Mutual Fund Yield

AAA

DEFINITION of 'Mutual Fund Yield'

Dividend payments divided by the value of a mutual fund’s shares.  Mutual fund yield is different from a fund’s market value, which is typically determined after the market closes each day and the fund reconciles its positions. It is also different from the fund’s return, which takes into account both dividend payments and changes in share price. 

INVESTOPEDIA EXPLAINS 'Mutual Fund Yield'

For example, assume that a mutual fund has a current market price of $20 per share, and paid $0.50 in dividends over the year. Mutual fund yield would be calculated by dividing the dividends paid by the share price. Thus the yield would be $0.50 / $20 = 0.025, or 2.5%. 

Investors planning on living off of dividends are most likely to pay attention to mutual fund yield, which is not as detailed as a mutual fund’s return. Because mutual funds do not pay dividends daily, looking at when the fund has paid the dividends (and how much those dividends were) can give the investor an idea of how healthy the fund is. A fund that has a particularly good quarter and pays significantly more dividends during that time may boost the yield for the entire year, which can be misleading if the other quarters saw lower dividend payments. 

 

RELATED TERMS
  1. Treasury Yield

    The return on investment, expressed as a percentage, on the debt ...
  2. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity ...
  3. Yield Variance

    The difference between actual output and standard output of a ...
  4. Fully Taxable Equivalent Yield

    The yield on a municipal bond, when the effect of reduced taxes ...
  5. Minimum Yield

    The lesser of a bond's yield-to-call and yield-to-maturity. The ...
  6. Liability Adjusted Cash Flow Yield ...

    A fundamental analysis calculation that compares a company's ...
RELATED FAQS
  1. How can I calculate the tracking error of an ETF or indexed mutual fund?

    Calculate the tracking error of an indexed exchange-trade fund (ETF) or mutual fund by doing a standard deviation percentage ... Read Full Answer >>
  2. How do you calculate the excess return of an ETF or indexed mutual fund?

    For exchange-traded funds (ETFs), the excess return should be equal to the risk-adjusted (or beta) measure that exceeds the ... Read Full Answer >>
  3. What mutual funds can be used for investing in the industrial sector?

    The industrial goods sector provides investors access to companies that engage in activities such as aerospace and defense, ... Read Full Answer >>
  4. What is the difference between a custodian bank and a mutual fund custodian?

    Custodian banks and mutual fund custodians, commonly known as mutual fund corporations, perform very similar roles for different ... Read Full Answer >>
  5. How do no-load funds typically perform relative to load funds?

    No-load mutual funds are pooled investments that do not carry an upfront sales charge when purchased or a deferred sales ... Read Full Answer >>
  6. What are the most popular mutual funds that invest primarily in the insurance sector?

    Under the purview of the financial services industry, the insurance sector is an attractive investment option for mutual ... Read Full Answer >>
Related Articles
  1. Bonds & Fixed Income

    Understanding Bond Prices and Yields

    Understanding this relationship can help an investor in any market.
  2. Fundamental Analysis

    Yield Investing: Dividend, Earnings And FCF

    There are numerous ways to value investments, and many investors prefer a specific valuation method. Yield investing is one way to value a stock by comparing the current price to various factors. ...
  3. Mutual Funds & ETFs

    When To Buy A Mutual Fund

    There is money to be made in mutual funds, but investors fall into several pitfalls that keep them from maximizing their profits. Read these tips to take the uncertainty out of investing in mutual ...
  4. Bonds & Fixed Income

    Are High-Yield Bonds Too Risky?

    Despite their reputation, the debt securities known as "junk bonds" may actually reduce risk in your portfolio.
  5. Bonds & Fixed Income

    The Impact Of An Inverted Yield Curve

    Find out what happens when short-term interest rates exceed long-term rates.
  6. Mutual Funds & ETFs

    When To Sell A Mutual Fund

    Unhappy with your mutual fund's returns and thinking of investing elsewhere? Read this article first.
  7. Mutual Funds & ETFs

    Style Drift Can Hurt Mutual Fund Returns

    Small, gradual changes in a portfolio manager's stated strategies can be a big risk for investors.
  8. Forex Education

    How To Compare Yields On Different Bonds

    Find out how to equalize and compare fixed-income investments with different yield conventions.
  9. Mutual Funds & ETFs

    Published Mutual Fund Returns Not Always What They Appear

    Survivorship bias erases substandard performers, distorting overall mutual fund returns.
  10. Forex Education

    Free Cash Flow Yield: The Best Fundamental Indicator

    Cash in the bank is what every company strives to achieve. Find out how to determine how much a company is generating and keeping.

You May Also Like

Hot Definitions
  1. Fracking

    A slang term for hydraulic fracturing. Fracking refers to the procedure of creating fractures in rocks and rock formations ...
  2. Mixed Economic System

    An economic system that features characteristics of both capitalism and socialism.
  3. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  4. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  5. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  6. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
Trading Center