ETF Education Report: SJNK

What this ETF is trying to do

The STATE STREET(R) SPDR BLOOMBERG SHORT TERM HIGH YIELD BOND ETF (ticker: SJNK) is an exchange-traded fund. Based on its name, it focuses on short-term, high-yield bonds.

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 only tracks how much the share price has gone up or down.

• Total Return: This includes both the change in share price *and* the money paid out through distributions (dividends).

For SJNK, the numbers show:

• Year-to-Date (YTD): The price return is approximately -4.58%. However, the YTD total return is positive at about 0.53%.

• One Year: The one-year price return is approximately -5.11%, while the one-year total return is about 1.69%.

• Three Year: The three-year price return is about 0.17%, but the three-year total return is much higher at approximately 24.45%.

To visualize the price change, the current price is $24.16. The estimated price from roughly one year ago was approximately $25.46.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 7.17%. This means the amount of cash paid out is high relative to the ETF's price. These distributions usually happen monthly, with 12 payments recorded over the last year.

It is important to remember that a high distribution yield does not mean you have earned that same amount in total return. Total return is the most accurate way to see how much value an investment has actually gained or lost over time.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of an ETF's underlying assets declines. While a falling share price does not always mean the NAV is eroding, we use an "erosion-risk score" to measure this risk.

SJNK has an erosion score of 75, which is labeled as "mild price erosion." This is considered a mild risk level, and there is no severe erosion-risk flag for this ETF.

Pros

• The ETF has a high income rating grade of "A."

• The total return figures over one, three, and five years are positive, even when the share price itself has declined.

Cons

• The ETF has experienced some share-price declines (negative price returns) over the last year and year-to-date.

• The erosion score indicates a "mild" level of price erosion.

Beginner takeaway

For new investors, SJNK shows how distributions can impact overall performance. Even when the share price of an ETF goes down, the total return can stay positive if the cash distributions are large enough to offset the price drop. Always look at the total return, not just the price or the yield, to get the full picture.