Understanding the PGIM High Yield Bond Fund Inc (ISD)

What this ETF is trying to do

The PGIM High Yield Bond Fund Inc (ticker: ISD) is an ETF traded on the NYSE. While the specific holdings are not listed in this report, high-yield bond funds generally focus on providing income by investing in bonds that 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 money paid out through distributions.

• Year-to-Date (YTD): The price return is approximately -20.11%. However, the YTD total return is -14.84%.

• One Year: The one-year price return is approximately -20.22%. The one-year total return is approximately -12.44%.

• Three Years: The three-year price return is approximately -4.23%. Interestingly, the three-year total return is 27.11%.

To visualize the price change, we can look at an estimated price from roughly one year ago. If you had invested in a single share at the estimated price of $14.49, that share is now priced at $11.56.

Income and distribution explanation

This ETF has a high distribution yield of approximately 10.90%. This means the fund pays out a significant amount of cash relative to its share price. These distributions are usually paid monthly, with 12 payments made over the last year. Most of these payments occurred on Thursdays.

While a high yield can provide regular cash, it is not the same as total return. Investors should remember that receiving high distributions does not guarantee that the value of their original investment will stay the same.

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.

For ISD, the erosion score is 55, which is labeled as "Moderate price erosion." This indicates a moderate level of risk regarding price deterioration. However, there is no "severe erosion-risk flag" for this ETF.

Pros

• High Yield: The fund offers a high distribution yield of approximately 10.90%.

• Strong Long-Term Total Return: While recent price returns have been negative, the three-year total return is positive at 27.11%.

Cons

• Price Decline: The ETF has experienced a significant share-price decline over the last year.

• Moderate Erosion Risk: The erosion-risk score suggests moderate price erosion.

Beginner takeaway

When looking at an ETF like ISD, it is vital to look at both the price and the distributions. A high distribution yield can provide cash, but it can also exist at the same time as a falling share price. Always compare the price return (the change in share cost) with the total return (the change in value including cash paid out) to get the full picture.