VICSX question - Vanguard Intermediate-Term Corporate Bond Index Fund

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JD1967
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VICSX question - Vanguard Intermediate-Term Corporate Bond Index Fund

Post by JD1967 » Wed Feb 28, 2018 10:22 am

Hello ... I'm hoping someone can explain some basics to me ... I should know this, but I don't ... thanks in advance for all feedback

1. I have money invested in VICSX ... today, the SEC Yield (A) for this investment is 3.65% ... with a monthly distribution payment of 0.0584 cents/shr (just declared) ... price $22.89/shr
2. One year ago, the same fund had an SEC Yield (A) of approx 3.35% ... with a monthly distribution payment of 0.063 cents /shr ... price 23.27/yr

In the intervening year, interest rates have risen slightly ... so I understand the SEC Yield going from 3.35% to 3.65% ... I also understand the price drop (because of rising yield) from 23.27 to 22.89 ...

What I don't understand is why did the monthly distribution payment drop ??? from 0.063 cents / shr to 0.0584 cents /shr ...

So this investment, dropped in value and the monthly distribution DROPPED when interest rates rose and the SEC Yield rose ... I would have expected the monthly distribution to increase ...

I'm sure I'm assuming a lot of things incorrectly here ... not exactly the sharpest tool in the shed ... but if someone could explain this, it would be greatly appreciated .. .thanks to all in advance

dbr
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Re: VICSX question - Vanguard Intermediate-Term Corporate Bond Index Fund

Post by dbr » Wed Feb 28, 2018 10:35 am

Maybe the trailing interest rate reflected in the distribution fell while the future looking interest rates today are up? There is also complexity regarding the actual portfolio and where the yield curve for these investments across durations has really moved. Also there are different computations of yield involving yield to maturity, coupon, SEC yield, distribution yield, etc.

I don't doubt some poster here has an actual tabulation that would show what happened.

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JD1967
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Re: VICSX question - Vanguard Intermediate-Term Corporate Bond Index Fund

Post by JD1967 » Wed Feb 28, 2018 10:40 am

dbr wrote:
Wed Feb 28, 2018 10:35 am
Maybe the trailing interest rate reflected in the distribution fell while the future looking interest rates today are up? There is also complexity regarding the actual portfolio and where the yield curve for these investments across durations has really moved. Also there are different computations of yield involving yield to maturity, coupon, SEC yield, distribution yield, etc.

I don't doubt some poster here has an actual tabulation that would show what happened.
Thank you ... if you are right, then this could be a pretty bad fund ... i would assume, bc its an index fund, the yield curve for each specific investment mingled together across the whole index would reflect the direction of the yield in general (up) ... not go in the opposite direction ???

aristotelian
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Re: VICSX question - Vanguard Intermediate-Term Corporate Bond Index Fund

Post by aristotelian » Wed Feb 28, 2018 11:48 am

Could it be that the distribution was calculated prior to the recent price drop/yield increase?

lack_ey
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Re: VICSX question - Vanguard Intermediate-Term Corporate Bond Index Fund

Post by lack_ey » Wed Feb 28, 2018 12:11 pm

aristotelian wrote:
Wed Feb 28, 2018 11:48 am
Could it be that the distribution was calculated prior to the recent price drop/yield increase?
The distribution is a given in a dollar amount (to 3 decimal places) per share. The OP is asking about the per-share distribution, so the share price drop is not relevant.


Some months can have slightly higher or lower distributions based on the underlying interest payments received. It doesn't need to be exactly evenly spread out through the year, and February is a short month. I'd check back with March and April's figures. Distribution yield (smoothed) is usually slow to change, not as responsive as measures that include price return.

aristotelian
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Re: VICSX question - Vanguard Intermediate-Term Corporate Bond Index Fund

Post by aristotelian » Wed Feb 28, 2018 12:30 pm

lack_ey wrote:
Wed Feb 28, 2018 12:11 pm
aristotelian wrote:
Wed Feb 28, 2018 11:48 am
Could it be that the distribution was calculated prior to the recent price drop/yield increase?
The distribution is a given in a dollar amount (to 3 decimal places) per share. The OP is asking about the per-share distribution, so the share price drop is not relevant.


Some months can have slightly higher or lower distributions based on the underlying interest payments received. It doesn't need to be exactly evenly spread out through the year, and February is a short month. I'd check back with March and April's figures. Distribution yield (smoothed) is usually slow to change, not as responsive as measures that include price return.
Right, but if the distribution per share was calculated based on yields prior to the yield increases in February, it might be a lower number than last year.

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prudent
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Re: VICSX question - Vanguard Intermediate-Term Corporate Bond Index Fund

Post by prudent » Thu Mar 01, 2018 8:09 am

Topic moved to Investing - Help with Personal Investments.

rkhusky
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Re: VICSX question - Vanguard Intermediate-Term Corporate Bond Index Fund

Post by rkhusky » Thu Mar 01, 2018 8:26 am

If you look at the distribution tab at Vanguard, you can see that the distribution has had some variation over the last year. It is mostly in the 0.063-0.064 range, but occasionally there are outliers: 2/27/18 is was 0.0584, 12/21/17 was 0.0686, 1/30/17 was 0.054, 12/20/16 was 0.070. Perhaps you need to average Dec - Feb. Seems like Dec is high, which is corrected in Jan or Feb.

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