Understanding the Hilton BDC Corporate Bond ETF (HBDC)

What this ETF is trying to do

The Hilton BDC Corporate Bond ETF (HBDC) is an exchange-traded fund listed on the NASDAQ. While the specific holdings are not listed in this report, ETFs like this generally aim to provide investors with exposure to corporate bond markets.

What the numbers show

When looking at an ETF, it is important to understand the difference between "price return" and "total return."

• Price Return: This measures only the change in the share price. For HBDC, the year-to-date (YTD) price return is approximately -3.56%. The one-year price return is approximately -3.94%. This means the share price has gone down over these periods.

• Total Return: This is a more complete picture because it includes the value of distributions (cash payments) made to investors. Even though the share price fell, the YTD total return is approximately 0.15%, and the one-year total return is approximately 1.03%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The estimated price was $25.25, while the current price is $24.26.

Income and distribution explanation

Some investors look for ETFs that pay regular cash. HBDC has a distribution yield of approximately 5.17%. This represents the cash distributions relative to the current ETF price. These payments are usually made monthly, with 12 payments recorded over the last year.

It is important to remember that a high distribution yield is not the same as total return. While distributions provide cash income, they do not guarantee that your original investment 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. StockValueFinder uses an "erosion-risk score" to help measure this risk.

HBDC 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, based on these specific measurements, the fund is not showing signs of significant price deterioration related to erosion.

Pros

• The ETF provides a regular monthly distribution frequency.

• The total return figures are positive, even though the share price has declined.

Cons

• The share-price return (price return) has been negative both year-to-date and over the last year.

• The income rating grade is a "C."

Beginner takeaway

When studying HBDC, notice how the total return is different from the price return. Even though the share price dropped slightly over the last year, the total return remained positive because of the cash distributions paid out to investors. Always remember that high yields can exist even when share prices are falling.