Understanding the iShares Treasury Floating Rate Bond ETF (TFLO)

What this ETF is trying to do

The iShares Treasury Floating Rate Bond ETF, known by its ticker symbol TFLO, is an exchange-traded fund (ETF). While the specific holdings are not listed in this report, this type of fund generally focuses on Treasury bonds with "floating" rates. This means the interest payments can change over time rather than staying the same.

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.

• Total Return: This includes both the change in share price AND any cash distributions (dividends) paid out to investors.

For TFLO, the numbers show:

• Year-to-Date (YTD): The price return is approximately 0.16%, while the total return is approximately 2.96%.

• One Year: The price return is approximately 0.18%, while the total return is approximately 3.99%.

• Three Years: The price return was approximately -7.91%, but the total return was approximately 14.32%.

To see how the price has moved, we can look at an estimated price from roughly one year ago, which was about $50.45. The current price is $50.54.

Income and distribution explanation

Some investors look for ETFs that pay out regular cash. This is called the distribution yield. TFLO has a distribution yield of approximately 3.73%. This fund typically pays out distributions monthly, with 12 payments recorded over the last year. Most of these payments have occurred on Mondays.

It is important to remember that a high distribution yield is not the same thing as total return. Total return tells you the full picture of how much value was created, including the cash paid out.

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 their original investment (the principal) to stay stable.

StockValueFinder uses an erosion-risk score to measure this risk. TFLO has an erosion score of 94, which is labeled as "Stable / sideways." This means the fund does not show signs of significant price deterioration. There is no severe erosion-risk flag for this ETF.

Pros

• The fund has a high income rating grade of "A."

• The total returns over one, three, and five years have been positive.

Cons

• The three-year price return was negative, meaning the share price itself dropped during that period, even though the total return remained positive due to distributions.

Beginner takeaway

When studying TFLO, notice the difference between the share price and the total return. While the share price may move up or down slightly, the total return includes the cash distributions paid to investors. Always look at both numbers to understand how an ETF is performing.