ETF Education Report: PGIM Global High Yield Fund Inc (GHY)

What this ETF is trying to do

The PGIM Global High Yield Fund Inc (GHY) is an ETF traded on the NYSE. While the specific investment strategy is not detailed in the provided data, high-yield funds generally focus on providing income to investors.

What the numbers show

It is important to understand the difference between price return and total return. Price return only tracks how much the share price changes. Total return includes both the price change and any distributions (cash payments) received.

• Year-to-Date (YTD): The YTD price return is -5.51%. However, the YTD total return is -0.46%.

• One Year: The one-year price return was -11.06%. The one-year total return was -1.53%. This means the share price dropped significantly, but the total return was slightly better because of distributions. An estimated price from roughly one year ago was $13.11, compared to the current price of $11.66.

• Three Year: The three-year price return was 2.46%, while the three-year total return was 39.72%.

Income and distribution explanation

This ETF has a distribution yield of approximately 10.81%. This represents the cash distributions relative to the ETF's price. The fund usually pays out monthly, with 12 distributions recorded over the last year. Most of these payments occurred on Thursdays.

It is important to remember that a high distribution yield does not guarantee you will earn that percentage as a total return. While these payments provide cash income, they do not guarantee that your original investment (your principal) will stay the same value.

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 market price is a "share-price decline," it does not automatically prove that the NAV has declined.

For this ETF, the erosion-risk score is 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag present.

Pros

• The fund provides a high distribution yield of approximately 10.81%.

• The three-year total return has been positive at 39.72%.

Cons

• The one-year price return shows a share-price decline of -11.06%.

• The year-to-date total return is currently negative at -0.46%.

Beginner takeaway

When looking at ETFs, high yields can sometimes be misleading. An investor might see a high percentage and think they are making a lot of money, but if the share price is dropping significantly, the total return might be much lower or even negative. Income investors often look for funds that stay steady or grow slightly in price, rather than funds that experience large share-price declines.