Understanding the Northern Trust 2045 Inflation-Linked Distributing Ladder ETF (TIPC)

What this ETF is trying to do

The Northern Trust 2045 Inflation-Linked Distributing Ladder ETF (TIPC) is an exchange-traded fund listed on the NYSE. While the specific holdings are not listed in this report, ETFs like this generally aim to provide exposure to inflation-linked bonds.

What the numbers show

When looking at an ETF, it is important to understand the difference between "price return" and "total return."

• Price Return: This measures only the change in the share price.

• Total Return: This includes both the share price changes and the money paid out to investors through distributions.

For TIPC, the numbers show a decline in both areas:

• Year-to-Date (YTD): The price return is approximately -7.41%, while the total return is approximately -3.18%.

• One Year: The price return is approximately -8.84%, while the total return is approximately -3.54%.

To visualize this, we can look at an estimated price from roughly one year ago. The price was approximately $101.97, and the current price is $92.96. This shows a decline in the share price over that period.

Income and distribution explanation

This ETF provides cash payments to investors, known as distributions. The current distribution yield is approximately 6.06%. This number describes the cash payments relative to the current ETF price. Over the last 12 months, there were 9 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 percentage as their total return. Total return is the more complete picture of how much value was gained or lost.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF decreases. While a falling market price is not the same thing as NAV erosion, we use "erosion-risk scores" to measure this risk.

TIPC has an erosion score of 75, which is labeled as "mild price erosion." This is a measurement of risk and not a definitive proof that the fund's value has collapsed. There is no "severe erosion-risk flag" for this ETF.

Pros

• The ETF provides a distribution yield of approximately 6.06%.

• It has a history of regular distributions (9 times in the last year).

Cons

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

• Both the price return and total return have been negative for the year-to-date and one-year periods.

• The income rating grade is a "D."

Beginner takeaway

When looking at TIPC, it is helpful to look at both the price and the distributions. While the ETF pays out cash (the distribution yield), the actual share price has been falling. Always check the total return to see how much the price changes and the distributions work together. High yields can sometimes exist even when the share price is going down.