What this ETF is trying to do

The ISHARES IBONDS DEC 2055 TERM TREASURY ETF (ticker: IBGL) is an exchange-traded fund. Based on its name, it focuses on Treasury bonds that are set to reach their end date in December 2055.

What the numbers show

The current price of one share is $21.44. An estimated price from roughly one year ago was $24.79.

When looking at how the ETF performed over the last year, it is important to look at two different types of returns. The one-year price return was -13.50%. This number only shows how much the share price itself changed. The one-year total return was -9.33%. Total return is a more complete measurement because it includes the cash payments (distributions) made to investors.

For this year so far (YTD), the price return is -11.50%, and the total return is -8.29%.

Income and distribution explanation

This ETF provides regular cash payments called distributions. The distribution yield is 5.23%. These payments usually happen every month, with 12 payments made over the last year. During that time, the trailing distributions were $1.12 per share.

It is important to remember that a high distribution yield can be misleading. A high yield does not mean an investor earned that percentage as their total return. If the share price falls significantly, the total return can still be negative even if you are receiving cash payments.

NAV erosion explanation

The ETF has an erosion-risk score of 75, which is labeled as "mild price erosion." "NAV erosion" is a term used to describe a decline in the value of the actual assets held inside the fund. While the market price of the shares has declined, this score is a measurement of that erosion risk.

Pros

• The ETF offers a distribution yield of 5.23%.

• It typically provides monthly income through distributions.

Cons

• The share price has seen a decline over the last year.

• Both the price return and total return have been negative for the past year and for this year so far.

• There is a measurement of mild price erosion.

Beginner takeaway

When studying an ETF like IBGL, do not look at the distribution yield alone. While monthly cash payments can provide income, you should also check the total return. In this case, even with the cash distributions, the total return has been negative for both the past year and the current year to date.