lawman
Thinks s/he gets paid by the post
When looking at bond fund numbers isn't the 30 day S.E.C. yield a more reliable number for future returns than the distribution yield?
Question About Yield
- Thread starter lawman
- Start date
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Yes, I believe so... it is more prospective as I understand it.
What I still don't get is how sometimes the SEC yield can be so different from the portfolio yield to maturity less the expense ratio.
But for BND... SEC Yield = 1.340%
Portfolio yield to maturity = 1.400%... ER = 0.035%... net = 1.365%
Difference = 0.025%
For AGG... SEC Yield = 1.35%
Portfolio yield to maturity = 1.49%... ER = 0.04%... net = 1.45%
Difference = 0.10%
https://investor.vanguard.com/etf/profile/performance/bnd
https://www.ishares.com/us/products/239458/ishares-core-total-us-bond-market-etf
What I still don't get is how sometimes the SEC yield can be so different from the portfolio yield to maturity less the expense ratio.
But for BND... SEC Yield = 1.340%
Portfolio yield to maturity = 1.400%... ER = 0.035%... net = 1.365%
Difference = 0.025%
For AGG... SEC Yield = 1.35%
Portfolio yield to maturity = 1.49%... ER = 0.04%... net = 1.45%
Difference = 0.10%
https://investor.vanguard.com/etf/profile/performance/bnd
https://www.ishares.com/us/products/239458/ishares-core-total-us-bond-market-etf
Last edited:
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
^^^ No!
For equities I would agree that 3 or 5 year total returns are good to look at... but not for bond funds or ETFs. Their returns are too influenced by changes in interest rates which have generally been lower for any 3 or 5 year period in the last 20 years.
I seem to recall Vanguard saying that the yield on 10 year Treasuries were a sensible proxy for future bond yields... at the end of 2020 the 10-year was at about 1%... in their 2021 outlook Vanguard's projected 10 year return for US bonds is in the .8-1.5% range.
BND's 3-year toal return is 5.35% and 5-year total return is 3.52% (periods ended 2/28/2021) and I don't know of anyone that thinks that bonds will provide such robust returns for the next 3 or 5 years.
For equities I would agree that 3 or 5 year total returns are good to look at... but not for bond funds or ETFs. Their returns are too influenced by changes in interest rates which have generally been lower for any 3 or 5 year period in the last 20 years.
I seem to recall Vanguard saying that the yield on 10 year Treasuries were a sensible proxy for future bond yields... at the end of 2020 the 10-year was at about 1%... in their 2021 outlook Vanguard's projected 10 year return for US bonds is in the .8-1.5% range.
BND's 3-year toal return is 5.35% and 5-year total return is 3.52% (periods ended 2/28/2021) and I don't know of anyone that thinks that bonds will provide such robust returns for the next 3 or 5 years.
