What this ETF is trying to do

The FRANKLIN U.S. TREASURY BOND ETF (ticker: FLGV) is an exchange-traded fund designed to invest in U.S. Treasury bonds. Investors often look at Treasury bond ETFs to gain exposure to government-backed debt.

What the numbers show

The data shows different results depending on whether you look at just the share price or the total return.

Price Return (Share Price Only)

The price return measures only the change in the ETF's market price. Over the last year, the one-year price return was approximately -6.02%. The year-to-date (YTD) price return is approximately -5.60%. Looking further back, the three-year price return was approximately -2.27%.

Total Return (Price + Distributions)

Total return is a different measurement because it includes the value of the cash distributions paid out to investors. For the last year, the one-year total return was approximately -2.05%. The YTD total return was approximately -2.64%. Interestingly, the three-year total return was positive at approximately 10.37%, even though the share price itself had declined over that same period.

An estimated price from roughly one year ago was $20.61, while the current price is $19.37.

Income and distribution explanation

FLGV provides regular cash payments to investors. The distribution yield is approximately 4.33%. This number describes the cash distributions relative to the current ETF price.

The fund typically pays out monthly, with 12 payments recorded over the last year. Based on the data, these distributions most commonly occur on Mondays. It is important to remember that a distribution yield tells you how much cash was paid out, but it does not guarantee that your original investment will stay at the same value.

NAV erosion explanation

Some investors look for "NAV erosion," which refers to a decline in the Net Asset Value (the actual value of the fund's underlying assets). The supplied data is sufficient to evaluate price erosion, but it does not include enough historical NAV-per-share data to confirm or rule out NAV erosion.

Regarding price erosion, the fund has an erosion-risk score of 75, which is labeled as "Mild price erosion." This is a measurement of price-based risk and does not mean the fund's actual assets have collapsed. There is no severe erosion-risk flag for this ETF.

Pros

• Regular Income: The fund has a history of monthly distributions.

• Positive Long-Term Total Return: While the share price has declined over three years, the total return (which includes distributions) was positive at 10.37% over that period.

Cons

• Price Decline: The share price has seen negative returns over the one-year and year-to-date periods.

• Mild Price Erosion Risk: The fund shows a mild risk score regarding its price trends.

Beginner takeaway

When researching FLGV, it is important to distinguish between the share price and the total return. While the share price has been falling recently, the total return includes the cash distributions paid to investors. High distribution yields provide cash income, but they do not prevent the share price from declining.