the three-year period was not supplied.

Beginner takeaway

When looking at CLOB, notice the difference between the falling share price and the rising total return. While the price of a single share has gone down slightly, the total return is positive because of the cash distributions paid to investors. Always remember that high yields are not a guarantee of total profit, and it is helpful to look at both price changes and distributions together.