RESEARCH
Reading Daily Yield: What the Number Actually Represents
A practical guide to interpreting daily yield across portfolio tiers, and how term length changes gross proceeds.
KEY TAKEAWAYS
- Daily yield is a rate, not a promise of a fixed daily payment.
- Term length changes total proceeds more than headline rate does.
- Always compare tiers on total return to maturity.
The definition
Daily yield expresses the return generated by a position over a single day, stated as a percentage of the invested principal. It is the reporting unit we use because portfolio terms are measured in days, not years.
Term length does the heavy lifting
A position at 1.2 percent daily over 20 days produces materially different gross proceeds than the same rate over 45 days. When two tiers look similar on rate, the longer term is usually the larger cheque, and the longer commitment.
- Principal: the amount you invest at open
- Accrued profit: daily yield applied across the term
- Total return: principal plus accrued profit at maturity
How to compare tiers properly
Convert everything to total return at maturity, then divide by the number of days your capital is committed. That gives you a like for like figure and stops a long term from looking better simply because the headline number is bigger.
This note is published for information only. It is not personal investment advice, and the value of investments can fall as well as rise.