ETF Education Report: Cohen & Steers Ltd Duration Preferred and Income Fund Inc (LDP)

What this ETF is trying to do

LDP is an Exchange Traded Fund (ETF) traded on the NYSE. Based on its name, this fund focuses on preferred securities and providing income to its investors.

What the numbers show

When looking at an ETF, it is important to understand two different types of returns: price return and total return.

• Price Return: This measures only the change in the share price.

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

For LDP, the numbers show different trends depending on how much time has passed:

• Year-to-Date (YTD): The price return is approximately -8.88%. However, the total return is higher at approximately -3.60%.

• One Year: The price return was approximately -11.35%, while the total return was approximately -4.48%.

• Three Years: The price return was approximately 13.14%, and the total return was much higher at approximately 42.71%.

To visualize the price change, the estimated price from roughly one year ago was $21.76. The current price is $19.29.

Income and distribution explanation

This ETF is designed to provide regular cash payments. The distribution yield is approximately 8.15%. This means the amount of cash paid out is high relative to the current share price.

LDP usually pays distributions monthly, with 12 payments made over the last year. Most of these payments have occurred on Tuesdays. 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.

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.

LDP has an erosion score of 75, which is labeled as "mild price erosion." While the share price has declined recently, there is no "severe erosion-risk flag" for this fund.

Pros

• The fund has a history of strong total returns over a three-year period (approximately 42.71%).

• It offers a high distribution yield of approximately 8.15%.

Cons

• The fund has experienced a share-price decline over the last year and year-to-date.

• The erosion-risk score indicates "mild price erosion."

Beginner takeaway

When looking at income-focused ETFs like LDP, it is helpful to look at both the price and the total return. A high distribution yield can provide cash, but it is important to watch if the share price is also falling. Always remember that total return is the most complete way to see how an investment has performed, as it combines both price changes and cash payments.