ETF Education Report: STATE STREET(R) SPDR(R) S&P(R) LEVERAGED LOAN ETF (LVLN)

What this ETF is trying to do

The LVLN ETF is a type of fund known as a leveraged ETF. This means it uses financial tools to try to amplify the performance of its underlying assets. Specifically, this fund focuses on leveraged loans.

What the numbers show

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

• Price Return: This measures only the change in the share price. For this ETF, the year-to-date (YTD) price return is approximately -1.31%. This means the share price has gone down slightly since the start of the year.

• Total Return: This measures the share price change *plus* any cash distributions paid out to investors. The YTD total return for this ETF is approximately 3.72%.

Because the total return (3.72%) is higher than the price return (-1.31%), it shows that the cash distributions helped offset the drop in the share price.

Income and distribution explanation

Some investors look at ETFs for regular cash payments, called distributions. This ETF has a distribution yield of approximately 5.43%. This number describes the cash distributions relative to the current ETF price.

The fund has paid out trailing distributions of approximately 1.35 per share. These payments happen frequently; the fund has made 10 payments in the last 12 months and usually pays out on a monthly basis. Most of these payments have occurred on Mondays.

NAV erosion explanation

"NAV erosion" is a term used when the value of the underlying assets in a fund decreases over time. While a falling share price can sometimes be a sign of this, they are not the same thing.

In this report, there is no "severe erosion-risk flag" active for LVLN. However, the data shows that an erosion score is not available because there is not enough verified price history to provide one.

Pros

• The ETF provides a regular stream of cash through monthly distributions.

• The YTD total return is positive, even though the share price itself has declined slightly.

Cons

• This is a leveraged ETF, which can lead to higher volatility (larger price swings).

• The YTD price return is currently negative.

Beginner takeaway

When looking at an ETF like LVLN, remember that price return and total return are different. A share price can go down while the total return stays positive because of cash distributions. Also, keep in mind that a high distribution yield does not guarantee that the share price will stay stable.