VSGDX 30 day SEC yield question

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sanjosanjo
Posts: 5
Joined: Mon Jan 27, 2020 9:56 am

VSGDX 30 day SEC yield question

Post by sanjosanjo » Fri Feb 14, 2020 3:57 pm

I see that the 30 day SEC yield for VSGDX is 2.08% Is this truly the rate of return for the fund? Can I compare this to the yield of a money market fund, for example? I'm a little confused about whether this is paid out as a dividend, which automatically reduces the price of the fund after being paid out - leaving me with nothing extra.

sycamore
Posts: 329
Joined: Tue May 08, 2018 12:06 pm

Re: VSGDX 30 day SEC yield question

Post by sycamore » Fri Feb 14, 2020 6:28 pm

Hi sanjosanjo,
sanjosanjo wrote:
Fri Feb 14, 2020 3:57 pm
I see that the 30 day SEC yield for VSGDX is 2.08% Is this truly the rate of return for the fund?
SEC yield is a rough estimate of how much you'd earn in a year. And it can vary quite a bit compared to the actual yield, aka distribution yield. Neither is a guarantee of course.
sanjosanjo wrote:
Fri Feb 14, 2020 3:57 pm
Can I compare this to the yield of a money market fund, for example?
Yes, you can compare SEC yield of one fund to another. That one of the main reasons for the SEC yield.
sanjosanjo wrote:
Fri Feb 14, 2020 3:57 pm
I'm a little confused about whether this is paid out as a dividend, which automatically reduces the price of the fund after being paid out - leaving me with nothing extra.
One way to see how a bond fund accrues and pays out dividends is to look in the prospectus. For the Short-Term Federal fund, it's at https://personal.vanguard.com/pub/Pdf/p ... 2210158406.

Search for "Fund Distributions", and you'll see "Income dividends generally are declared daily and distributed monthly".

So you accrue the dividends every day you hold the fund. Meaning the NAV of the fund won't drop on the distribution date, at least not because of the distribution -- it might drop because bonds in general dropped.

Another way: after you login to vanguard.com, click on "My Accounts" and then "Balance & Holdings". Then click on the "Balances by date" tab. Look at the table -- one of the columns is "Accrued dividends". You'll see an amount for your VSGDX holding.

For more info, see this wiki article or this other post.

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