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 Articles
  1. Understanding Bond Prices and Yields
    Bonds & Fixed Income

    Understanding Bond Prices and Yields

  2. Yield Investing: Dividend, Earnings ...
    Fundamental Analysis

    Yield Investing: Dividend, Earnings ...

  3. When To Buy A Mutual Fund
    Mutual Funds & ETFs

    When To Buy A Mutual Fund

  4. Are High-Yield Bonds Too Risky?
    Bonds & Fixed Income

    Are High-Yield Bonds Too Risky?

comments powered by Disqus
Hot Definitions
  1. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  2. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  3. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  4. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  5. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  6. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
Trading Center