Fund Distribution Yield

Example of the week

Definition: A fund’s distribution yield is a measure of its cash distributed over a period as a percentage of its net asset value (NAV) at the period end.

Calculation: The distribution yield is calculated as the total distribution amount (interest, regular or special dividends, capital gains) over the past year divided by the NAV at year-end.

Significance: Investors relying on funds to provide regular cash flows can use the distribution yield for the past year to estimate future distributions. The distribution yield is also the basis for estimating future tax liabilities for funds that are not held in tax-advantaged accounts.