SEC Yield vs. Distribution Yield: Which Bond Fund Number Should You Compare?

Updated October 8, 2026

A bond fund page can show a “30-day SEC yield,” a “distribution yield” and several other percentages, and the numbers rarely match. They answer different questions, so comparing one fund’s SEC yield with another fund’s distribution yield can make the wrong fund look better.

This guide explains what each figure measures, where each can mislead and how to compare two funds on equal terms. It will not tell you which fund to buy.

Scope: Bond mutual funds and bond ETFs. Money market funds use a separate seven-day yield and are not covered here. Educational information only; no fund is recommended, and a yield is never a guarantee of future income.

What the 30-day SEC yield measures

The SEC yield is a standardized calculation. In the formula written out in one fund’s prospectus, the fund takes the dividends and interest earned over 30 days, subtracts accrued expenses, calculates income per share, divides by the applicable share price and annualizes the result. Because every fund follows the same steps, two funds’ figures are comparable. Charles Schwab describes it as the best standard measure for comparing a bond fund’s future income potential.

Standardized does not mean predictive. The figure covers only the latest 30 days, and John Hancock’s yield disclosures state that it is subject to change. The portfolio and market interest rates keep changing after the calculation date.

What distribution yield measures

Distribution yield starts from cash the fund actually paid shareholders and divides it by the fund’s price or net asset value. Unlike the SEC calculation, distribution-yield definitions need to be checked individually, and the method can differ by fund company. Some pages annualize the latest payment; others add up twelve months of payments.

A twelve-month version looks even further back. Schwab notes that a backward-looking figure may not reflect recent portfolio changes, especially after a large move in interest rates. Always read the footnote that defines the number you are looking at.

The two numbers side by side

Feature	30-day SEC yield	Distribution yield
Standard formula?	Yes, the same method for every fund	No, definitions can differ
Time window	The most recent 30 days	Latest payment or trailing 12 months; check the footnote
Expenses	Subtracted in the formula	Depends on how the payout was calculated
Best use	Comparing funds on equal terms	Seeing what cash the fund really paid
Main limit	Short window; not a promise	Backward-looking; compare only after matching definitions

A hypothetical comparison

Suppose two invented funds show the numbers below. These are teaching figures, not real funds, and the income line assumes each rate stayed constant for a year, which real funds do not guarantee.

Annual income per $10,000 if each rate held for a year (hypothetical)

Fund	Metric	Yield	Income per $10,000
Fund A	30-day SEC yield	4.20%	$420
Fund A	Distribution yield	3.10%	$310
Fund B	30-day SEC yield	3.80%	$380
Fund B	Distribution yield	4.60%	$460

By SEC yield, Fund A leads by $40 per $10,000. By distribution yield, Fund B leads by $150. Both statements are true, which is why the metric must match before the comparison means anything. If Fund B’s payout looks high, check its distribution notices to see whether anything unusual, such as a one-time payment, lifted the figure.

Why a yield is not a return

Yield describes income, not what your account ends up worth. Imagine a share bought at $10.00 that pays $0.42 of income over a year, a 4.2% yield on the starting price. If the share price falls to $9.70 over the same year, the price change is −$0.30.

Hypothetical result: $0.42 income − $0.30 price decline = $0.12, or 1.2% of the $10.00 starting price, before taxes. If the price had risen to $10.30 instead, the result would be $0.72, or 7.2%.

Bond prices tend to move opposite to interest rates, so a fund with a high yield can still lose money in a year when rates rise. Treat the yield as a starting point, not a forecast.

Three common traps on a fund page

• Mixing metrics across tabs. A summary box may show the SEC yield while a comparison tool shows a distribution figure. Check the label every time.
• Reading a payout as a promise. Bond fund payments can change from month to month. A recent payout is a fact about the past, not a contract about next month.
• Ignoring the date. A yield quoted “as of” last month may sit beside a price quoted today. If rates moved in between, the pair no longer fits together.

If you only remember one habit, make it this: write the metric name and the “as of” date next to every number you copy into a comparison.

Compare two funds on equal terms

1. Match the metric and the date. Use the 30-day SEC yield for both funds, with the same “as of” date.
2. Match the share class. Different classes carry different expenses, so their yields differ. If a page shows both a subsidized and an unsubsidized figure, note which one you used.
3. Read the distribution footnote. Note whether it uses the last payment or twelve months of payments.
4. Compare the risks, not only the income. Kiplinger suggests looking at the investment objective, fees, credit quality, default risk and sensitivity to interest rates.
5. Decide what you need the money to do. Spendable monthly income and long-term total return are different goals.

A single yield number can be useful, but only when you know its definition, its window and what it leaves out.

Sources and scope

Charles Schwab and John Hancock source links and worked examples rechecked October 8, 2026; other references previously reviewed October 7, 2026. Rules, fees and product terms can change. Examples and worksheets are original illustrations, not individual advice or reports of personal experience.

• SEC filing (2010) — example fund prospectus describing the standardized yield formula
• Kiplinger — types of bond fund yields
• Charles Schwab — understanding bond yield measurements
• John Hancock Investment Management — fixed-income yield disclosures