[robfordlives]

I own PH&N Total Return Bond fund for many years. I received $1017 this quarter (received today) and my market value as of this writing on July 4th midday is $144,290 for an annualized yield of 2.81%.

When I look at PH&N Total Return Bond fact sheet (as of May 31) it shows distribution yield of 3.2%. What gives?

http://funds.rbcgam.com/pdf/fund-pages/monthly/rbf5340_e.pdf

 

[AltaRed]

Lots of qualifiers here. If your numbers are based on the end of June (for each of quarter), the linked May 31st data in the fact sheet does not apply. Both the market price of the fund and the income earned within the fund would have changed since May 31st.

Secondly, have you owned the F series fund for the entire quarter? If not, then you owned a higher MER version that would distribute less.

 

[robfordlives]

It does indeed show F series and then (5340) in brackets in Itrade. Presumably the dist yield would show higher as at June 30th given the drop in bond funds during month of June....but I cannot find anything more current. I believe that the yield stated is AFTER MER? If it is before, then that would explain most of the variance.

 

[AltaRed]

The yield both quoted and received is always after MER, So the class of fund A vs D vs F would result in different yields which is why IF you didn't have Class F for the full period, then your yield would not be the same in any event.

FWIW, you could not have owned F class of the fund prior to the wholesale shift at discount brokerages from Series A/B/D to zero trailer fee Class F. It is a question of WHEN Scotia made that shift in your portfolio. If after Mar 30th, then you actually owned a different series of fund for part of the second quarter (which would have had lower distributions due to higher MER during that period). You cannot form any particular conclusions at this point without having done more analysis.

 

[GreatLaker]

Distribution yield is the yield calculated as if the most recent distribution was annualized, and remains the same going forward. If the quarterly distributions are variable, then distribution yield is not a particularly accurate way to measure what you received in the past year.

Yield measures what the fund distributed as a % of the price. Distribution $ / Price $. Is MER even relevant to that calculation? Not sure, but to me it seems that MER would not factor into such a calculation. Since price constantly varies, then yield does too.

A better way to determine if you received the correct distributions is to multiply your units held by the declared distribution per unit. 2022 YTD distribution is $.15/unit (I would assume this is as of May 31 per this link: PH&N Total Return Bond Fund ). 2021 total distribution was $0.27/unit. Is that what you received? Even that may require some digging if you purchased more units during the year, or are having your distributions reinvested. You would have to determine how many units you held at each distribution record date and the amount per unit for each distribution.

 

[AltaRed]

@GreatLaker: Agreed with all said but MER is a factor IF the fund was switched during the quarter from trailer fee version to F class. Virtually every DIYer with discount brokerage accounts with mutual funds (other than from BG, LW, and Mawer which had no trailer fees to begin with) would have seen 'switches' during the quarter.

 

[Retired Peasant]

Agree AR. I hold PHN Dividend and the Short Term Bond Fund. I had class D and they were switched to F in March. I'm with TDDI, but imagine something similar happened at RBC.

 

[robfordlives]

Why did these "switches" happen in the last quarter?

 

[Money172375]

Why did these "switches" happen in the last quarter?

Paying trailer fees to online brokers was outlawed last month. So the brokers switched the class of funds held by clients.

OSC adopts measures to facilitate trailer fee ban | Investment Executive

Temporary relief aims to help firms implement new rules on June 1

www.investmentexecutive.com

 

[cardhu]

Is RBC screwing me?

No.

When I look at PH&N Total Return Bond fact sheet (as of May 31) it shows distribution yield of 3.2%.

No it doesn’t … it shows current yield of 3.2% … that refers to the portfolio yield, not your personal yield.

I believe that the yield stated is AFTER MER?

No ... the portfolio yield stated is before MER ... the distribution yield, if it were stated, would be net of MER, but it isn’t stated anywhere on that sheet.

Why did these "switches" happen in the last quarter?

New rules kicked in on Jun 1, prohibiting trailer fees in OEO (order execution only) brokerage accounts … otherwise known as discount broker accounts … in some cases, funds were switched into F class funds … in other cases, other methods were used, without any switching taking place ... but if you're not using an OEO broker, then its a moot point, and there would have been no switch.


