## What is the 'SEC Yield'

The SEC yield is a standard yield calculation developed by the U.S. Securities and Exchange Commission (SEC) that allows for fairer comparisons of bond funds. It is based on the most recent 30-day period covered by the fund's filings with the SEC. The yield figure reflects the dividends and interest earned during the period after the deduction of the fund's expenses. It is also referred to as the "standardized yield."

Next Up

## BREAKING DOWN 'SEC Yield'

The SEC yield is used to compare bond funds because it captures the effective rate of interest an investor may receive in the future. It is widely considered a good way to compare mutual funds or exchange-traded funds (ETFs) because this yield measure is generally very consistent from month to month. The resulting yield calculation shows investors what they would earn in yield over the course of a 12-month period if the fund continued earning the same rate for the rest of the year. It is mandatory for funds to calculate this yield.

## Calculation

Most funds calculate a 30-day SEC yield on the last day of each month, though U.S. money market funds calculate and report a seven-day SEC yield. The standardized formula for the 30-day SEC yield consists of four variables:

a = interest and dividends received over the last 30-day period

b = accrued expenses over the last 30-day period, excluding reimbursements

c = the average number of shares outstanding, on a daily basis, that were entitled to receive distributions

d = the maximum price per share on the day of the calculation, the last day of the period

The formula of the annualized 30-day SEC yield is:

2 x (((a - b) / (c x d) + 1) ^ 6 - 1)

As an example, assume Investment Fund X earned \$12,500 in dividends and \$3,000 in interest. The fund also recorded \$6,000 worth of expense, of which \$2,000 was reimbursed. The fund has 150,000 shares entitled to receive distributions, and on the last day of the period, the day the yield is being calculated, the highest price the shares reached was \$75. In this scenario, the variables equal:

a = \$12,500 + \$,3000 = \$15,500

b = \$6,000 - \$2,000 = \$4,000

c = 150,000

d = \$75

Once these numbers are plugged into the formula, it looks like this:

30-day yield = 2 x (((\$15,500 - \$4,000) / (150,000 x \$75) + 1) ^ 6 - 1), or 2 x (0.00615) = 1.23%

RELATED TERMS
1. ### Gross Yield

The yield on an investment before the deduction of taxes and ...
2. ### Securities And Exchange Commission ...

A government commission created by Congress to regulate the securities ...
3. ### Mutual Fund Yield

Dividend payments divided by the value of a mutual fundâ€™s shares. ...
4. ### Earnings Yield

The earnings per share for the most recent 12-month period divided ...

The difference between yields on differing debt instruments, ...
6. ### Indicated Yield

The dividend yield that a share of stock would return based on ...
Related Articles
1. Investing

### 4 Best Dividend-Paying Global Equity ETFs (YYY, KBWD)

Review these global equity ETFs to learn more about opportunities for robust dividends. These funds provide some of the highest yields.
2. Investing

### How Bond Yields Could Topple the Stock Market

Bond yields have reached a crucial point since the election that could be bad news for the stock market.
3. Investing

### 4 Best Dividend-Paying U.S. Equity ETFs (HDV, XOM)

Explore detailed analyses of the top three U.S. dividend-paying financials ETFs, which have trailing 12-month dividend yields of over 5%.
4. Investing

### ETF for FTSE High Dividend Yield Index (VYM)

Discover a high dividend yielding exchange-traded fund (ETF) that almost perfectly mimics the performance and behavior of the FTSE High Dividend Yield Index.
5. Investing

### Short-Term Bond ETFs Draw Investors as Yields Surge (SJNK, SHY)

Investors have been flocking to short-term bond ETFs recently, as yields have been rising sharply.

### Top 3 High Yield Bond Mutual Funds (BHYIX, MWHYX)

Read about three high-yield bond mutual funds and why they are currently popular, and learn the advantages and disadvantages of investing in high-yield bonds.
7. Investing

### Calculating Bond Equivalent Yield

The bond equivalent yield calculates the semi-annual, quarterly or monthly yield on a discount bond or note.
8. Investing

### Understanding the Different Types of Bond Yields

Any investor, private or institutional, should be aware of the diverse types and calculations of bond yields before an actual investment.
9. Insights

### Understanding the SEC

The SEC's triple mandate of investor protection, maintenance of orderly markets and facilitation of capital formation makes it a vital player in capital markets.
RELATED FAQS
1. ### What is the difference between the yield of stock and the yield of a bond?

Explore and understand the various meanings of the investment term "yield" as it is applied to equity investments and bond ... Read Answer >>
2. ### Do Vanguard ETFs pay dividends?

Learn about Vanguard exchange-traded funds (ETFs) and how most of them typically have low expense ratios and pay dividends ... Read Answer >>
3. ### What size of annual dividend yield is typical of companies in the financial services ...

Learn the importance of calculating the annual dividend yield and how income investors can use it to analyze companies in ... Read Answer >>
4. ### How can I use the holding period return yield to determine whether or not I should ...

Find out how to use the holding period return yield formula to determine whether it is a good time to sell your bond based ... Read Answer >>
5. ### What is the difference between yields and interest rates?

The main difference between yields and interest rates is that each term refers to different financial instruments. Yield ... Read Answer >>
6. ### What are the different formations of yield curves?

Find out more about the yield curve and yield curve formations, what yield curves measure and the three main types of yield ... Read Answer >>
Hot Definitions
1. ### Racketeering

A fraudulent service built to serve a problem that wouldn't otherwise exist without the influence of the enterprise offering ...
2. ### Aggregate Demand

The total amount of goods and services demanded in the economy at a given overall price level and in a given time period.
3. ### Fixed Cost

A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
4. ### Blue Chip

A blue chip is a nationally recognized, well-established, and financially sound company.
5. ### Payback Period

The length of time required to recover the cost of an investment. The payback period of a given investment or project is ...
6. ### Collateral Value

The estimated fair market value of an asset that is being used as loan collateral. Collateral value is determined by appraisal ...