In the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

, 30-day yield is a standardized yield calculation for

bond fund A bond fund or debt fund is a fund that invests in bonds, or other debt securities. Bond funds can be contrasted with stock funds and money funds. Bond funds typically pay periodic dividends that include interest payments on the fund's underlyi ...

s. The formula for calculating 30-day yield is specified by the U.S. Securities and Exchange Commission (SEC). The formula translates the bond fund's current

portfolio Portfolio may refer to: Objects * Portfolio (briefcase), a type of briefcase Collections * Portfolio (finance), a collection of assets held by an institution or a private individual * Artist's portfolio, a sample of an artist's work or a ...

income into a standardized yield for reporting and comparison purposes. A bond fund's 30-day yield may appear in the fund's "Statement of Additional Information (SAI)" in its prospectus. Because the 30-day yield is a standardized mandatory calculation for all United States bond funds, it serves as a common ground comparison of yield performance. Its weakness lies in the fact that funds tend to

trade Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market. Traders generally negotiate through a medium of cr ...

actively and do not hold bonds until maturity. In addition, funds do not mature. For this reason, analysts often consider a distribution yield to be a better measure of a fund's income-generating potential. United States

money market The money market is a component of the economy that provides short-term funds. The money market deals in short-term loans, generally for a period of a year or less. As short-term securities became a commodity, the money market became a compo ...

funds report a 7-day SEC yield. The rate expresses how much the fund would yield if it paid income at the same level as it did in the prior 7 days for a whole year. It is calculated by taking the sum of the income paid out over the period divided by 7, and multiplying that quantity by 36500 (365 days x 100).

Bond fund yield calculation

The SEC yield calculation for a bond fund is essentially an annualized version of the ratio of interest and dividends per share (or yield to maturity for fixed income funds) earned over the last month, factoring in the impact of shareholder expenses. It is an adjusted version of

yield to maturity The yield to maturity (YTM), book yield or redemption yield of a fixed-interest security is an estimate of the total rate of return anticipated to be earned by an investor who buys it at a given market price, holds it to maturity, and receives ...

for the bonds in the portfolio, as it does take into account the amortization of the premiums or discounts at which the bonds are trading. Because bond funds trade actively and prices fluctuate, the rate may not be a good indicator of future results. However, because the calculation is standardized, it provides a standard comparison measure for funds. An appropriate use is to make daily/weekly adjustments to a bond mutual fund price series to determine running total return. The formula for SEC 30-day yield is

\mathrm = 2 \left \left(\frac+1\right)^6-1\right

Where: *a =

dividend A dividend is a distribution of profits by a corporation to its shareholders, after which the stock exchange decreases the price of the stock by the dividend to remove volatility. The market has no control over the stock price on open on the ex ...

s and

interest In finance and economics, interest is payment from a debtor or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct f ...

collected during the past 30 days *b = accrued expenses of the past 30 days *c = average daily number of outstanding

shares In financial markets, a share (sometimes referred to as stock or equity) is a unit of equity ownership in the capital stock of a corporation. It can refer to units of mutual funds, limited partnerships, and real estate investment trusts. Sha ...

that were entitled to distributions *d = the maximum

public offering A public offering is the offering of securities of a company or a similar corporation to the public. Generally, the securities are to be publicly listed. In most jurisdictions, a public offering requires the issuing company to publish a prospectu ...

price per share on the last day of the period

References

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