What this ETF is trying to do

The AAM Low Duration Preferred and Income Securities ETF (ticker: PFLD) is designed to invest in securities that provide income. Based on its name, it focuses on "preferred" securities and other assets that have a "low duration." In simple terms, these are types of investments that aim to pay out regular money to investors while trying to manage how much the value of the investment swings up and down over time.

What the numbers show

To understand how this ETF has performed, we look at two different types of measurements: price return and total return.

The price return only shows how much the share price itself has changed. Over the last year, the share-price decline was approximately -2.44%. For the year-to-date (YTD) period, the price return was about -1.87%. Looking further back at three years, the price return was approximately -5.56%.

The total return is a different measurement because it includes both the share-price change and any distributions (like cash payments) the ETF paid out. Even though the share price went down over the last year, the total return was positive at 3.00%. Over three years, the total return was approximately 15.20%.

The current price of the ETF is $19.20. For comparison, the estimated price from roughly one year ago was $19.68.

Income and distribution explanation

This ETF provides regular cash distributions to investors. The distribution yield is 5.52%, which means it pays out that percentage based on its current share price. The trailing distributions amount to $1.06, and the fund usually pays these out on a monthly basis.

It is important for new investors to know that a high distribution yield does not automatically mean an investor earned that much as a total return. While these payments provide cash income, they do not guarantee that the original money invested (the principal) will stay the same. It is possible for an ETF to pay out a high yield while its share price continues to decline.

NAV erosion explanation

NAV erosion is a term used to describe when the value of the underlying assets in a fund decreases over time. StockValueFinder uses an "erosion-risk score" to measure this risk. PFLD has an erosion score of 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good." These numbers are measurements used to track price trends and do not necessarily mean the fund's value has collapsed; they simply show how the price has behaved over time.

Pros

• The ETF has shown positive total returns over both one-year and three-year periods, even though the share price declined during those times.

• It provides regular monthly distributions for investors seeking income.

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

Cons

• The share-price return has been negative over the last year, the last three years, and the current year-to-date period.

Beginner takeaway

PFLD is an ETF that focuses on providing regular income through distributions. When looking at this fund, it is important to distinguish between the price return (the change in share value) and the total return (which includes those cash payments). While the share price has seen a decline recently, the total return figures remain positive because of the distributions provided by the fund.