ETF Education Report: SPHY

What this ETF is trying to do

The STATE STREET(R) SPDR(R) PORTFOLIO HIGH YIELD BOND ETF (ticker: SPHY) is an exchange-traded fund. Based on its name, it focuses on high-yield bonds.

What the numbers show

It is important to understand that "price return" and "total return" are different things. Price return only tracks how much the share price moves. Total return includes both the price movement and the cash distributions paid out to investors.

Here is what the data shows:

• Year-to-Date (YTD): The price return is approximately -4.94%. However, the YTD total return is approximately 0.26%.

• One Year: The one-year price return is approximately -5.50%. The one-year total return is approximately 1.46%.

• Three Years: The three-year price return is approximately 2.13%. The three-year total return is much higher at approximately 27.94%.

To visualize the price change, we can look at an estimated example. The estimated price from roughly one year ago was $23.81. The current price is $22.50.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 7.40%. This means the amount of cash paid out is about 7.40% 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 an investor earned that exact percentage as their total return. You must look at the "total return" figure to see the full picture of how the investment performed including those payments.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases. While a falling share price can sometimes look like erosion, they are not always the same thing.

StockValueFinder uses an "erosion-risk score" to measure this risk. SPHY has an erosion score of 75, which is labeled as "mild price erosion." This is a measurement of risk, not a confirmed fact 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 grade of "A."

• It provides regular monthly distributions.

• The three-year total return has been positive at approximately 27.94%.

Cons

• The share price has seen declines in both the one-year and year-to-date periods.

• There is a "mild" erosion-risk score of 75.

Beginner takeaway

When looking at high-yield ETFs like SPHY, it is helpful to look at both the price and the total return. A share price might go down, but the cash distributions (the yield) can make the total return a different number. Always remember that high yields can be misleading if the share price is also falling.