ETF Education Report: AB HIGH YIELD ETF (HYFI)

What this ETF is trying to do

The AB High Yield ETF (ticker: HYFI) is an exchange-traded fund listed on the NYSE. While specific holdings are not listed in this report, high-yield ETFs generally focus on providing income to investors through regular cash payments.

What the numbers show

It is important to understand that "price return" and "total return" tell different stories. Price return only tracks how the share price moves. Total return includes both the price movement and the cash distributions paid out to investors.

Based on the data provided:

• Year-to-Date (YTD): The price return is approximately -3.25%, meaning the share price has dropped since the start of the year. However, the YTD total return is approximately 1.01%.

• One Year: The one-year price return is approximately -3.84%, while the one-year total return is approximately 2.72%.

• Three Year: The three-year price return is approximately 4.26%, and the three-year total return is approximately 27.29%.

To visualize the price change, if you look at an estimated price from roughly one year ago of $37.81 and compare it to the current price of $36.36, you can see the share-price decline.

Income and distribution explanation

This ETF has a distribution yield of approximately 6.79%. This represents the cash distributions relative to the ETF's price. The fund usually pays out these distributions monthly, with 12 payments recorded over the last year.

A high distribution yield can be helpful for those seeking cash, but it is important to remember that a high yield alone does not guarantee an investor will earn that same percentage as a total return.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the assets held by the fund). While a falling share price can sometimes look like erosion, they are not always the same thing.

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 regular monthly distribution frequency.

• The three-year total return shows significant growth when including distributions.

Cons

• The share price has shown a decline over the last year and year-to-date.

• Investors must distinguish between the falling share price and the total return to see the full picture.

Beginner takeaway

When looking at HYFI, notice the difference between the share price and the total return. Even when the share price goes down (price return), the total return can be positive because of the cash distributions paid to investors. Always look at total return to understand how much value was actually created over time.