ETF Education Report: XTRACKERS HIGH BETA HIGH YIELD BOND ETF (HYUP)

What this ETF is trying to do

The XTRACKERS HIGH BETA HIGH YIELD BOND ETF (ticker: HYUP) is an exchange-traded fund that focuses on high-yield bonds. These are types of debt investments that typically offer higher interest rates.

What the numbers show

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

• Price Return: This measures only the change in the share price. For HYUP, the one-year price return was approximately -5.66%. The year-to-date (YTD) price return was approximately -4.27%.

• Total Return: This includes the share price changes plus any cash distributions (dividends) paid out. Because of these distributions, the total return numbers are different. For example, while the one-year price return was negative, the one-year total return was approximately 1.51%. Over three years, the total return was approximately 29.05%.

To visualize the price change, the estimated price from roughly one year ago was $42.78. The current price is $40.36.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 7.60%. This means the amount of cash paid out is high relative to the ETF's price. These payments usually happen monthly, with 12 payments made over the last year. It is important to remember that a high distribution yield does not guarantee that an investor will earn that same percentage as a total return.

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 measure this risk. HYUP has an erosion score of 75, which is labeled as "mild price erosion." This is a measurement of risk and does not mean the fund's value has definitely collapsed. There is no severe erosion-risk flag for this ETF.

Pros

• The ETF has a high income rating grade of "A."

• The three-year total return has been positive at approximately 29.05%.

• It provides regular monthly cash distributions.

Cons

• The share price has seen some declines, as shown by the negative one-year and YTD price returns.

• There is a "mild" erosion-risk score to monitor.

Beginner takeaway

For new investors, HYUP shows how price and income work together. While the share price itself has gone down recently, the cash distributions (the yield) helped make the total return positive over certain periods. Always remember that a high yield is not the same as a total profit, and it is important to look at both the price movement and the distributions together.