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Post by chang on Jun 20, 2022 20:29:00 GMT
I always thought VG cash reserves VMRXX had a higher yield than the settlement fund VMFXX. It seems I am wrong! According to VG, VMRXX is yielding 1.14% while VMFXX is yielding 1.19% (SEC yields on 6/17/22).
VMFXX is the settlement fund, which is of course very convenient for keeping cash. So why would anyone use VMRXX?
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Post by roi2020 on Jun 21, 2022 5:43:12 GMT
I always thought VG cash reserves VMRXX had a higher yield than the settlement fund VMFXX. It seems I am wrong! According to VG, VMRXX is yielding 1.14% while VMFXX is yielding 1.19% (SEC yields on 6/17/22). VMFXX is the settlement fund, which is of course very convenient for keeping cash. So why would anyone use VMRXX? I believe VMRXX usually yielded more than VMFXX in the past.
As you note, that is not the case now.
I can't think of a good reason to use VMRXX instead of VMFXX. |
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Post by fishingrod on Jun 21, 2022 14:53:19 GMT
Old news, but thought some might be interested. It outlines the change of Prime MM to Cash reserves and how it changed its' profile to lower risk.
That is probably why cash reserves VMRXX has lower yield than the settlement fund VMFXX at this time. Trying to keep liquidity really high.
"Vanguard believes it’s better to seek to provide clients with a higher yield through lower expenses on a secure government portfolio than incurring risk in the prime market.
The fund will enhance its credit quality and liquidity levels by investing almost exclusively in U.S. government securities, cash, and repurchase agreements that are collateralized solely by U.S. government securities or cash. Given the current low-interest rate market environment and tight credit spreads, Vanguard has already increased the fund’s exposure to government securities, while commensurately decreasing credit risk by letting non-government holdings, such as commercial paper, mature."
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Post by mozart522 on Jun 22, 2022 12:25:58 GMT
I always thought VG cash reserves VMRXX had a higher yield than the settlement fund VMFXX. It seems I am wrong! According to VG, VMRXX is yielding 1.14% while VMFXX is yielding 1.19% (SEC yields on 6/17/22). VMFXX is the settlement fund, which is of course very convenient for keeping cash. So why would anyone use VMRXX? VMRXX is now at 1.22 while VMFXX is at 1.27. The two funds have different average maturities and different average life by a few days. It appears that VMFXX has a significantly larger percent of repurchase agreements which must pay a little more. |
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Post by fishingrod on Jun 22, 2022 13:08:02 GMT
Money market rates are moving up daily. They are responding quickly to the FED rate changes, as they should.
VMFXX was at .01% on 3/16/2022, now at 1.27%
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Post by chang on Jun 24, 2022 17:13:58 GMT
I just noticed what seems like a bug on VG's website. VMFXX is the settlement fund, but it can also be held as a separate position. I made a mistake the other day and "exchanged" a fund for VMFXX instead of "selling" the fund *to* the settlement fund. So, VMFXX showed up as a new position, alongside the settlement fund. (Easy enough to correct: today I am selling VMFXX to the settlement fund. Hopefully VG won't actually do anything other than just adjust my account display.)
I don't think anybody would want to hold VMFXX as a separate position, thereby tying up the money and requiring an extra day to sell it and buy something else.
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Post by anitya on Jun 25, 2022 0:58:46 GMT
I just noticed what seems like a bug on VG's website. VMFXX is the settlement fund, but it can also be held as a separate position. I made a mistake the other day and "exchanged" a fund for VMFXX instead of "selling" the fund *to* the settlement fund. So, VMFXX showed up as a new position, alongside the settlement fund. (Easy enough to correct: today I am selling VMFXX to the settlement fund. Hopefully VG won't actually do anything other than just adjust my account display.) I don't think anybody would want to hold VMFXX as a separate position, thereby tying up the money and requiring an extra day to sell it and buy something else. Very interesting. I tried on Wednesday to exchange into it by selling another Vanguard fund and the system would not allow me to exchange into it - I was required to sell and let the system sweep the proceeds into VMFXX. I tried it because I did not want to lose VMFXX interest for a day. By looking at transaction history I can not tell if there is a loss of VMFXX interest for a day or not. But now that you mention, I think you may have forced the system by adding VMFXX as a new Vanguard fund, not withstanding VMFXX is already showing up in the "Where's the money going?" box. |
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Post by mozart522 on Jun 25, 2022 16:12:01 GMT
I just noticed what seems like a bug on VG's website. VMFXX is the settlement fund, but it can also be held as a separate position. I made a mistake the other day and "exchanged" a fund for VMFXX instead of "selling" the fund *to* the settlement fund. So, VMFXX showed up as a new position, alongside the settlement fund. (Easy enough to correct: today I am selling VMFXX to the settlement fund. Hopefully VG won't actually do anything other than just adjust my account display.) I don't think anybody would want to hold VMFXX as a separate position, thereby tying up the money and requiring an extra day to sell it and buy something else. It is likely that it can be held in a separate position because some VG clients have not transitioned to brokerage accounts. I agree it is not something one would do with a brokerage. |
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Post by chang on Jun 25, 2022 17:17:05 GMT
It is likely that it can be held in a separate position because some VG clients have not transitioned to brokerage accounts. I agree it is not something one would do with a brokerage. I know there are a few folks who still maintain an old-fashioned mutual funds account. But even that account must have a core or sweep fund, which I assume is VMFXX. So doesn’t the same observation apply? |
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Post by mozart522 on Jun 25, 2022 17:33:53 GMT
It is likely that it can be held in a separate position because some VG clients have not transitioned to brokerage accounts. I agree it is not something one would do with a brokerage. I know there are a few folks who still maintain an old-fashioned mutual funds account. But even that account must have a core or sweep fund, which I assume is VMFXX. So doesn’t the same observation apply? I don't think so. In the mutual fund account, you have to exchange within Vanguard. You only buy and sell if you are moving funds in our out, like to a checking account. So if I want to exchange all my TSM, I have to indicate what fund the proceeds are going to. One option is a MM, but it isn't automatic. At least is wasn't when I had only MF account there. |
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Post by chang on Jun 10, 2023 19:04:18 GMT
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Post by Fearchar on Jun 10, 2023 22:33:34 GMT
 These VG Gov't MM funds are all so very similar. All have the 99.5% Cash & US Securities clause. However, they differ in expense ratios and allowable detailed strategy. While the 7 Day SEC yields are in line with the ER, notice how YTD returns are not. Note: difference of 0.01% ER on $1M is only $100/year. While the lower ER Gov't MM fund (VUSXX) will probably eventually prevail, uncertainty over the shorter holding period could obliviate the advantage. |
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