Understanding the PIMCO Senior Loan Active ETF (LONZ)

What this ETF is trying to do

The PIMCO Senior Loan Active ETF (ticker: LONZ) is an exchange-traded fund. While the specific investment strategy isn't detailed in the data, it is categorized as an ETF that focuses on senior loans.

What the numbers show

When looking at this ETF, it is important to understand the difference between "price return" and "total return."

• Price Return: This only measures how much the share price itself has changed.

• Total Return: This includes both the change in share price and the money paid out through distributions.

For LONZ, the numbers show a difference between these two:

• Year-to-Date (YTD): The price return is approximately -2.07%, but the total return is +3.71%.

• One Year: The price return is approximately -3.48%, while the total return is +4.78%.

• Three Years: The price return is approximately -1.93%, but the total return is +23.52%.

To visualize the price change, we can look at an estimated price from roughly one year ago, which was about $51.02. The current price is $49.24. This shows that while the share price has gone down, the total return (which includes cash payments) has been positive.

Income and distribution explanation

This ETF provides regular cash payments, known as distributions. The distribution yield is approximately 8.31%. This number describes the cash payments relative to the current ETF price. These payments usually happen monthly, with 12 payments recorded over the last year.

It is important to remember that a high distribution yield does not mean an investor earned that same percentage as their total return. Total return is the most complete way to see how much value was actually created.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases over time. Investors often care about this because they want to make sure their original investment (the principal) stays stable while they collect income.

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

Pros

• The ETF has a history of positive total returns over one-year and three-year periods.

• It provides a relatively high distribution yield.

Cons

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

Beginner takeaway

When looking at an ETF like LONZ, don't just look at the share price or just the dividend yield. The share price tells you how the market is valuing a single share, while the distribution yield tells you about the cash being paid out. To see the full picture of how the investment has performed, look at the total return.