What this ETF is trying to do

The iShares 7-10 Year Treasury Bond ETF (ticker: IEF) is an exchange-traded fund. This type of investment focuses on U.S. Treasury bonds that have a "maturity" (a lifespan) of between 7 and 10 years.

What the numbers show

When looking at an ETF, it is important to know the difference between price return and total return. Price return only tracks how much the share price moves. Total return includes both the price movement and any cash payments (distributions) made to investors.

Here is what the data shows for IEF:

• Year-to-Date (YTD): The price return is approximately -5.57%. However, the total return is approximately -3.04%.

• One Year: The price return was approximately -6.07%, while the total return was approximately -2.35%.

• Three Years: The price return was approximately -2.55%, but the total return was a positive 8.85%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The price was approximately $96.67, and the current price is $90.80.

Income and distribution explanation

Some investors look for ETFs that pay out cash regularly. This is called the distribution yield. For IEF, the distribution yield is approximately 4.08%. These payments are usually made monthly. Over the last 12 months, there were 12 distributions.

It is important to remember that a distribution yield tells you how much cash was paid out, but it does not guarantee your original investment will stay the same value.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF decreases. StockValueFinder uses an erosion-risk score to measure this risk.

For IEF, the erosion score is 75, which is labeled as "Mild price erosion." This means there has been some mild deterioration in the share price. However, there is no "severe erosion-risk flag" for this ETF.

Pros

• Total Return History: While the share price has gone down over the last three years, the total return (which includes distributions) was positive at 8.85%.

• Regular Income: The ETF has a history of monthly distributions and a distribution yield of approximately 4.08%.

Cons

• Price Declines: The share price has seen declines in the year-to-date, one-year, and three-year price return categories.

• Mild Erosion Risk: The fund has a mild erosion-risk score of 75.

Beginner takeaway

When studying IEF, notice how the total return is often higher than the price return. This happens because the cash distributions help offset some of the losses from the falling share price. Always look at both numbers to get a full picture of how an ETF is performing.