Difference between TTM Yield and 30 day SEC Yield

Soupkitchen

I've been looking at a fund that has a 4.67% TTM yield, at the same time having a 2.99% 30 day SEC yield. What would the difference be between the two yields (not mathematically, and why are the numbers so different? Oh, the fund is CAIBX by the way. Looking at another income fund, VWINX, I see that the two yields are almost the same. 3.10% TTM and 2.53% 30 day. What gives?

Mark

Help here maybe:

http://ibd.morningstar.com/article/article.asp?id=594471&CN=brf295,http://ibd.morningstar.com/archive/archive.asp?inputs=days=14;frmtId=12, brf295

catch22

@Soupkitchen

Mark's link, yes.

Basically, the "TTM" is the previous 12 month period average of what the stock or fund was paying. For the two funds you noted, both the dividends from equities held and yields from bonds held in the fund were higher during the prior 12 month period. As the price of either or both the equity and bond holdings increased, the dividend/yield moved lower. Which was generally the case for both in 2014. This TTM will vary depending upon what is held within any given fund based upon the mix.

The 30 day yield is related (as noted in Mark's link) to the most recent short time period, usually based at the end of the prior month (in this case, Dec. of 2014).

The funds you noted show yields decreasing; being from price appreciation during the previous 12 month period.

The same applies to high yield/junk bonds; but in reverse to what you find with the funds you mentioned.

SPHIX is an example: 12 months ago, more folks were still buying junk bonds, moving prices up and yields down. Today is the reverse, with folks selling junk bonds causing pricing to move down and yields to much higher.

TTM for the above fund is 5.44% (average). The 30 day SEC yield is 6.08%.

'Course, related to investment grade bonds in particular; is some of the supposedly sharp folks who talk on the tv and write articles; is that how can one expect to make any money with IG bonds with such crappy, low yields. Seldom do they note what happened to the bond pricing as yields continued downward. The answer, of course; is that investors made money on the price appreciation, not really caring about the yield, as long as it (the yield) was still going down.

Hope this helds somewhat.

Regards,
Catch

msf

While it is true that SEC30 day yield is "more current" than trailing twelve month, I feel that the more important factor is that it is a formula that approximates yield to maturity, rather than current yield.

To take an extreme case, consider a portfolio with one zero coupon bond. Its TTM yield is 0%. Totally useless information. The SEC yield would reflect its "true" yield - that the bond was issued at a discount, and its yield reflects the appreciation up to its face (par) value at maturity.

This YTM concept is built into the SEC formula, but is buried so deep that I usually go crazy trying to find it every time I look (so I'm not volunteering now)