Understanding the Pimco Municipal Income Fund II (PML)

What this ETF is trying to do

The Pimco Municipal Income Fund II (PML) is an Exchange Traded Fund (ETF). While the specific holdings are not listed in this report, ETFs like this one generally aim to provide investors with income through various financial instruments.

What the numbers show

When looking at an ETF, it is important to understand two different types of returns: 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 to investors.

For PML, the numbers show a decline in both areas:

• Year-to-Date (YTD): The price return is approximately -9.15%, while the total return is approximately -4.76%.

• One Year: The price return was approximately -12.18%, and the total return was approximately -6.53%.

• Three Year: The price return was approximately -16.77%, while the total return was approximately -0.49%.

To visualize the price change, we can look at an estimated starting point. The estimated price from roughly one year ago was $7.80. The current price is $6.85.

Income and distribution explanation

This ETF has a distribution yield of approximately 6.93%. This number describes the cash distributions relative to the current ETF price. PML usually pays these distributions monthly, with 12 payments recorded over the last year.

It is important to remember that a high distribution yield does not mean an investor earned that same percentage as a total return. As seen in the data above, even with these cash payments, the total returns have remained negative over the last year and three years.

NAV erosion explanation

"NAV erosion" is a term used to describe a decline in the value of the fund's underlying assets. While a falling market price is not the same thing as NAV erosion, we use an erosion-risk score to measure this risk.

PML has an erosion score of 75, which is labeled as "Mild price erosion." This indicates a mild level of risk regarding price deterioration.

Pros

• The ETF provides regular cash distributions, which occur usually on a monthly basis.

• The distribution yield is approximately 6.93%.

Cons

• The ETF has experienced a share-price decline over the one-year and three-year periods.

• The total returns have been negative for the one-year, three-year, and five-year periods.

Beginner takeaway

When looking at ETFs that pay regular income, it is vital to look at the total return, not just the distribution yield. A high yield can look attractive, but if the share price is falling significantly, it can offset the cash you receive. Always check both the price movement and the total return to get a full picture of how the investment has performed.