7 Day SEC Yield
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The 7 day SEC yield is a measure of performance in the interest rates of money market funds offered by US mutual fund companies.
The calculation is performed as follows:
- Add the net interest income earned by the fund over the last 7 days and subtract the fund's expenses for that period.
- Divide that dollar amount by the average size of the fund's investments over the same 7 days.
- Multiply by 365/7 (366/7 if a leap year), to give the 7 day SEC yield.
To calculate approximately how much interest one might earn in a money fund account, take the 7 day SEC yield, multiply by the amount invested, divide by the number of days in the year, and then multiply by the number of days in question.
This does not take compounding into effect.
[edit] Example
If one has $1000 invested for 30 days at a 7 day SEC yield of 5%, then:
- ( .05 x $1000 ) / 365 ~= $0.137 per day.
Multiply by 30 days to yield $4.11 in interest.
