ETF Education Report: BNY Mellon Strategic Municipal Bond Fund Inc (DSM)

What this ETF is trying to do

The BNY Mellon Strategic Municipal Bond Fund Inc (ticker: DSM) is an ETF. While the specific investment strategy is not detailed in the provided data, it is categorized as a fund that deals with municipal bonds.

What the numbers show

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

• Price Return: This measures only the change in the share price. For DSM, the year-to-date (YTD) price return is approximately -16.05%. The one-year price return is approximately -12.79%.

• Total Return: This includes both the share price changes and the money paid out to investors (distributions). The YTD total return is approximately -12.53%, and the one-year total return is approximately -8.09%.

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

To visualize this, we can look at an estimated price from roughly one year ago. The price was approximately $5.94, and the current price is $5.18.

Income and distribution explanation

This ETF provides cash payments to investors, known as distributions. The distribution yield is approximately 6.10%. This means the amount of cash paid out is about 6.10% relative to the current ETF price. These payments usually happen monthly, with a trailing distribution of $0.316 per share.

It is important to remember that a high distribution yield does not mean you are earning that full amount as your total return. You must look at the "total return" to see how the share price and distributions worked together.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases. While a falling market price is not the same thing as NAV erosion, we use "erosion scores" to measure risk.

DSM has an erosion score of 75, which is labeled as "mild price erosion." This is a measurement of risk and does not mean the fund's value has definitely collapsed. There is no "severe erosion-risk flag" for this ETF.

Pros

• The fund provides regular cash distributions (usually monthly).

• Over a three-year period, the total return was approximately 17.17%.

Cons

• The share price has declined recently (the YTD price return is approximately -16.05%).

• The five-year total return is approximately -18.46%.

Beginner takeaway

When looking at DSM, it is helpful to distinguish between the cash you receive (distribution yield) and the change in the share price (price return). While the fund pays out regular income, the share price has seen a decline in the short term. Always look at the total return to get a fuller picture of how an ETF is performing.