ETF Education Report: ISHARES ESG ADVANCED UNIVERSAL USD BOND ETF (EUSB)

What this ETF is trying to do

The ISHARES ESG ADVANCED UNIVERSAL USD BOND ETF (EUSB) is an exchange-traded fund that focuses on bond investments. It uses ESG criteria, which means it looks at environmental, social, and governance factors when choosing its investments.

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.

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

For EUSB, the numbers show different trends depending on how long you look:

• Year-to-Date (YTD): The price return is approximately -5.67%, while the total return is approximately -2.80%.

• One Year: The price return is approximately -5.63%, while the total return is approximately -1.81%.

• Three Years: The price return is approximately 2.02%, while the total return is much higher at approximately 14.29%.

To visualize the price change, the estimated price from roughly one year ago was $43.89. The current price is $41.42.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 4.15%. This number describes the cash paid out relative to the current ETF price. These payments happen frequently; in the last 12 months, there were 12 distributions, which 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 mean the investor earned that same percentage as their total return. You must look at the "total return" figure to see how the investment performed overall.

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 share price is not the same thing as NAV erosion, we use an erosion-risk score to measure this risk.

EUSB has an erosion score of 75, which is labeled as "Mild price erosion." This is a measurement of risk, not a guarantee that the fund's value has collapsed. There is no severe erosion-risk flag for this ETF.

Pros

• The three-year total return has been positive at approximately 14.29%.

• The ETF provides regular monthly cash distributions.

Cons

• The one-year and year-to-date price returns have been negative.

• There is a measurement of "mild" price erosion.

Beginner takeaway

When studying EUSB, notice the difference between the share price and the total return. While the share price has dropped recently, the total return (which includes the cash paid to you) is a different number. Always look at both price returns and total returns to get the full picture of how an ETF is performing.