ETF Education Report: HYGH

What this ETF is trying to do

The ISHARES INTEREST RATE HEDGED HIGH YIELD BOND ETF (ticker: HYGH) is an exchange-traded fund. While the specific holdings are not listed in this report, this type of ETF generally focuses on high-yield bonds.

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 changes.

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

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

• Year-to-Date (YTD): The price return is approximately -0.19%, but the total return is 4.19%.

• One Year: The price return is approximately -0.73%, while the total return is 5.94%.

• Three Year: The price return is approximately 3.04%, while the total return is 29.02%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The estimated price was $86.67, and the current price is $86.04.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 6.52%. This means the amount of cash paid out is about 6.52% relative to the ETF's price. These distributions usually happen monthly, and over the last 12 months, there were 12 payouts.

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 investment performed overall.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases. Investors often care about this because they want to keep their original investment (their principal) stable while collecting income.

For HYGH, 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 ETF has a high income rating grade of "A."

• The total returns over one, three, and five years are positive.

Cons

• The share-price return (the price alone) has been slightly negative over the last year.

Beginner takeaway

When looking at HYGH, notice that while the share price has moved down slightly over the last year, the total return is positive. This is because the cash distributions help boost the overall value. Always distinguish between price movement and total return when evaluating how an income-focused ETF is performing.