Why is VTC yield less than the 3 funds it is made of?

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ocotillo711
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Joined: Thu Aug 04, 2022 1:30 am

Why is VTC yield less than the 3 funds it is made of?

Post by ocotillo711 »

VTC is made up of the following:

VCLT with an SEC yield of 4.78%
VCIT with an SEC yield of 4.48%
VCSH with an SEC yield of 3.95%

So why is VTC's SEC yield so low at 2.69% ?

Shouldn't it be a blend of the above yields, so much higher than 2.69%?
Corvidae
Posts: 180
Joined: Tue May 10, 2022 1:11 am

Re: Why is VTC yield less than the 3 funds it is made of?

Post by Corvidae »

Just a guess, but because it is an ETF of ETFs, that's probably more like the distribution yield than the SEC yield on a typical bond fund. So it's probably based on the distributions of the underlying ETFs rather than the bonds in those underlying funds.
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jeffyscott
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Joined: Tue Feb 27, 2007 9:12 am

Re: Why is VTC yield less than the 3 funds it is made of?

Post by jeffyscott »

Yep, it's treated like a stock fund for purposes of calculating the SEC yield. It makes no sense, but that's what they do. You can confirm this by reading/comparing the Vanguard footnote for the SEC yield on each fund's web page.
The two greatest enemies of the equity fund investor are expenses and emotions. ― John C. Bogle
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