Bond Funds and SEC Yields –

Link: Bond Funds and SEC Yields –

Over a year old, an article very well worth reading, especially today with bond fund yields so low and the divergence between SEC yield (which reflects Yield-To-Maturity) and Distribution yield (which is inflated when there are lots of premium bonds – the result of a  long down-trend in interest rates) is so large.

Unfortunately, getting all the information about the yield and contents of a bond fund takes a bit of detective work.  If you are buying a bond fund, you should know the SEC Yield, the distribution yield, the WAM, WAC, WA Price (ie. how much of what it holds is held at a premium or discount), and the duration, as well as the level of exposure to corporates vs. treasuries vs. etc.

And it gets even messier when you factor in such possibilities as floating-rate notes, TIPs, etc.

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