Understanding the REGAN FIXED RATE MBS ETF (MBSX)

What this ETF is trying to do

The REGAN FIXED RATE MBS ETF (ticker: MBSX) is an exchange-traded fund listed on the NYSE. While the specific holdings are not listed in this report, this type of ETF generally focuses on mortgage-backed securities.

What the numbers show

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

• Price Return: This measures only the change in the share price. For MBSX, the year-to-date (YTD) price return is approximately -4.36%. The one-year price return is approximately -4.27%.

• Total Return: This includes both the share price changes and any cash distributions paid out. The YTD total return is approximately -2.87%, and the one-year total return is approximately -0.63%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The estimated price was about $26.38, while the current price is $25.25.

Income and distribution explanation

Some investors look for ETFs that pay out cash, known as distributions. MBSX has a distribution yield of approximately 3.94%. This means the cash paid out is about 3.94% of the current share price. These distributions usually happen monthly, with 12 payments recorded over the last year.

It is important to remember that a high distribution yield is not the same as total return. While distributions provide cash, they do not guarantee that your original investment will stay the same value.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases. StockValueFinder uses an "erosion-risk score" to measure this risk. MBSX has an erosion score of 94, which is labeled as "Stable / sideways" with a "good" severity rating. There is no severe erosion-risk flag for this ETF.

Pros

• The ETF provides regular cash distributions, which usually occur on Wednesdays.

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

Cons

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

• The total return has been negative for both the year-to-date and one-year periods.

Beginner takeaway

When studying MBSX, it is helpful to look at both the share price and the total return. While the share price has gone down, the total return is slightly higher because it includes the cash distributions paid to investors. Always remember that receiving regular income does not prevent the share price from falling.