SEC Yield in Australia: 2025 Guide for Investors

When it comes to investing in fixed income products—like bond ETFs and managed funds—one of the most important metrics for assessing your potential returns is the SEC yield. While the term originated in the US, SEC yield is increasingly showing up in Australian fund fact sheets, particularly for global bond ETFs. But what does it really mean, and how should you use it to make smarter investment decisions in 2025?

What Is SEC Yield and Why Does It Matter?

SEC yield, or Securities and Exchange Commission yield, is a standardised way to measure the income generated by a bond fund after accounting for fees and expenses. It’s calculated over the past 30 days, annualised, and helps investors compare funds on a like-for-like basis. While it originated with US regulations, global fund managers—many of whom operate in Australia—now use it to improve transparency for investors.

• Standardisation: SEC yield allows for apples-to-apples comparisons between funds, regardless of their underlying bonds.
• Reflects Net Income: It deducts fund expenses, giving a more realistic view of what investors might receive.
• Relevant for Global ETFs: Australian investors accessing global fixed income ETFs will see SEC yield quoted in fact sheets from major providers like Vanguard, iShares, and State Street.

With interest rates and inflation remaining volatile in 2025, understanding the real income your bond investments can generate is more important than ever.

How Is SEC Yield Calculated?

The SEC yield formula is designed to reflect the income a fund’s portfolio generated over the past 30 days, less costs. Here’s a simplified breakdown:

• Total interest and dividends received over 30 days
• Minus fund expenses (management fees, etc.)
• Divided by the fund’s average net assets
• Annualised to create a comparable yearly figure

For example, if a global bond ETF earned $1.5 million in net income over 30 days, with average net assets of $1 billion, its SEC yield would be approximately 1.8% annualised. The actual process is more complex, but this gives a sense of what’s involved.

In 2025, as more Australian investors access international bond markets via ETFs, understanding SEC yield helps avoid confusion when comparing with traditional Australian yield metrics like running yield or yield to maturity (YTM).

SEC Yield vs. Other Yield Measures: What’s the Difference?

It’s easy to get lost in the alphabet soup of yield measures. Here’s how SEC yield compares to other common figures you’ll see in Australia:

• SEC Yield: Standardised, net of fees, based on the last 30 days’ income—good for direct income comparison.
• Distribution Yield: Shows the actual cash paid out to investors (often over the past 12 months)—may include capital gains, so it’s not a pure income measure.
• Yield to Maturity (YTM): Reflects the total return if you hold a bond to maturity, factoring in price changes and interest payments—useful for direct bond investments, less so for bond funds.

For example, a US Treasury ETF listed on the ASX in 2025 might show an SEC yield of 4.2%, a distribution yield of 3.8%, and a YTM of 4.5%. Each tells a slightly different story, but SEC yield is the most consistent for comparing funds across providers and geographies.

Practical Implications for Australian Investors in 2025

Why does SEC yield matter for your portfolio? Here are key points to consider:

• Income Focus: If you rely on your bond investments for regular income, SEC yield offers the clearest picture of what you might expect—net of costs.
• Comparing Global Funds: With more ASX-listed global fixed income ETFs reporting SEC yield, it’s a useful metric for comparing products from different issuers.
• Interest Rate Sensitivity: In 2025, with central banks adjusting rates to combat inflation, SEC yields can change quickly—so always check the most recent figures.
• Currency Impact: For Australian investors in USD or EUR-denominated bond funds, remember that SEC yield is reported in the fund’s base currency, not AUD. Exchange rates will affect your actual returns.

For example, in early 2025, the yield curve in the US has flattened, leading to lower SEC yields for short-term bond ETFs, while longer-dated funds still offer higher yields. Australian investors need to weigh these dynamics alongside local opportunities.

Key Takeaways

SEC yield is a valuable tool for Australian investors navigating the growing universe of global bond funds and ETFs. As fund transparency improves and more products hit the ASX, understanding how to interpret SEC yield—and how it differs from other yield measures—can help you make more informed, confident investment decisions.