MFOHome About Commentary Discussions Funds The Best Resources Support Us!

Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

Sign In Register

Categories

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

USFR Distribution yield vs 30 day SEC yield.

fundly
in Fund Discussions
Maybe someone can explain why the 30 day sec yield is supposed to be able for investors to use in comparing bond fund yields but there is a discrepancy of 14 basis points for example in the latest distribution. Why does USFR hold back these 14 basis points and therefore the 30 day SEC yield is meaningless as a comparison tool in this case. Latest distribution was 4.10 %. 30 day SEC yield is 4.24% as both are notated on the USFR page at Wisdom Tree.

Comments

  • yogibearbullyogibearbull
    Current yield is simple - take the last month's distribution and annualize it. It's a snapshot now, and things could be quite different before and after.

    The 30-day SEC takes into account the yields-to-maturity (YTMs) and aggregates them for portfolios in a special way requited by the SEC. So, it takes into account any potential price appreciations and fees involved.

    FRNs have an additional complication - their yield floats weekly with that of 3m T-Bills.

    Anyway, USFR isn't holding the difference between the current yield and 30-day SEC yield.

    Current distributions can be manipulated, but not the 30-dat SEC yield.
  • fundly
    @YBB. Thanks for your response. The 4.10% distribution I noted above is the annualized % on the day of last months distribution and at the same time the SEC yield is noted at 4.24%. So why the difference. Almost all of my other bond funds pay their distribution annualized within 1-2 basis points of the announced 30 day SEC yield? So do I expect 4.10 % distribution from the fund on an annualized basis or the 30 day SEC yield if there is absolutely no change in rates or fund fees for the next 364 days?
  • msf
    There's not much I can add beyond what Yogi wrote. Though the term the Wisdom Tree uses on its page is "Distribution Yield", not current yield. The former typically means the average dividend payments over the last twelve months, i.e. TTM.

    Checking what Wisdom Tree actually means would entail adding up the 12 divs, figuring out what price to divide by, and doing the calculation. Likely the divisor is the price on the day of calculation (2/7/25), but what price? High, low, last, average of high and low? How does that divisor compare with the divisor used for SEC yield?

    Sometimes the distribution yield is lower than the SEC yield, sometimes higher. On May 24, 2024, the distribution yield was 12 basis points higher than the SEC yield (5.42% vs 5.30%). Here's the USFR page from May 25th.

    https://web.archive.org/web/20240525082254/https://www.wisdomtree.com/investments/etfs/fixed-income/usfr
  • fundly
    @msf. Thanks again for adding a little more clarity to this issue. I appreciate the time you take to further delve into these questions ,which sometimes have no definitive answers.
Sign In or Register to comment.