With respect to the discussions about the differences between SEC yield, yield to maturity (YTM), average YTM, current yield, and distribution yield, I started this thread to try and clarify and provide a thread to discuss exactly these things:

Bogleheads • View topic - SEC Yield, YTM, Distribution Yield, Current Yield.

To summarize ...

For an individual bond, "

**current yield**" generally refers to the sum of annual coupon payments divided by the current value of the bond. The analog to this for a bond fund is

**distribution yield**, but there are different ways to calculate it, and it generally includes accrual/accretion of discounts/premiums.

The way Vanguard calculates

**distribution yield** comes pretty close to the way you'd calculate current yield for a bond. The latest distribution amount is divided by the average fund price over previous 30 days, then annualized (divide by days in month, multiply by 365). By contrast, Morningstar publishes the trailing 12-month (TTM) distribution yield. Since there is no fixed coupon payment for a bond fund, and since discounts and premiums are factored in, there really isn't an

**exact** bond fund analog to current yield for a bond.

For an individual bond,

**yield to maturity** (

**YTM**)( is the single discount rate that equalizes discounted cash flows and current price. Vanguard reports

**average YTM** for its bond funds, which is a weighted average of the YTMs of the fund's bond holdings, and for some funds factors in the possibility of bonds being called. For an individual bond, yield-to-worst factors in the bond being called, but YTM does not.

**SEC yield** is a standardized method of calculating average YTM, averaged over the previous 30 days, and subtracting fund expenses. You can look at SEC yield and average YTM for Vanguard's bond funds; they are likely to be pretty close for most bond funds if you look at them on the same date, but there definitely can be some variation. SEC yield is updated daily, but average YTM is only reported as of certain dates (e.g., you can see it now for 12/31/2014). As far as I know, Vanguard only provides historical data for SEC Yield, so that's what I use.

Vanguard also reports average coupon rate for its bond funds. If the average coupon rate is higher than the average YTM, the distribution yield probably is higher than the SEC yield, but there won't be a precise relationship because of all the averaging and different ways these various numbers are calculated.

Kevin