Understanding the Franklin Dynamic Municipal Bond ETF (FLMI)

What this ETF is trying to do

The Franklin Dynamic Municipal Bond ETF (FLMI) is an exchange-traded fund that focuses on municipal bonds. Investors often look at these types of funds to find regular income.

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 much the share price itself has changed.

• Total Return: This includes both the change in share price and the money paid out through distributions.

For FLMI, the numbers show different results depending on how you measure them:

• Year-to-Date (YTD): The price return is approximately -4.06%, while the total return is -1.44%.

• One Year: The price return was approximately -3.83%, but the total return was a positive 0.04%.

• Three Years: The price return was approximately 1.62%, while the total return was much higher at 14.65%.

To give you an idea of the price movement, the estimated price from roughly one year ago was $24.81. The current price is $23.86.

Income and distribution explanation

This ETF provides cash payments called distributions. The distribution yield is approximately 4.11%. This means the amount of cash paid out is about 4.11% relative to the current ETF price. These payments usually happen monthly, with 12 payments recorded over the last year.

It is important to remember that a high distribution yield does not mean you have earned that same amount in total return. You must look at the total return 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. Some investors worry about this because they want to keep their original investment amount stable while collecting income.

For FLMI, the erosion-risk score is 94, which is labeled as "Stable / sideways." The erosion severity is described as "good," and there is no severe erosion-risk flag. This suggests the fund's price movement is not showing signs of significant structural decay based on these measurements.

Pros

• The fund has a high income rating grade of "A."

• The three-year total return is positive at 14.65%.

• It provides regular monthly distributions.

Cons

• The year-to-date price return has been negative.

• The one-year price return has also been negative.

Beginner takeaway

When studying FLMI, notice how the total return is often higher than the price return. This happens because the distributions add value back to the investor. While the share price has seen some declines recently, the total return figures provide a fuller picture of how the fund has performed when including those cash payments.