I thought I'd understood how bond fund yields (dividend vs. 30-day SEC) were calculated but with the recent rise in interest rates and discrepancy between the two, I realize I'm missing something despite reading the descriptions over and over.
I'd thought dividend yield was a average of the past 12 months of dividends divided by current price. e.g,. for BND right now it's 2.62% reflecting old bonds with old interest rates. I thought 30-day SEC yield was what the bond is paying now/next reflecting the current interest rates of the bond portfolio. For BND, it's listed as 4% - again this makes sense so far .
But when I look at my distributions, I got $0.1759/share for Feb. That translates in ( x 12 / 73.45 feb price) = 2.87% (or 2.93% if you use today's price) - nowhere near the 4% I'd understood would be paid out. March was announced at even less, $0.164216 and a real-time yield of 2.68%
What am I missing? What is the SEC yield and why am I not getting that interest rate on bonds as expected by the high interest rate environment? And if I wanted 4% bond return, how do I achieve that (at higher volume than ibonds)?
Submitted March 06, 2023 at 02:39AM by mettle https://ift.tt/9YqlaDK
