Understanding the BONDBLOXX Bloomberg Three Year Target Duration US Treasury ETF (XTRE)

What this ETF is trying to do

The XTRE ETF is an exchange-traded fund that focuses on US Treasury securities. It aims to manage a specific "target duration" of three years, which is a way of measuring how sensitive the fund's price might be to changes in interest rates.

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 only tracks 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 XTRE, the numbers show different results depending on how you look at them:

• Year-to-Date (YTD): The price return is approximately -3.98%, while the total return is approximately -1.00%.

• One Year: The price return is approximately -3.96%, while the total return is approximately -0.01%.

• Three Years: The price return is approximately -0.95%, but the total return is much higher at approximately 11.85%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The estimated price was $49.75, and the current price is $47.78.

Income and distribution explanation

Some investors look for ETFs that pay out regular cash, known as distributions. XTRE has a distribution yield of approximately 4.15%. This means the fund paid out about $1.98 in trailing distributions relative to its price. These payments usually happen monthly, with the most common payout day being Monday.

It is important to remember that a high distribution yield does not mean the investor earned that same percentage as their total return. You must look at the "total return" figure to see how much value was actually created over time.

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. XTRE has an erosion score of 94, which is labeled as "Stable / sideways." This indicates a good level of stability, and there is no severe erosion-risk flag for this ETF.

Pros

• Total Return Performance: Over a three-year period, the total return (which includes distributions) was approximately 11.85%.

• Income: The fund provides regular monthly distributions with a yield of approximately 4.15%.

• Stability: The erosion-risk measurement is considered "good."

Cons

• Price Declines: The share price has seen declines in the year-to-date, one-year, and three-year price return categories.

• Price vs. Total Return Gap: The total return is higher than the price return, meaning much of the value comes from distributions rather than the share price going up.

Beginner takeaway

When studying XTRE, notice that while the share price has gone down recently, the total return (which includes the cash paid out to investors) tells a different story. Always distinguish between the price of the share and the total amount of money returned through distributions.