I have no idea what posts # 4 & 6 are going on about … the “full period” is irrelevant … the same distribution is paid to ALL holders of F class units, regardless of how long they’ve held those units … distributions are not pro-rated, they are simply paid to the holder of record on the record date, exactly like dividends … the distributions are what they are, regardless of whether (or when) a switch occurred.

 

[AltaRed]

I have no idea what posts # 4 & 7 are going on about … the “full period” is irrelevant … the same distribution is paid to ALL holders of F class units, regardless of how long they’ve held those units … distributions are not pro-rated, they are simply paid to the holder of record on the record date, exactly like dividends … the distributions are what they are, regardless of whether (or when) a switch occurred.

You are correct. What I also didn't know is what the OP was actually measuring, e.g. portfolio yield vs distribution yield. I assumed the latter.

 

[cardhu]

The timing of the switch (if, in fact, any switch occurred) is irrelevant either way.

 

[Beaver101]

No.

No it doesn’t … it shows current yield of 3.2% … that refers to the portfolio yield, not your personal yield.

No ... the portfolio yield stated is before MER ... the distribution yield, if it were stated, would be net of MER, but it isn’t stated anywhere on that sheet.

New rules kicked in on Jun 1, prohibiting trailer fees in OEO (order execution only) brokerage accounts … otherwise known as discount broker accounts … in some cases, funds were switched into F class funds … in other cases, other methods were used, without any switching taking place ... but if you're not using an OEO broker, then its a moot point, and there would have been no switch.


I have no idea what posts # 4 & 6 are going on about … the “full period” is irrelevant … the same distribution is paid to ALL holders of F class units, regardless of how long they’ve held those units … distributions are not pro-rated, they are simply paid to the holder of record on the record date, exactly like dividends … the distributions are what they are, regardless of whether (or when) a switch occurred.

... so are you (or RBC in this case) saying that the yields (let's start with the portfolio one) are "unequivocally equivalent" for the "same fund type" regardless of its class. Or are we just to pre-assume it is.

 

[GreatLaker]

my market value as of this writing on July 4th midday is $144,290 for an annualized yield of 2.81%.

When I look at PH&N Total Return Bond fact sheet (as of May 31) it shows distribution yield of 3.2%. What gives?

% yield varies with price. You need to use the market value on the date the yield is quoted. Or better yet, find the declared distribution per unit and multiply it by the number of units held on the record date for the distribution.

 

[GreatLaker]

... so are you (or RBC in this case) saying that the yields (let's start with the portfolio one) are "unequivocally equivalent" for the "same fund type" regardless of its class. Or are we just to pre-assume it is.

If looking only at the most recent distribution, then the fund held on the distribution record date is the only one that matters. Investors will receive a total distribution equal to the $ distributed per unit x the number of units held on the record date for the distribution. If a different fund or different class of fund was held before the record date that will not factor into the distribution the investor receives.

 

[Beaver101]

If looking only at the most recent distribution, then the fund held on the distribution record date is the only one that matters. Investors will receive a total distribution equal to the $ distributed per unit x the number of units held on the record date for the distribution. If a different fund or different class of fund was held before the record date that will not factor into the distribution the investor receives.

... I get that which is basically what you said in your post #4 which I don't disagree to verify if the amount you're getting is "now" correct.

But my question extends beyond that- are the distributions for the "same fund (aka portfolio)" equivalent? Eg. a dividend fund that pays, say $1 distribution / unit/ quarter has 2 classes. Class F usually has higher price and lower distributions 'cause I'm guessing the additional distributions went into its price. Class D had a lower price but higher distributions. So being "equal for the same fund", am I getting the same distributions regardless of its class now? I would guess the answer is "I should". But how do we know for sure?

 

[cardhu]

... so are you (or RBC in this case) saying that the yields (let's start with the portfolio one) are "unequivocally equivalent" for the "same fund type" regardless of its class. Or are we just to pre-assume it is.

It’s not the “same fund type” … it is the same fund … there is only one portfolio … how could it have multiple yields?

