Share-split context: A minor share adjustment was recorded on Jan 23, 2025 with coefficient 1.048. Current price-return figures are already normalized to the current share basis.

ETF Education Report: Neuberger Berman Real Estate Securities Income Fund Inc (NRO)

What this ETF is trying to do

The Neuberger Berman Real Estate Securities Income Fund Inc (NRO) is an ETF that focuses on real estate securities. Its goal is to provide income to investors through regular distributions.

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 how much the share price has changed.

• Total Return: This includes both the change in share price and the money paid out through distributions.

For NRO, the numbers show a difference between these two:

• Year-to-Date (YTD): The price return is approximately -17.11%, while the total return is approximately -8.91%.

• One Year: The price return is approximately -21.50%, while the total return is approximately -11.05%.

• Three Year: The price return is approximately -2.19%, while the total return is a positive 38.88%.

It is also important to note that this ETF has a history of forward splits. In a forward split, each old share becomes multiple new shares, and the price per share falls proportionally. This change does not create a gain or a loss for the investor; it is simply a structural adjustment.

Income and distribution explanation

NRO has a high distribution yield of approximately 14.86%. This means the fund pays out a large amount of cash relative to its share price. These distributions usually happen monthly, with the most common payout day being Monday.

However, a high yield can sometimes be misleading. While distributions provide cash income, 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.

NRO has an erosion score of 55, which is labeled as "Moderate price erosion." This indicates a moderate level of risk regarding price deterioration. While there is no "severe erosion-risk flag" for this fund, the moderate score suggests that the share price has faced some downward pressure.

Pros

• The fund offers a high distribution yield of approximately 14.86%.

• Over a three-year period, the total return (which includes distributions) was positive at approximately 38.88%.

Cons

• The share price has seen significant declines recently, with a one-year price return of approximately -21.50%.

• The fund has a moderate erosion-risk score.

Beginner takeaway

When looking at NRO, it is vital to distinguish between the cash you receive (distributions) and the value of your shares (price return). While the high distribution yield provides regular cash, the declining share price means the total value of the investment has been lower in the short term. Always remember that high yields do not protect against a falling share price.