ETF Education Report: TIPA

What this ETF is trying to do

The Northern Trust 2030 Inflation-Linked Distributing Ladder ETF (TIPA) is an exchange-traded fund. While the specific investment strategy is not detailed in the provided data, the name suggests it focuses on inflation-linked assets with a specific timeline.

What the numbers show

When looking at an ETF, it is important to separate "price return" from "total return."

• Price Return: This measures only the change in the share price. For TIPA, the year-to-date (YTD) price return is approximately -1.67%. The one-year price return is approximately -2.67%.

• Total Return: This includes both the price changes and the money paid out to investors through distributions. TIPA's YTD total return is approximately 1.42%, and its one-year total return is approximately 1.23%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The price was approximately $100.82, and the current price is $98.12. This shows a share-price decline over that period.

Income and distribution explanation

Some investors look for ETFs that pay out cash, known as distributions. TIPA has a distribution yield of approximately 4.01%. This means the cash distributed is about 4.01% of the ETF's price. Over the last 12 months, there were 8 distributions, which usually happen on a quarterly basis.

It is important to remember that a high distribution yield does not mean the investor earned that same amount as total return. Total return is the most complete way to see how the investment performed overall.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value, which is the actual value of the assets held by the fund. A falling share price does not always mean NAV erosion is happening, but it is something to watch.

StockValueFinder uses an "erosion-risk score" to measure this risk. TIPA has an erosion score of 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 ETF provides a distribution yield of approximately 4.01%.

• The erosion-risk score suggests the fund is currently considered stable or sideways.

Cons

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

• The one-year price return is negative at approximately -2.67%.

Beginner takeaway

When studying TIPA, notice the difference between the share price and the total return. While the share price went down over the last year, the total return was positive because of the cash distributions paid to investors. Always look at total return to get a full picture of performance, and remember that distributions provide cash but do not guarantee the share price will stay the same.