ETF Education Report: SPIB

What this ETF is trying to do

The STATE STREET(R) SPDR(R) PORTFOLIO INTERMEDIATE TERM CORPORATE BOND ETF (ticker: SPIB) is an exchange-traded fund. Based on its name, it focuses on corporate bonds that have "intermediate" terms. This means the fund generally holds debt from companies that is scheduled to be paid back over a medium amount of time.

What the numbers show

When looking at an ETF, it is important to know the difference between "price return" and "total return." Price return only tracks how much the share price changes. Total return includes both the price change and any cash payments (distributions) made to investors.

Here is what the data shows for SPIB:

• Year-to-Date (YTD): The price return is approximately -4.79%. However, the total return is higher at approximately -1.51%.

• One Year: The price return was approximately -4.90%, while the total return was approximately -0.54%.

• Three Year: The price return was approximately 3.21%, but the total return was much higher at approximately 17.93%.

To visualize the price change, we can look at an estimated price from roughly one year ago, which was $33.85. The current price is $32.19.

Income and distribution explanation

Some investors look for ETFs that pay out regular cash. This is called the "distribution yield." SPIB has a distribution yield of approximately 4.66%. These distributions are usually paid out monthly, with 12 payments recorded over the last year.

It is important to remember that a high distribution yield does not mean you are earning that same amount in total return. You must look at the "total return" figure to see how the investment performed overall, including those cash payments.

NAV erosion explanation

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

For SPIB, the erosion-risk score is 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag present.

Pros

• The fund provides regular monthly distributions.

• The three-year total return has been positive at approximately 17.93%.

• The erosion-risk measurements suggest the fund is currently stable.

Cons

• The share price has seen a decline recently, as shown by the negative one-year and YTD price returns.

• The total return has also been negative for the past year.

Beginner takeaway

When studying SPIB, remember that price movement and cash distributions are two different things. While the share price has dropped recently, the total return (which includes the cash paid to you) is higher than the price return alone. Always check both numbers to get a full picture of how an ETF is performing.