Understanding the iShares National Muni Bond ETF (MUB)

What this ETF is trying to do

The iShares National Muni Bond ETF (MUB) is an exchange-traded fund that focuses on municipal bonds. Municipal bonds are loans made to local governments. This ETF is designed to provide investors with exposure to these types of bonds through a single fund.

What the numbers show

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

• Price Return: This only tracks how the share price changes.

• Total Return: This includes both the share price changes and any cash distributions (dividends) paid out.

For MUB, the numbers show different results depending on how you look at them:

• Year-to-Date (YTD): The price return is approximately -5.59%, while the total return is approximately -3.28%.

• One Year: The price return is approximately -4.94%, while the total return is approximately -1.84%.

• Three Years: The price return is approximately -0.84%, but the total return is much higher at approximately 8.83%.

To visualize the price change, the current price is $101.12. The estimated price from roughly one year ago was approximately $106.38.

Income and distribution explanation

Some investors look for ETFs that pay out regular cash. This is called the "distribution yield." MUB has a distribution yield of approximately 3.38%. These payments are usually made monthly, with the most recent trailing distributions totaling approximately $3.42 per share.

It is important to remember that a distribution yield tells you how much cash was paid out, but it does not guarantee that the investment will grow in value.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases. Investors often care about this because they want to keep their original investment (the principal) stable.

For MUB, the erosion-risk score is 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag present. This suggests the fund's price movements are not currently showing signs of high erosion risk.

Pros

• The fund provides regular monthly distributions.

• The three-year total return is positive at approximately 8.83%.

• The erosion-risk measurements suggest the fund is relatively stable.

Cons

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

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

Beginner takeaway

When studying MUB, notice how the total return is often higher than the price return. This happens because the cash distributions help offset some of the share-price declines. Always look at both the price movement and the total return to get a full picture of how an ETF is performing.