Understanding the PIMCO Intermediate Municipal Bond Active ETF (MUNI)

The PIMCO Intermediate Municipal Bond Active ETF (ticker: MUNI) is an exchange-traded fund designed to invest in municipal bonds. This ETF focuses on providing income through bond interest.

What this ETF is trying to do

MUNI is an actively managed fund that invests in intermediate municipal bonds. Municipal bonds are loans made to local governments (like cities or states). Because this is an "active" fund, managers make decisions about which bonds to buy to try and meet the fund's goals.

What the numbers show

When looking at MUNI, 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 example, the one-year price return was approximately -4.69%. The year-to-date (YTD) price return was approximately -5.00%.

• Total Return: This includes both the share price changes and the money paid out through distributions. The one-year total return was approximately -1.49%, and the YTD total return was approximately -2.63%.

Over a longer period, the three-year total return was approximately 10.69%, which is higher than the three-year price return of approximately 0.12%. This shows that distributions helped improve the overall total return over those three years.

Income and distribution explanation

MUNI provides regular cash payments to investors. The current distribution yield is approximately 3.45%. This means the amount of cash paid out relative to the current share price is 3.45%.

The fund typically pays distributions on a monthly basis, with 12 payments recorded over the last year. Based on the data, these payments often occur on Mondays.

NAV erosion explanation

Some investors worry about "NAV erosion," which is when the value of the underlying assets in a fund decreases over time. The supplied data is sufficient to evaluate price erosion, but it does not include enough historical NAV-per-share data to confirm or rule out NAV erosion.

However, we can look at the erosion-risk score. MUNI 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

• Regular Income: The fund has a history of monthly distributions.

• Stable Risk Profile: The erosion-risk score suggests the price movement has been relatively stable or sideways rather than showing extreme deterioration.

• Income Rating: The fund has an income rating grade of "B."

Cons

• Recent Price Declines: The share price has seen a decline both year-to-date and over the last year.

• Total Return vs. Price: While distributions help, recent total returns have still been negative.

Beginner takeaway

MUNI is a fund focused on municipal bond income. While the share price has recently declined, the distributions (the cash paid to investors) help boost the total return. Investors looking for monthly income should note that a high distribution yield does not guarantee that the share price will stay the same.