Understanding the ISHARES IBONDS OCT 2033 TERM TIPS ETF (IBIJ)

What this ETF is trying to do

The ISHARES IBONDS OCT 2033 TERM TIPS ETF (ticker: IBIJ) is an exchange-traded fund. While the specific holdings are not listed in this report, this type of fund generally focuses on specific types of 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 measures only how much the share price has changed.

• Total Return: This includes both the change in share price and any cash distributions (dividends) paid out.

For IBIJ, the numbers show different trends depending on how long you look:

• Year-to-Date (YTD): The price return is approximately -5.65%. However, the total return is higher at approximately -2.02%.

• One Year: The price return was approximately -6.77%, while the total return was approximately -2.02%.

• Three Years: The price return was nearly flat at approximately -0.10%. However, the total return over three years was a positive 14.15%.

To visualize the price change, if you had bought one share a year ago at its estimated price of $26.16, the current price is $24.39.

Income and distribution explanation

This ETF provides cash distributions to investors. The current distribution yield is approximately 5.22%. This means the amount of cash paid out is about 5.22% of the current share price. Over the last 12 months, the trailing distributions were approximately $1.27 per share. These payments usually happen quarterly.

It is important to remember that a high distribution yield does not mean you are making that much money in total. You must look at the total return to see how the share price and distributions work together.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases. While a falling share price does not always mean the NAV is eroding, we use an erosion-risk score to measure this risk.

IBIJ has an erosion score of 75, which is labeled as "Mild price erosion." This is a measurement of risk and not a guarantee that the fund's value has collapsed. There is no "severe erosion-risk flag" for this ETF.

Pros

• The three-year total return is positive at approximately 14.15%.

• The fund provides a regular distribution yield of approximately 5.22%.

Cons

• The one-year and year-to-date price returns have been negative.

• The fund shows a "mild" erosion-risk score.

Beginner takeaway

When looking at IBIJ, notice that the total return is often better than the price return. This is because the cash distributions help offset some of the share-price declines. Always look at both numbers to get the full picture of how an ETF is performing.