Understanding the NUVEEN ESG HIGH YIELD CORPORATE BOND ETF (NUHY)

What this ETF is trying to do

The NUVEEN ESG HIGH YIELD CORPORATE BOND ETF (ticker: NUHY) is an exchange-traded fund. Based on its name, it focuses on high-yield corporate bonds while following ESG (Environmental, Social, and Governance) principles.

What the numbers show

It is important to understand that "price return" and "total return" tell different stories. Price return only tracks the change in the share price. Total return includes both the price change and the money paid out through distributions.

• Year-to-Date (YTD): The price return is approximately -5.72%, while the total return is approximately -0.83%.

• One Year: The price return was approximately -6.07%, but the total return was positive at approximately 0.47%.

• Three Year: The price return was approximately 3.09%, while the total return was much higher at approximately 26.00%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The estimated price was $21.68, and the current price is $20.36.

Income and distribution explanation

This ETF provides regular cash payments, known as distributions. The distribution yield is approximately 7.06%. This number describes the cash payments relative to the current ETF price. These distributions usually happen monthly, with 12 payments made over the last year.

When looking at an ETF, it is important to remember that a high distribution yield does not mean the investor earned that same percentage as their total return. Total return is the more complete measurement of how much value was gained or lost.

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. This ETF has an erosion score of 75, which is labeled as "mild price erosion." While the share price has seen some declines, there is no severe erosion-risk flag for this fund.

Pros

• The ETF has a high income rating grade of "A."

• Over a three-year period, the total return was significantly higher than the price return.

Cons

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

• The fund shows signs of mild price erosion according to the erosion-risk score.

Beginner takeaway

When looking at high-yield ETFs like NUHY, always look at the total return rather than just the price or the yield. The price might go down, but the distributions can help offset some of that loss, as seen in the one-year total return data. However, high yields do not guarantee that your original investment (the principal) will stay the same value.