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30-day SEC yield was introduced in 1988 by the Securities and Exchange Commission to standardize the inputs mutual funds employ to calculate the statistic, allowing for a fairer comparison. The calculation uses the current yields to worst of all fixed income portfolio holdings to estimate how much interest the fund’s assets would have earned over the past 30-day period. After deducting the fund’s expenses and fees, the income earned is annualized and divided by the net asset value on the day of calculation. While standardized, the 30-day SEC yield is limited in that it is based on a static portfolio as of month-end. However, because 30-day SEC yield is based on the yield to worst methodology ..., it is more forward looking and can provide a more accurate indication of the income an investor might expect to receive.
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