# Understanding SEC 30-Day Yield: Definition, Formula, and Examples

![SEC 30-Day Yield: A standard yield calculation developed for fairer comparisons of bond funds.](https://www.investopedia.com/thmb/VfgwcTl1McOltLD3qk8B0xkBEus=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/Secyield_final-cadc47f8f62b49ffbfc25ac8378b68a5.png)

*— Investopedia / Michela Buttignol*

## What Is the SEC Yield?

The SEC 30-day yield is a crucial metric for comparing bond funds, offering a standardized calculation as mandated by the [Securities and Exchange Commission (SEC)](https://www.investopedia.com/terms/s/sec.asp). This yield is based on [dividends](https://www.investopedia.com/terms/d/dividend.asp) and interest, less expenses, over a recent 30-day period. It provides investors a transparent view of potential annual earnings, helping make informed investment decisions.

### Key Takeaways

*   The SEC yield is a standard calculation that allows investors to fairly compare the performance of bond funds.
*   This yield reflects the income from dividends and interest minus expenses over a 30-day period, annualized to show potential yearly returns.
*   Differences between SEC yield and distribution yield should be noted as they convey distinct earnings information.
*   The SEC yield formula involves four key variables: income, expenses, shares entitled for distribution, and maximum share price.
*   Funds must disclose SEC yield, making it a reliable benchmark for future income projections.

## How the SEC Yield Works

The SEC yield helps compare [bond funds](https://www.investopedia.com/terms/b/bondfund.asp) by showing the effective interest rate an investor might earn. It is widely considered a good way to compare mutual funds or [exchange-traded funds (ETFs)](https://www.investopedia.com/terms/e/etf.asp) because this yield measure is generally very consistent from month to month. The resulting yield calculation shows investors what they would earn in yield over the course of a 12-month period if the fund continued earning the same rate for the rest of the year.

It is mandatory for funds to calculate this yield. This yield differs from the [Distribution Yield](https://www.investopedia.com/terms/d/distribution-yield.asp), which is typically displayed on a bond's website.

## How to Calculate the SEC Yield

Most funds calculate a 30-day SEC yield on the last day of each month, though U.S. [money market funds](https://www.investopedia.com/terms/m/money-marketfund.asp) calculate and report a seven-day SEC yield. The steps involved in the process work like this:

1.  Determine the total interest and dividends received over the last 30-day period (a).
2.  Calculate accrued expenses over the last 30 days, excluding any reimbursements (b).
3.  Determine the average number of shares outstanding, on a daily basis, that were entitled to receive distributions (c).
4.  Identify the maximum share price on the last day of the period (d).
5.  Plug these variables into the formula: 2 x (((a - b) / (c x d) + 1) ^ 6 - 1) to calculate the SEC yield.

### Four Standardized Formula Variables

The formula for calculating the 30-day SEC yield includes four main variables:

a = total interest and dividends received in the last 30 days

b = accrued expenses over the last 30-day period, excluding reimbursements

c = average daily number of shares entitled to distributions

d = the maximum price per share on the day of the calculation, the last day of the period

The formula of the annualized 30-day SEC yield is:

2 x (((a - b) / (c x d) + 1) ^ 6 - 1)

## SEC Yield Calculation Example

Assume Investment Fund X earned $12,500 in dividends and $3,000 in interest. The fund also recorded $6,000 worth of expense, of which $2,000 was reimbursed. The fund has 150,000 shares entitled to receive distributions, and on the last day of the period, the day the [yield](https://www.investopedia.com/terms/y/yield.asp) is being calculated, the highest price the shares reached was $75. In this scenario, the variables equal:

a = $12,500 + $,3000 = $15,500

b = $6,000 - $2,000 = $4,000

c = 150,000

d = $75

When you plug these numbers into the formula, it looks like this:

30-day yield = 2 x ((($15,500 - $4,000) / (150,000 x $75) + 1) ^ 6 - 1), or 2 x (0.00615) = 1.23%

## The Bottom Line

The SEC yield is a crucial standard for comparing bond funds, offering a consistent and fair measure of what an investor might earn in a year if the fund maintains its current rate. Calculated using specific variables—interest, dividends, expenses, shares, and price per share—the SEC yield provides a more accurate reflection of a bond fund's performance by accounting for expenses and capturing the effective rate of interest.

Understanding how to interpret this yield can empower investors to make more informed decisions in assessing mutual funds and ETFs.

> **Article Sources**
>
> 1.  Vanguard. "[What Are Money Market Funds?](https://investor.vanguard.com/investor-resources-education/mutual-funds/what-are-money-market-funds)"
>     
> 2.  Morningstar. "[SEC Yield](https://admainnew.morningstar.com/webhelp/glossary_definitions/mutual_fund/mfglossary_SEC_Yield.html)."