ETF Education Report: T. ROWE PRICE INTERMEDIATE MUNICIPAL INCOME ETF (TAXE)

What this ETF is trying to do

The T. Rowe Price Intermediate Municipal Income ETF (TAXE) is an exchange-traded fund. While the specific investment goals are not listed in the data, municipal income ETFs generally focus on providing income through 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 TAXE, the year-to-date (YTD) price return is approximately -4.82%. The one-year price return is approximately -4.15%.

• Total Return: This includes the share price change plus any distributions (cash payments) made to investors. The YTD total return is approximately -2.15%, and the one-year total return is approximately -0.55%.

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 see how the price has moved, we can look at an estimated price from roughly one year ago. The estimated price was $50.74, and the current price is $48.64.

Income and distribution explanation

This ETF provides cash distributions to investors. The distribution yield is approximately 3.86%. This number describes the cash payments relative to the current ETF price.

The data shows that these distributions usually happen monthly, with 12 payments made over the last year. Most of these payments have occurred on Tuesdays. It is important to remember that a distribution yield tells you how much cash was paid out, but it does not guarantee that the investor earned that same amount as a total return.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases over time. Investors often care about this because they want to keep their original investment (the principal) stable while collecting income.

For TAXE, 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. This suggests that the fund's price movement is not currently showing signs of high-risk erosion.

Pros

• The fund provides regular monthly distributions.

• The erosion-risk measurements suggest the price movement is relatively stable or "sideways."

Cons

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

• Both the YTD and one-year total returns have been negative.

Beginner takeaway

When looking at an ETF like TAXE, remember that the share price and the cash distributions are two different things. A falling share price can be partially balanced out by the income paid through distributions, which is why the "total return" is different from the "price return." Always look at both numbers to get a clearer picture of how an investment is performing.