Understanding the XB ETF

What this ETF is trying to do

The XB ETF, known as the BONDBLOXX B RATED USD HIGH YIELD CORPORATE BOND ETF, is an exchange-traded fund. Based on its name, it focuses on high-yield corporate bonds that are rated "B." These types of bonds are often used by investors looking for higher interest payments.

What the numbers show

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

• Price Return: This only measures how much the share price itself has changed.

• Total Return: This includes both the change in share price AND the money paid out through distributions.

For XB, the numbers show a difference between these two:

• Year-to-Date (YTD): The price return is approximately -4.09%, but the total return is +0.88%.

• One Year: The price return is approximately -4.36%, while the total return is +2.39%.

• Three Year: The price return is approximately 1.26%, but the total return is much higher at approximately 25.86%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The estimated price was about $39.59, and the current price is $37.86.

Income and distribution explanation

This ETF provides cash payments called distributions. The distribution yield is approximately 7.06%. This means the amount of cash paid out is about 7.06% relative to the current ETF price. These payments happen frequently; in the last 12 months, there were 12 distributions, which usually occur monthly. Most of these payments have been made on Mondays.

It is important to remember that a high distribution yield does not mean the investor earned that same percentage as total return. You must look at the "total return" figure to see how the investment performed overall.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases over time. StockValueFinder uses an "erosion-risk score" to measure this risk.

For XB, the erosion score is 94, which is labeled as "Stable / sideways" with a "good" severity level. There is no severe erosion-risk flag for this ETF.

Pros

• The ETF has a high distribution yield of approximately 7.06%.

• The three-year total return has been positive at approximately 25.86%.

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

Cons

• The share-price return (price return) has been negative for both the year-to-date and one-year periods.

• The top holdings data was not supplied, so the specific companies owned by the fund are not listed here.

Beginner takeaway

When looking at high-yield bond ETFs like XB, always check both the price return and the total return. While the share price may go down (a share-price decline), the total return can still be positive if the cash distributions are large enough to make up for that decline.