ETF Education Report: Dimensional California Municipal Bond ETF (DFCA)

What this ETF is trying to do

The Dimensional California Municipal Bond ETF (DFCA) is an exchange-traded fund that focuses on municipal bonds from California. Investors often look at these types of funds to find regular income through bond interest.

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 the share price changes.

• Total Return: This includes both the share price changes and the cash distributions (dividends) paid out to investors.

For DFCA, the numbers show different trends depending on how much time has passed:

• Year-to-Date (YTD): The price return is approximately -4.55%. However, the total return is higher at approximately -2.72%.

• One Year: The price return was approximately -4.17%, while the total return was approximately -1.49%.

• Three Years: The price return was approximately -2.09%, but the total return was positive at approximately 6.62%.

To visualize the price change, if you had bought one share at the estimated price from roughly one year ago ($49.88), the current price is $47.80.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 2.89%. This means the amount of cash paid out is about 2.89% relative to the current share price. These payments usually happen monthly, with most occurring on Tuesdays.

It is important to remember that a distribution yield tells you how much cash was paid out, but it is not the same thing as your total return.

NAV erosion explanation

"NAV erosion" refers to a situation where the value of the underlying assets in the fund decreases. StockValueFinder uses an "erosion-risk score" to measure this risk.

DFCA 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. This suggests the fund's value has remained relatively stable rather than showing a pattern of significant decline.

Pros

• The three-year total return is positive at approximately 6.62%.

• The fund has a "good" erosion severity rating, suggesting stability.

• It provides regular monthly distributions.

Cons

• The price return has been negative over the last year and year-to-date.

• The total return has also been negative over the last year and year-to-date.

Beginner takeaway

When looking at DFCA, notice how the total return is often higher than the price return. This happens because the cash distributions help offset some of the share-price declines. Always look at both numbers to get a full picture of how an ETF is performing.