ETF Education Report: Pimco High Income Fund (PHK)

What this ETF is trying to do

The Pimco High Income Fund (PHK) is an exchange-traded fund (ETF) listed on the NYSE. While the specific investment strategy is not detailed in the data, the name suggests it focuses on generating income for investors.

What the numbers show

It is important to understand that "price return" and "total return" tell different stories. Price return only tracks how the share price changes. Total return includes both the price change and the cash distributions paid out to investors.

Based on the data provided:

• Year-to-Date (YTD): The price return is approximately -15.02%. However, the YTD total return is -6.80%.

• One Year: The price return was approximately -16.06%, while the one-year total return was approximately -5.18%.

• Three Years: The price return was approximately -8.43%, but the three-year total return was a positive 31.24%.

To visualize the price change, if you had invested in this ETF at its estimated price from roughly one year ago ($4.92), the current price is $4.13.

Income and distribution explanation

This ETF has a high distribution yield of approximately 13.95%. This means the fund pays out a significant amount of cash relative to its share price. These distributions usually happen monthly, with Thursday being the most common day for payments. Over the last 12 months, there were 12 distributions totaling $0.576 per share.

It is important to remember that a high distribution yield does not mean an investor earned that same percentage as their total return. Total return is the most accurate way to see how much value was actually 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 over time. StockValueFinder uses an "erosion score" to measure this risk. This ETF has an erosion score of 55, which is labeled as "moderate price erosion." While the share price has declined recently, this score is a measurement of risk rather than a guarantee that the fund's value has collapsed.

Pros

• The fund offers a high distribution yield, which provides regular cash income.

• Over a three-year period, the total return was positive (31.24%), even though the share price itself declined.

Cons

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

• There is a moderate erosion-risk score, meaning the price has shown some downward movement.

Beginner takeaway

When looking at high-income ETFs, a large distribution yield can be eye-catching. However, it is vital to look at the total return. A fund might pay out a lot of cash, but if the share price drops significantly, the total value of your investment might still go down. Always check both the price movement and the distributions to get the full picture.