Understanding the PIMCO 0-5 YEAR HIGH YIELD CORPORATE BOND INDEX ETF (HYS)

What this ETF is trying to do

The HYS ETF is an exchange-traded fund that focuses on high-yield corporate bonds with maturities between 0 and 5 years. High-yield bonds are loans made to companies that typically pay higher interest rates.

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 the cash distributions (dividends) paid out to investors.

Based on the data:

• Year-to-Date (YTD): The price return is approximately -3.98%, but the total return is +0.71%.

• One Year: The price return was approximately -4.73%, while the total return was +2.46%.

• Three Year: The price return was approximately 0.61%, while the total return was +25.11%.

To visualize the price change, we can look at an estimated price from roughly one year ago, which was $95.57. The current price is $91.05. This shows a share-price decline over the last year, even though the total return remained positive due to distributions.

Income and distribution explanation

This ETF is designed to provide regular cash payments. The distribution yield is approximately 7.51%. These distributions usually happen monthly, with the most common payout day being Monday. Over the last 12 months, there were 12 distributions totaling $6.84 per share.

Investors often look for high yields, but it is important to remember that a high distribution yield does not guarantee the investment will grow in value.

NAV erosion explanation

"NAV erosion" refers to a situation where the value of the underlying assets in the fund decreases over time. 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

• Strong Total Returns: Over the last three years, the total return was approximately 25.11%.

• High Income Potential: The fund has an income rating grade of "A" with a score of 89.

• Consistent Payouts: The fund provides regular monthly distributions.

Cons

• Share-Price Decline: The price return has been negative for both the year-to-date period and the one-year period.

• Price vs. Total Return Gap: Investors must rely on distributions to offset the decline in the share price.

Beginner takeaway

When looking at HYS, it is helpful to distinguish between the share price and the total return. While the share price has dropped recently, the total return (which includes cash payments) has stayed positive. This shows how distributions can impact the overall value an investor receives.