ETF Education Report: Flaherty & Crumrine Total Return Fund Inc (FLC)

What this ETF is trying to do

Flaherty & Crumrine Total Return Fund Inc (FLC) is an ETF traded on the NYSE. While the specific investment strategy is not listed in the provided data, the fund's name suggests it focuses on providing "total return" to its investors.

What the numbers show

It is important to understand that "price return" and "total return" are two different things. Price return only tracks how much the share price changes. Total return includes both the price change and any cash distributions (dividends) paid out.

Here is what the data shows for FLC:

• Year-to-Date (YTD): The price return is approximately -9.31%. However, the total return is approximately -4.11%.

• One Year: The price return was approximately -11.09%, while the total return was approximately -4.16%.

• Three Years: The price return was approximately 16.01%, and the total return was much higher at approximately 43.58%.

• Five Years: The total return was approximately -3.58%.

To visualize the price change, we can look at an estimated example. The estimated price from roughly one year ago was $17.85. The current price is $15.87.

Income and distribution explanation

This ETF provides regular cash payments to investors. The distribution yield is approximately 8.66%. This means the amount of cash paid out is high relative to the current share price. These distributions usually happen monthly, with 13 payments recorded over the last 12 months.

It is important to remember that a high distribution yield does not mean an investor earned that 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 over time. While a falling share price does not always mean NAV is eroding, we use "erosion-risk scores" to measure this possibility.

FLC 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 fund has a high distribution yield of approximately 8.66%.

• Over a three-year period, the total return was positive at approximately 43.58%.

Cons

• The one-year price return and total return have both been negative.

• The five-year total return is negative at approximately -3.58%.

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

Beginner takeaway

When looking at ETFs like FLC, it is helpful to distinguish between the cash you receive (distribution yield) and the actual growth of your investment (total return). High yields can be attractive, but they should always be viewed alongside the share price performance and total return figures.