You are confusing mutual fund units (which could exist in various series) with the underlying portfolio … the OP referred to a fact sheet produced by RBC … that fact sheet has a mixture of information on it, some of which pertains to the underlying portfolio generally (AUM, fixed income characteristics, fixed income breakdown, top holdings, credit rating, etc.), and some of which pertains to the F class units specifically (fund code, NAV, MER, historical returns, calendar year returns, yadda yadda yadda) … take a look at the fact sheets for the series A units, series D units, and series F units, side by side, and take special note of the items that DO NOT CHANGE from one sheet to the others.

 

[Beaver101]

It’s not the “same fund type” … it is the same fund … there is only one portfolio … how could it have multiple yields?

... okay, I meant the "same fund" eg. RBC Dividend Fund and yet different yields depending on its class. See below.

You are confusing mutual fund units (which could exist in various series) with the underlying portfolio …

... huh?

the OP referred to a fact sheet produced by RBC … that fact sheet has a mixture of information on it, some of which pertains to the underlying portfolio generally (AUM, fixed income characteristics, fixed income breakdown, top holdings, credit rating, etc.), and some of which pertains to the F class units specifically (fund code, NAV, MER, historical returns, calendar year returns, yadda yadda yadda) … take a look at the fact sheets for the series A units, series D units, and series F units, side by side, and take special note of the items that DO NOT CHANGE from one sheet to the others.

... I did do that with the RBC Dividend Fund (if I recall correctly) which uses the 'same fund' code but lists A, D, F series etc. and distributions are different between those series (/classes) as with its prices. So how do you get the same yields without making some assumptions ... UNLESS you happen to be doing the accountings for that fund.

 

[AltaRed]

The distribution yield will vary depending on the MER of each class of the same fund....by the amount difference between the MERs. Cardhu was talking specifically about the portfolio which is identical for all classes of mutual fund units. Retail investors normally just speak to the distribution yield of their specific class of units.

As GreatLaker also said, percentage yield is a relatively meaningless number. That percentage changes every day with the change in NAV (FMV) of the fund. I've never understood why folks insist on quoting percentage yields, even on stocks. The only thing that is certain without qualification is the very last dollar yield distributed per unit, per share, etc.

 

[cardhu]

... huh?

I think I was pretty clear, but I’ll give it another try … think of it this way … a mutual fund has investment income flowing INTO the pool, and distributions flowing OUT OF the pool … both can be expressed as a “yield”, but they are measuring different things … you are confusing the funds flowing INTO the pool, with funds flowing OUT OF the pool … they are not the same thing.

When the fund publishes its portfolio yield (ie. the 3.2% yield the OP cited), it is referring to investment income flowing INTO the fund … that amount is whatever it is, regardless of which series of fund units you happen to hold … so the fund can have only ONE portfolio yield (referred to as current yield in the RBC fact sheets).

Mutual funds are flow-through entities … meaning all tax obligations arising from the income received by the fund are flowed through (distributed) to the unit-holders … generally speaking, they only distribute enough to clear the tax obligation, and their MERs are deductible expenses, so they’d only distribute whatever is left over after all expenses have been paid … and because the MERs differ by fund series, the amount left over to distribute will differ by fund series.

I did do that with the RBC Dividend Fund (if I recall correctly) which uses the 'same fund' code but lists A, D, F series etc.

Not likely … different series don’t share the same fund code.

So how do you get the same yields without making some assumptions ... ... UNLESS you happen to be doing the accountings for that fund.

I didn’t make any assumptions whatsoever … didn’t need to … I just read (and understood) the information on RBC’s published fact sheets.
I’m not an industry insider … I just happen to understand how mutual funds work.


And from an earlier post …

Class F usually has higher price and lower distributions 'cause I'm guessing the additional distributions went into its price.

No … series F would have higher distributions because it’s MER is lower, and series A would have lower distributions because its MER is highest … series D lands somewhere in between because its MER is somewhere in between … but there is never any “additional” distribution that “goes into” the price … distributions are fully distributed.

So being "equal for the same fund", am I getting the same distributions regardless of its class now?

Of course not … you’re getting whatever distribution applies to whichever series you hold … again, you’re confusing monies flowing INTO the fund, with monies flowing OUT OF the fund.