Investing 101 Question

[setab]

What is the difference between the yield percentage and the YTD percentage on funds. Should I be more concerned about one or the other?
Thanks!

setab

[audreyh1]

Are you talking about bond funds?

If so, the yield - usually 30 day SEC yield reflects the income the bond fund should throw off today (this month) stated in annual terms. But the yield can change from month to month depending interest rate conditions.

The YTD includes the capital gain or loss of the fund as well as the amount of income the fund generated since Jan 1. A fund might be yielding around 5%, but also have several % capital loss due to a rise in interest rates. YTD reflects all this. The capital gain/loss of a fund is a reflection of the duration of the fund (is it short-term, intermediate, long, etc.), and the class of credit held by the fund (commercial paper, government bond, junk/high-yield, foreign).

Personally, I tend to look more at current yield of a bond fund than YTD, but YTD also reflects how a bond fund performance has been impacted by changes in interest rates, and changes in credit spreads. I only compare bond funds with the same general duration and same general types of bond held.

Audrey

[LOL!]

Yield is the annual percentage rate that an investment will pay on average for a whole year. It does not include any capital gains. So it's like the interest rate on a CD.

YTD stands for "year-to-date". I guess it could include interest paid for the year up to now and also any other changes in the value of the investment such as capital gains and losses. The Y means "Year" and not yield.

Suppose a stock like Altria (MO) has a dividend yield of 4.3% today. That means is tends to pay 4.3% of the current share price ($80) as a dividend over the course of a year. The actual MO dividend is now 86 cents a share 4 times a year, but earlier this year the dividend was only 80 cents a share every 3 months. So that dividend has been 80 + 86(?) + 86 cents ($2.52) per share so far this year or YTD. The stock price has also gone up $5 per share, so the total return has been $7.52 or a little more than 10% so far this year.

"Yield" is not the same as "Total return".

You should not be "concerned" about either of these numbers, but you should take them into consideration.

[My Dream]

Say what? I think I need to go back to grade one, since I read this twice and still don't understand it. Forgive me for not adding any value to this post.