ETF Education Report: Western Asset Municipal Partners Fund Inc (MNP)

What this ETF is trying to do

Western Asset Municipal Partners Fund Inc (MNP) is an ETF traded on the NYSE. While the specific investment strategy is not detailed in the provided data, it is categorized as an ETF asset type.

What the numbers show

It is important to understand the difference between price return and total return. Price return only tracks how much the share price changes. Total return includes both the price change and any distributions (cash payments) received.

According to the data as of October 17, 2023:

• Year-to-Date (YTD): The YTD price return is approximately -9.11%. However, the YTD total return is -6.08%.

• One Year: The one-year price return is approximately -5.20%. The one-year total return is approximately -0.86%.

• Three Years: The three-year price return is approximately -25.49%, while the three-year total return is approximately -14.96%.

The current price is $10.58. Based on the one-year price return, the estimated price from roughly one year ago was approximately $11.16.

Income and distribution explanation

This ETF provides cash distributions to investors. The trailing distributions are $0.525, and the distribution yield is approximately 4.96%. These payments usually happen monthly, with 12 distributions recorded over the last year.

It is important to remember that a distribution yield is not the same as total return. A high yield provides cash income, but it does not guarantee that your original investment (your principal) will stay the same value.

NAV erosion explanation

This ETF has a severe erosion-risk flag. The data shows an erosion score of 30, which is labeled as "Significant price erosion" with a severity level of "significant."

"NAV erosion" is a term used when the value of the underlying assets in the fund decreases. While a falling market price is a "share-price decline," significant and lasting declines can be an indicator of erosion risk. When an ETF's share price drops significantly over a long period, it can be difficult for the fund to maintain its value. Income investors often prefer funds where the price stays steady or goes up slightly, because if the share price collapses, the loss in value can outweigh the cash earned from distributions.

Pros

• The ETF provides regular monthly cash distributions.

• It offers a distribution yield of approximately 4.96%.

Cons

• The ETF has experienced share-price declines over the one-year and three-year periods.

• There is a severe erosion-risk flag present.

• The three-year total return has been negative.

Beginner takeaway

When looking at this ETF, it is vital to look at both the price return and the total return. A high distribution yield can provide cash, but if the share price is falling significantly (price deterioration), the total value of your investment may still go down. Always check for erosion-risk measurements to understand how the share price has behaved over time.