ETF Education Report: PGIM AAA CLO ETF (PAAA)

What this ETF is trying to do

The PGIM AAA CLO ETF (ticker: PAAA) is an exchange-traded fund listed on the NYSE. While specific holdings are not listed in this report, ETFs like this generally aim to provide exposure to specific types of assets to help investors meet their financial goals.

What the numbers show

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

• Price Return: This measures only the change in the share price.

• Total Return: This includes both the change in share price AND any cash distributions (dividends) paid out.

For PAAA, the numbers show:

• Year-to-Date (YTD): The price return is approximately 0.23%, while the total return is approximately 3.72%.

• One Year: The price return is approximately 6.82%, while the total return is approximately 4.84%.

• Three Years: The price return is approximately 2.08%, while the total return is approximately 19.99%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The current price is $51.38, compared to an estimated price of approximately $51.34 one year ago.

Income and distribution explanation

Some investors look for ETFs that pay out regular cash. This is called the distribution yield. For PAAA, the distribution yield is approximately 4.65%. This means the ETF paid out about $2.39 in trailing distributions.

The data shows that these payments usually happen monthly, with Monday being the most common day for distributions. It is important to remember that a high distribution yield does not guarantee that an investor will earn that same percentage as a total return.

NAV erosion explanation

"NAV erosion" refers to a situation where the value of the underlying assets in the fund decreases over time. StockValueFinder uses an erosion-risk score to measure this risk.

PAAA has an erosion score of 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 trend has been relatively stable rather than showing significant deterioration.

Pros

• The fund provides a regular monthly distribution yield of approximately 4.65%.

• The three-year total return is approximately 19.99%, which includes both price growth and distributions.

• The erosion-risk score suggests a stable price trend.

Cons

• Total return figures can vary significantly from price-only returns.

• The report does not provide a list of top holdings to show exactly what assets the fund owns.

Beginner takeaway

When evaluating PAAA, it is helpful to look at both the share price and the total return. Because this ETF pays regular distributions, the total return provides a more complete picture of how the investment performed by including those cash payments. Always remember that high yields are not a guarantee of total profit, and it is important to monitor erosion-risk scores to understand how stable the fund's value remains.