Understanding the PGIM Active High Yield Bond ETF (PHYL)

What this ETF is trying to do

The PGIM Active High Yield Bond ETF (ticker: PHYL) is an exchange-traded fund that focuses on high-yield bonds. While the specific holdings are not listed in this report, ETFs like this generally aim to provide investors with regular income through bond interest.

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 moves. Total return includes both the price movement and the cash distributions paid out to investors.

• Year-to-Date (YTD): The price return is approximately -5.55%. However, the YTD total return is -0.37%.

• One Year: The one-year price return is approximately -5.74%. The one-year total return is approximately 0.95%.

• Three Year: The three-year price return is approximately 2.18%, while the three-year total return is much higher at approximately 28.30%.

To visualize the price change, we can look at an estimated example. The estimated price from roughly one year ago was $35.55. The current price is $33.51. This shows a share-price decline over the last year.

Income and distribution explanation

This ETF has a distribution yield of approximately 7.16%. This means the fund pays out a significant amount of cash relative to its price. These distributions usually happen monthly, with 12 payments recorded over the last year. Most of these payments have occurred on Mondays.

Investors often look for high yields, but it is important to remember that a high distribution yield is not the same as total return.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the assets held by the fund). While a falling share price can sometimes look like erosion, they are not always the same thing.

This ETF has an erosion-risk score of 75, which is labeled as "mild price erosion." This is a measurement of risk, not a guarantee that the fund's value has collapsed. There is no severe erosion-risk flag for this ETF.

Pros

• The fund has a high income rating of "A."

• The three-year total return is quite strong at approximately 28.30%.

• It provides regular monthly cash distributions.

Cons

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

• The YTD total return is currently negative.

• There is a "mild" erosion-risk score to consider.

Beginner takeaway

When looking at PHYL, it is helpful to distinguish between the share price and the total return. While the share price has gone down recently, the total return (which includes the cash paid to you) tells a different story. Always remember that high distributions provide cash, but they do not guarantee that the share price will stay stable.