What this ETF is trying to do

The Franklin Ltd Duration Income Trust (FTF) is an ETF listed on the AMEX. While the specific investment strategy is not detailed in the provided data, the fund focuses on providing regular income to its investors.

What the numbers show

When looking at FTF, it is important to distinguish between "price return" and "total return." Price return only tracks how the share price changes. Total return includes both the share price changes and the cash distributions paid out to investors.

• Year-to-Date (YTD): The price return is approximately -12.68%, while the total return is approximately -4.04%.

• One Year: The price return was approximately -15.96%, while the total return was approximately -4.82%.

• Three Year: The price return was approximately -10.80%, while the total return was significantly higher at approximately 27.04%.

An estimated price from roughly one year ago was $6.40, compared to the current price of $5.37.

Income and distribution explanation

FTF is characterized by a high distribution yield of approximately 13.74%. The fund typically pays distributions on a monthly basis, with 12 payments made over the last year. Most of these payments have occurred on Fridays.

It is important to remember that a high distribution yield does not guarantee that an investor will earn that same percentage as a total return. While these distributions provide cash income, they are separate from the movement of the share price.

NAV erosion explanation

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 55, which is labeled as "moderate price erosion." This indicates that the market price of the shares has faced some downward pressure.

Pros

• High Yield: The fund offers a high distribution yield of approximately 13.74%.

• Monthly Income: The fund provides frequent cash distributions, usually occurring every month.

• Long-term Total Return: Over a three-year period, the total return was approximately 27.04%.

Cons

• Price Decline: The share price has seen declines in the one-year and year-to-date periods.

• Moderate Erosion Risk: The fund shows a moderate level of price erosion.

Beginner takeaway

FTF is an ETF that focuses on providing high monthly cash distributions. However, new investors should notice the difference between its high distribution yield and its price performance. While the total return over three years was positive, the share price itself has declined recently. High yields can sometimes be accompanied by a falling share price, so it is important to look at both the income and the total return when researching this fund.