Mutual Fund Yield Definition.

A mutual fund yield is the percentage of return that a mutual fund generates on an annual basis. This yield is calculated by dividing the fund's total return by its net asset value. The total return of a mutual fund includes both the capital gains that the fund generates and the income that it pays out to investors. How is yield calculated? When it comes to yield, there are a couple different types that are commonly mentioned in relation to mutual funds: current yield and yield to maturity.

Current yield is simply the annual income paid out by the fund (from dividends and/or interest) divided by the current share price. So, if a fund pays out $1.50 in dividends per share annually and the current share price is $10, the current yield would be 15%.

Yield to maturity is a bit more complicated to calculate, but essentially it takes into account not only the annual income paid out by the fund, but also any capital gains that might be realized if the fund's holdings are sold at the current market price. To calculate yield to maturity, you first need to determine the fund's "running yield," which is the current yield plus any capital gains realized divided by the number of years until the fund matures. Once you have the running yield, you can then calculate the yield to maturity using the following formula:

Yield to maturity = (Running yield + 1)^# of years until maturity - 1

For example, let's say a fund has a current yield of 5% and is expected to realize a capital gain of 10% when it matures in 3 years. The running yield would be ((5% + 10%)/3) = 7%. So, the yield to maturity would be ((7% + 1)^3 - 1) = 22%.

It's important to note that yield to maturity is only an estimate, because it assumes that the fund will not make any additional payments between now and when it matures and that the capital gains will be realized at the end of the period. In reality, of course, dividends and capital gains can (and often do) fluctuate from year to year, so the actual yield to maturity may be different than what is estimated.

What are the 3 types of mutual funds?

There are three primary types of mutual funds: stock, bond, and money market. Each type of fund has its own characteristics and risks.

Stock mutual funds invest in stocks and are subject to stock market fluctuations. They offer the potential for higher returns but also come with higher risks.

Bond mutual funds invest in bonds and are subject to interest rate fluctuations. They offer the potential for higher income but typically have lower returns than stock mutual funds.

Money market mutual funds invest in short-term debt instruments and are subject to changes in interest rates. They offer the potential for stability and income but typically have lower returns than stock and bond mutual funds.

How many types of funds are there? According to the Investment Company Institute, there were 8,836 mutual funds offered in the United States as of December 31, 2019. This total includes both open-end and closed-end funds, as well as exchange-traded funds (ETFs).

The vast majority of these funds (8,362, or 94.8%) were open-end mutual funds. Closed-end funds accounted for 471 (5.3%) of the total, while ETFs made up just three (0.03%) of all mutual funds.

Within the open-end category, there were a variety of subcategories, including:

- Money market funds: 2,362 (27.9% of all open-end mutual funds)
- Bond funds: 3,313 (38.8%)
- Equity funds: 2,687 (30.9%)
- Hybrid funds: 400 (4.6%)

Money market funds are typically used as a cash management tool, while bond and equity funds are more commonly used for long-term investment purposes. Hybrid funds, as the name suggests, invest in both stocks and bonds, and can be used for either short- or long-term purposes, depending on the specific fund. What is a mutual fund yield? A mutual fund yield is the percentage of the fund's NAV that is paid out as dividends. The yield is calculated by dividing the fund's total dividends paid out over the course of a year by the fund's NAV. What are three types of funds? There are three types of mutual funds:

1. Equity funds - which invest in stocks
2. Bond funds - which invest in bonds
3. Balanced funds - which invest in both stocks and bonds