I am new to bond funds so please bear with me if this is a "duh!" question.
As the price (NAV?) of a bond fund goes down, the value of my portfolio does too, that's simple enough. How about the Yield? Isn't the yield directly related to the coupon rates of the bonds in the fund? If so, the yield, as a dollar amount, should not fluctuate since I am still holding the same # of bond fund shares, right? However, my calculations show that the dividends paid depend on the price of the bond fund shares.
I asked Vanguard and they told me that the yield is calculated on a a dail "mill rate". When I asked them what this was, there was no response.
The fund is actively trading bonds, therefore, the yield will change depending on what they are invested in.. Also, the yield depends on the price movement of the bonds if the price goes down, the YTM on the bonds goes up, hence, your yield will go up.
Price moves inversely to yield. Therfore, if your fund is taking any losses, you will be getting a higher coupon payment.