ETF Education Report: JHMB

What this ETF is trying to do

The John Hancock Mortgage-Backed Securities ETF (JHMB) is an exchange-traded fund that focuses on mortgage-backed securities. This type of ETF is designed to provide investors with exposure to a specific part of the debt market.

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 the change in the share price. For JHMB, the year-to-date (YTD) price return is approximately -4.24%. The one-year price return is approximately -4.48%.

• Total Return: This includes both the share price changes and the cash distributions (dividends) paid out to investors.

The numbers show a difference between these two. For example, while the one-year price return was negative (-4.48%), the one-year total return was positive at approximately 0.15%. This means that even though the share price went down, the cash payments helped make the overall return positive. Over a three-year period, the total return was approximately 15.48%.

Income and distribution explanation

This ETF provides regular cash payments to investors. The distribution yield is approximately 4.92%. This number describes the annual cash payments relative to the current ETF price. JHMB usually pays these distributions monthly, with 12 payments recorded 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. Total return is the most accurate way to see how much value an investment has actually gained or lost over time.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value, which is the actual value of the assets held by the fund. While a falling share price can sometimes be a sign of erosion, it is not proof of it.

For JHMB, the erosion-risk score is 94, which is labeled as "Stable / sideways." The erosion severity is described as "good," and there is no severe erosion-risk flag present.

Pros

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

• The three-year total return shows positive growth of approximately 15.48%.

• The fund provides regular monthly distributions.

Cons

• The share price has seen declines recently, with a YTD price return of approximately -4.24%.

• The one-year price return was also negative at approximately -4.48%.

Beginner takeaway

When looking at JHMB, notice how the total return is different from the price return. Because this ETF pays out regular cash, the total return can be higher than the share price movement alone. Always look at both numbers to get a full picture of how an ETF is performing.