30-Day SEC Yield vs. Distribution Yield vs. 12-Month Yield
When evaluating an income-producing investment like a bond fund, ETF, or mutual fund, you’ll often encounter three common yield metrics.
At first glance, they might look similar, but each tells a different story about the income potential and performance of the fund.
Let’s break down the 30-Day SEC Yield, Distribution Yield, and 12-Month Yield – what they mean, how they differ, and when each matters.
Key Takeaways – 30-Day SEC Yield vs. Distribution Yield vs. 12-Month Yield
30-Day SEC Yield
- Standardized, forward-looking income estimate.
- Reflects interest/dividends minus expenses.
- Best for comparing fund income potential.
Distribution Yield
- Shows annualized income from latest payout.
- Reflects current cash flow to investors and may include interest, dividends, or gains.
12-Month Yield
- Backward-looking average of all payouts, including income and capital gains.
- Useful for understanding past income history.
30-Day SEC Yield
What It Measures
The 30-Day SEC Yield is a standardized, SEC-mandated measure designed to give investors a clear picture of the income a fund is generating from its underlying holdings.
It’s based on the income (interest or dividends) earned over the past 30 days, after deducting fund expenses.
How It’s Calculated
This yield is computed using the fund’s net investment income over the most recent 30-day period, divided by the fund’s maximum offering price (or NAV for ETFs).
It’s then annualized.
Importantly, this yield reflects the yield an investor would receive if the fund continued to earn the same rate over the next year, assuming reinvestment of income.
30-Day SEC Yield = [(Net Investment Income over the last 30 days − Fund Expenses) ÷ Net Asset Value] × 12
Why It’s Valuable
This is often considered the most objective and comparable yield measure.
Because it’s standardized across all mutual funds and ETFs, it allows investors to compare income potential between funds with a fair baseline.
It removes the noise of capital gains, special distributions, or fluctuating monthly payouts.
Limitations
The main drawback?
It’s just a snapshot.
It may not capture the actual distributions investors receive, especially in funds that distribute irregularly or seasonally.
It also doesn’t reflect any price appreciation or capital gains.
Distribution Yield
What It Measures
The Distribution Yield reflects the most recent income distribution (typically monthly or quarterly) annualized and expressed as a percentage of the current NAV or market price.
It’s more of a real-time look at what the fund is actually paying out to shareholders.
How It’s Calculated
It takes the most recent distribution per share, annualizes it (by multiplying by 12 for monthly funds or 4 for quarterly funds), and divides that figure by the fund’s current share price.
Distribution Yield = (Most Recent Distribution × 12) ÷ Current Share Price
Why It’s Useful
This yield tells you what you’re getting paid right now.
It shows the current income stream going into your account – great for income-focused investors, retirees, or dividend-chasers who want cash flow.
Limitations
It can fluctuate widely based on the fund’s payout schedule.
A fund might have paid a particularly large distribution due to a special dividend or capital gains, making the yield temporarily look much higher than normal.
It’s not smoothed or standardized like the SEC yield, so it’s not great for comparison between funds.
12-Month Yield
What It Measures
The 12-Month Yield gives you a backward-looking average.
It sums up all distributions (income + capital gains) paid over the past 12 months and divides that by the fund’s current price.
How It’s Calculated
12-Month Yield = Total Distributions Paid Over Past 12 Months ÷ Current Share Price
This includes interest, dividends, and capital gains – all actual distributions received by investors.
Why It’s Valuable
It gives a full-year snapshot of actual payouts.
This can help investors see what they might have earned if they held the fund for a full year.
It’s especially helpful for evaluating fund performance over time, showing how consistent or volatile the fund’s payouts have been.
Limitations
Because it includes past capital gains, the 12-month yield can be misleading if those gains were unusually high and unlikely to recur.
For example, if the fund sold some long-held positions and distributed large capital gains, that might not happen again anytime soon. It’s a lagging metric, not a forecast.
Head-to-Head: Key Differences at a Glance
| Metric | Time Horizon | Includes Capital Gains? | Reflects Current Distribution? | Standardized Across Funds? | Best For… |
| 30-Day SEC Yield | Past 30 Days | No | No | Yes | Comparing fund income generation |
| Distribution Yield | Most Recent | Possibly (if paid out) | Yes | No | Seeing current income flow |
| 12-Month Yield | Past Year | Yes | Yes (average) | No | Viewing full-year income history |
Real-World Example
Here are numbers from a real-life fund:
- 30-Day SEC Yield: 6.26% – This means that if the fund continues to earn income at the same rate it has for the past 30 days, the annualized return would be 6.26%. It strips out any special distributions or gains.
- Distribution Yield: 6.42% – This is based on the most recent payout. It might include dividends, interest, or even capital gains. It reflects what was just deposited into investors’ accounts.
- 12-Month Yield: 6.87% – Over the last year, this fund paid out a total of 6.87% of its price in income and gains. This might include extra capital gains or unusually high dividends that aren’t sustainable.
From these values, we can infer that:
- The 12-month yield is the highest, likely due to some elevated payouts in the past year.
- The distribution yield is slightly higher than the SEC yield, suggesting the most recent payout was generous compared to the 30-day average.
- The SEC yield is the most conservative, offering a more stable income projection going forward.
Which Yield Should You Rely On?
Income Planning: Use the SEC Yield
If you’re estimating future income, especially from bond funds or ETFs, the SEC yield gives a more accurate forward-looking view.
It accounts for current interest rates, current expenses, and it’s not inflated by one-off payouts.
Being a government regulation, it’s generally the most conservative.
Cash Flow Monitoring: Use the Distribution Yield
If you want to know what you’re getting paid this month, use the distribution yield.
It helps you see the actual, tangible return flowing into your account in the near term.
Long-Term Performance: Use the 12-Month Yield
If you’re looking back to see how much income a fund generated over the last year, the 12-month yield gives that bigger picture.
It’s great for historical comparison but not always predictive of what’s next.
A Note on Yield vs. Total Return
It’s also important to remember: yield isn’t everything.
Yield is something that feels concrete and easy to grasp given the complexity/variance/uncertainty inherent in financial markets, but it can be deceptively comforting if not weighed alongside total return, price movement, and underlying risk. (It can be complicated.)
As we mentioned in other articles, high yields might come from risky assets, falling prices, or unsustainable payouts.
Always pair yield analysis with total return, capital appreciation potential, and risk metrics.
Conclusion
Yields are like different camera lenses on the same subject.
- The 30-day SEC yield shows a tightly focused, regulation-defined view of current income.
- The distribution yield zooms in on the most recent snapshot of cash flow.
- The 12-month yield pulls back to reveal the full year’s story.
Used together, they can give you a fuller picture of a fund’s income profile—how much it pays, how regularly, and how reliable that income might be going forward.
Understanding their differences helps you choose investments that align with your strategy, whether you’re chasing income, comparing options, or planning for long-term returns.