ETF Education Report: LDRC

What this ETF is trying to do

The ISHARES IBONDS 1-5 YEAR CORPORATE LADDER ETF (LDRC) is an exchange-traded fund designed to hold corporate bonds. It uses a "ladder" approach, which means it holds different bonds that mature at different times between one and five 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 itself goes up or down.

• Total return includes both the price changes and the cash distributions (dividends) paid out to investors.

For LDRC, the numbers show:

• Year-to-Date (YTD): The price return is approximately -2.82%, but the total return is positive at 0.43%.

• One-Year: The price return was approximately -2.53%, while the total return was 1.62%.

To visualize the price change, you can look at the estimated price from roughly one year ago, which was $25.30, compared to the current price of $24.66.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 4.26%. This means the amount of cash paid out is about 4.26% relative to the ETF's price. These payments usually happen monthly, with 12 payments recorded over the last year.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases over time. It is important to distinguish between a falling share price and NAV erosion. While the share price of LDRC has declined slightly, the fund's erosion-risk score is 94, which is labeled as "Stable / sideways." This indicates a "good" level of erosion severity. There is no severe erosion-risk flag for this ETF.

Top Holdings

The fund's holdings can change over time. As of the latest update, the top holdings include:

• ISHARES IBONDS DEC 2029 TERM CORP ETF (20.03%)

• ISHARES IBONDS DEC 2027 TERM CORP ETF (20.01%)

• ISHARES IBONDS DEC 2028 TERM CORP ETF (20.00%)

• ISHARES IBONDS DEC 2026 TERM CORP ETF (19.96%)

• ISHARES IBONDS DEC 2025 TERM CORP ETF (19.91%)

Pros

• The fund provides regular monthly cash distributions.

• The erosion-risk score suggests the fund is currently stable or moving sideways.

Cons

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

Beginner takeaway

For new investors, LDRC shows how total return can be different from price return. Even when the share price goes down, the total return can be positive if the cash distributions are high enough to offset the price drop. Always remember that a high distribution yield does not guarantee that the share price will stay the same.