ETF Education Report: Western Asset Managed Municipals Fund Inc (MMU)

What this ETF is trying to do

Western Asset Managed Municipals Fund Inc (ticker: MMU) is an ETF listed on the NYSE. While the specific investment goals are not detailed in the data, it is categorized as an ETF and focuses on municipal assets.

What the numbers show

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

• Price Return: This measures only the change in the share price. For MMU, the year-to-date (YTD) price return is approximately -13.98%. The one-year price return is approximately -13.07%.

• Total Return: This includes the price change plus any distributions (cash payments) received. The YTD total return is approximately -9.72%, and the one-year total return is approximately -7.31%.

You can see that the total return numbers are higher than the price return numbers. This is because the cash distributions help offset some of the share-price decline.

Looking further back, the three-year total return is approximately 17.91%, even though the three-year price return was approximately -2.07%. This shows how distributions can impact overall performance over longer periods.

Based on an estimated price from roughly one year ago of $10.33, the current price is $8.98.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 7.28%. This number describes the cash payments relative to the current ETF price. These distributions usually happen monthly, with 12 payments recorded over the last year.

It is important to remember that a high distribution yield does not guarantee that an investor will earn that same percentage as a total return.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the assets held by the fund). While a falling share price is not the same thing as NAV erosion, we use an erosion-risk score to measure this risk.

MMU has an erosion score of 75, which is labeled as "Mild price erosion." This is considered a mild risk level, and there is no severe erosion-risk flag for this ETF.

Pros

• The fund has a history of providing regular monthly distributions.

• Over a three-year period, the total return was positive (approximately 17.91%), even though the share price declined.

Cons

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

• The five-year total return is approximately -14.26%.

Beginner takeaway

When looking at MMU, it is helpful to distinguish between the share price and the total return. While the share price has gone down recently, the distributions provide cash that helps the total return perform better than the price return alone. Always remember that high yields can exist even when a share price is falling.