VTEB SEC Yield vs Merrill Edge Estimated Income

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Topic Author
mosilaby
Posts: 15
Joined: Mon Sep 28, 2020 8:47 pm

VTEB SEC Yield vs Merrill Edge Estimated Income

Post by mosilaby »

Hi all,
Vanguard Tax-Exempt Bond ETF (VTEB - https://investor.vanguard.com/etf/profile/VTEB) has a 30 day SEC yield of 0.98%.

Merrill Edge has a nice "Estimated Investment Income" report that, by my calculations, has VTEB paying out about 1.99%. i.e. if I have $100K in VTEB, it estimates that I will receive $1990 annually or $165.83/month.

Beyond the fact that the report is an estimate for informational purposes only, any insight into the big difference or perhaps my misunderstanding?

Thanks!
SlowMovingInvestor
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Joined: Sun Sep 11, 2016 11:27 am

Re: VTEB SEC Yield vs Merrill Edge Estimated Income

Post by SlowMovingInvestor »

mosilaby wrote: Wed Jan 13, 2021 1:39 pm Hi all,
Vanguard Tax-Exempt Bond ETF (VTEB - https://investor.vanguard.com/etf/profile/VTEB) has a 30 day SEC yield of 0.98%.

Merrill Edge has a nice "Estimated Investment Income" report that, by my calculations, has VTEB paying out about 1.99%. i.e. if I have $100K in VTEB, it estimates that I will receive $1990 annually or $165.83/month.

Beyond the fact that the report is an estimate for informational purposes only, any insight into the big difference or perhaps my misunderstanding?

Thanks!
A lot of the 'estimated income' projections by brokerages take the income over the last year and project it into next year. That may not be valid during a time of falling yields. Some sites may even take the last 3 months and multiply by 4, which is likely to be very inaccurate in Jan if there are a lot of 4th quarter distributions
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grabiner
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Re: VTEB SEC Yield vs Merrill Edge Estimated Income

Post by grabiner »

The estimated income is probably based on the distribution yield.

For an example of the difference, see SEC Yield on the wiki. One bond is at par, so its distribution and SEC yield are equal. Another bond is at a premium, so it distributes more than its SEC yield, but the bond price declines over time, so the total return will be the same if it is held to maturity.
Wiki David Grabiner
Topic Author
mosilaby
Posts: 15
Joined: Mon Sep 28, 2020 8:47 pm

Re: VTEB SEC Yield vs Merrill Edge Estimated Income

Post by mosilaby »

Thank you both for the replies. Very helpful! I'll be interested to see how income works out here in the upcoming year.
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