ETF Education Report: XTRACKERS LOW BETA HIGH YIELD BOND ETF (HYDW)

What this ETF is trying to do

The XTRACKERS LOW BETA HIGH YIELD BOND ETF (ticker: HYDW) is an exchange-traded fund. Based on its name, it focuses on high-yield bonds that have "low beta." In simple terms, low beta often means the investment is designed to be less sensitive to big swings in the overall market.

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 only tracks how much the share price itself has changed.

• Total Return: This includes both the change in share price and the cash distributions (dividends) paid out to investors.

For HYDW, the numbers show a difference between these two:

• Year-to-Date (YTD): The price return is approximately -3.44%, meaning the share price has dropped. However, the total return is +0.51%, meaning when you include the cash paid out, the overall value was slightly positive.

• One Year: The one-year price return is approximately -3.38%, while the one-year total return is +2.07%.

• Three Year: The three-year price return is +4.42%, and the three-year total return is +23.59%.

If you had invested $10,000 based on the estimated price from roughly one year ago ($47.16), the current price is $45.56.

Income and distribution explanation

This ETF provides cash distributions to investors. The current distribution yield is approximately 5.64%. This means the amount of cash paid out is about 5.64% of the current share price. These payments happen frequently; the data shows 12 payments over the last year, usually occurring on a monthly basis. Most of these payments have been made on Mondays.

NAV erosion explanation

"NAV erosion" is a term used to describe when the underlying value of an ETF's assets decreases over time. It is important to note that a falling share price does not always mean the NAV is eroding.

For HYDW, 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. This suggests that the fund's price movements are not currently showing signs of a dangerous downward trend in value.

Pros

• The ETF provides regular monthly cash distributions.

• The total return figures (which include dividends) have been positive over the one-year and three-year periods.

• The erosion-risk score suggests a stable profile.

Cons

• The share price itself has seen declines (negative price returns) over the year-to-date and one-year periods.

• The top holdings data was not supplied, so the specific companies or bonds held are unknown from this report.

Beginner takeaway

When looking at HYDW, remember that a falling share price doesn't tell the whole story. While the price of a single share has gone down recently, the total return—which counts the cash paid back to you—has remained positive over the last year. Always look at both price return and total return to see how an ETF is performing overall.