ETF Education Report: FIRST TRUST SENIOR LOAN FUND (FTSL)

What this ETF is trying to do

The FIRST TRUST SENIOR LOAN FUND (FTSL) is an exchange-traded fund (ETF). While the specific investment strategy is not detailed in the provided data, ETFs are tools used to collect a group of different investments into one single package.

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 goes up or down.

• Total Return: This includes both the change in share price and any cash payments (distributions) the fund gave to investors.

For FTSL, the share price has seen some declines. The one-year price return was approximately -2.40%, and the year-to-date (YTD) price return was approximately -2.55%.

However, the total returns tell a different story because they include the cash distributions. The one-year total return was approximately 3.86%, and the YTD total return was approximately 2.08%. Over a three-year period, the total return was significantly higher at approximately 20.61%.

An estimated price from roughly one year ago was $45.81. The current price is $44.71.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 6.84%. This means the amount of cash paid out is about 6.84% relative to the ETF's price. These payments happen frequently; in the last 12 months, there were 13 distributions, which usually occur on a monthly basis.

It is important to remember that a high distribution yield does not mean the investor earned that exact percentage as their total return. You must look at the "total return" figure to see how the price changes and distributions worked together.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases over time. StockValueFinder uses an "erosion-risk score" to measure this risk.

FTSL has an erosion score of 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag present. This suggests that the fund's value has remained relatively stable rather than showing significant deterioration.

Pros

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

• The total returns over one, three, and five years have been positive, even though the share price itself has declined.

Cons

• The share-price return (price return) has been negative for the one-year, three-year, and year-to-date periods.

Beginner takeaway

For new investors, FTSL shows how price and income can move in different directions. Even when the share price of an ETF goes down, the total return can be positive if the cash distributions are large enough to make up for that price decline. Always look at both the price return and the total return to get the full picture.