Understanding the AB Tax-Aware Long Municipal ETF (TAFL)

What this ETF is trying to do

The AB Tax-Aware Long Municipal ETF (ticker: TAFL) is an exchange-traded fund listed on the NYSE. While specific holdings are not listed in the current data, this type of ETF generally focuses on municipal bonds.

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. For TAFL, the year-to-date (YTD) price return is approximately -6.58%. The one-year price return is approximately -6.43%.

• Total Return: This includes the share price change plus any cash distributions paid out to investors. The YTD total return is approximately -3.66%, and the one-year total return is approximately -2.47%.

Because the total return numbers are higher than the price return numbers, it shows that distributions helped offset some of the share-price decline.

To visualize this, if you had invested in the estimated price from roughly one year ago ($24.96) and the price is now $23.35, the share price has gone down.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 4.41%. This number describes the cash paid out relative to the current ETF price. These payments usually happen monthly, with 12 payments recorded over the last year.

It is important to remember that a high distribution yield is not the same as total return. While distributions provide cash income, they do not guarantee that your original investment will stay the same value.

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 market price can look like erosion, they are not always the same thing.

StockValueFinder uses an erosion-risk score to measure this risk. TAFL has an erosion score of 75, which is labeled as "Mild price erosion." This is considered a mild level of risk and does not trigger a severe erosion-risk flag.

Pros

• The ETF provides regular monthly cash distributions.

• The total return is higher than the price return, meaning distributions are helping to cushion the share-price decline.

Cons

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

• There is a "mild" erosion-risk score present.

Beginner takeaway

When looking at TAFL, it is helpful to distinguish between the share price and the cash income (distributions) you receive. While the share price has decreased, the total return shows how much better the performance looks when you include those cash payments. Always remember that high yields can exist even when the share price is falling.