Understanding the AB Tax-Aware Intermediate Municipal ETF (TAFM)

What this ETF is trying to do

The AB Tax-Aware Intermediate Municipal ETF (ticker: TAFM) is an exchange-traded fund (ETF). While the specific investment strategy details are not listed in the provided data, municipal ETFs generally focus on bonds issued by local governments.

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 TAFM, the one-year price return was approximately -5.28%. The year-to-date (YTD) price return was approximately -5.47%.

• Total Return: This is a more complete measure because it includes the value of distributions (cash payments) made to investors. TAFM's one-year total return was approximately -1.76%, and its YTD total return was approximately -2.88%.

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

To visualize the price change, we can look at an estimated example. The estimated price from roughly one year ago was $25.37. The current price is $24.03.

Income and distribution explanation

Some investors look for ETFs that pay regular cash. This is called the distribution yield. TAFM has a distribution yield of approximately 3.85%. These payments are usually made monthly, with 12 payments recorded over the last year.

It is important to remember that a high distribution yield does not guarantee you will make money. As seen in the total return figures above, an ETF can pay out cash even if the overall value of your investment goes down.

NAV erosion explanation

"NAV" stands for Net Asset Value, which is essentially the underlying value of everything the ETF owns. NAV erosion happens when that underlying value decreases over time.

StockValueFinder uses an "erosion-risk score" to measure this risk. TAFM has an erosion score of 75, which is labeled as "Mild price erosion." This is a measurement of risk regarding price trends; it is not a guarantee that the fund's value has collapsed. There is no "severe erosion-risk flag" for this ETF.

Pros

• The ETF provides regular cash distributions (usually monthly).

• 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 and year-to-date.

• The erosion-risk score indicates "mild price erosion."

Beginner takeaway

When studying TAFM, remember that the share price and the cash distributions tell different stories. While the share price has fallen, the total return (which includes the cash paid to you) shows a slightly better result. Always look at both price return and total return to get the full picture.