What this ETF is trying to do

The ISHARES IBOXX $ INVESTMENT GRADE CORPORATE BOND ETF (LQD) is an exchange-traded fund. Based on its name, it focuses on investment-grade corporate bonds. These are essentially loans made to high-quality companies.

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

Here is what the data shows for LQD:

• Year-to-Date (YTD): The price return is approximately -7.06%. However, the total return is approximately -3.73%.

• One Year: The price return was approximately -7.77%, while the total return was approximately -3.38%.

• Three Year: The price return was approximately 1.18%, but the total return was much higher at approximately 15.79%.

• Five Year: The total return was approximately -4.89%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The estimated price was $111.04, and the current price is $102.41.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 4.93%. This number describes the cash paid out relative to the current ETF price. These payments usually happen monthly, with 12 distributions 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 the investment performed overall.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases. While a falling market price is a "share-price decline," it does not always mean the NAV has declined.

StockValueFinder uses an erosion-risk score to measure this risk. LQD has an erosion score of 75, which is labeled as "mild price erosion." This is a measurement of risk, not a confirmed fact that the fund's value has collapsed. There is no "severe erosion-risk flag" for this ETF.

Pros

• The three-year total return shows a positive gain of approximately 15.79%.

• The ETF provides regular monthly cash distributions.

Cons

• The one-year and year-to-date price returns have been negative.

• The five-year total return has been negative.

Beginner takeaway

When studying LQD, notice how the total return is often different from the price return. For example, over the last year, the share price dropped by about 7.77%, but because of the cash distributions, the total return was a smaller loss of about 3.38%. Always look at both numbers to get the full picture.