Bogleheads

[Sheepdog]

Vanguard's Treasury money market funds are closed to new accounts as yields tumble
January 26, 2009 - Vanguard has closed Vanguard Admiral Treasury Money Market Fund and Vanguard Treasury Money Market Fund to new accounts effective 4 p.m., Eastern time, on Monday, January 26, 2009. The decision was made to protect the interests of current fund shareholders in an environment in which yields on short-term Treasury securities have reached historic lows
https://personal.vanguard.com/....09_ALL.jsp

What's been the impact on money market funds?

Mr. Glocke: Because money market funds are required to maintain an average maturity of 90 days or less, their yields respond fairly quickly to changes in short-term interest rates. So as prevailing rates decline, money market fund yields follow with a bit of a lag as they reinvest the proceeds from maturing holdings in newly issued securities with lower yields. Yields on Treasury securities have fallen the most so far, so funds investing in Treasury securities have seen the sharpest drop in yields. If this environment continues, money market funds will see their yields approach 0%, because they must deduct their operating expenses before passing on income dividends to shareholders. Indeed, a number of Treasury money market funds already are reporting yields at or close to 0%
Jim
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I am not young enough to know everything..Oscar Wilde

[preserve]

Yup interesting stuff.

I wonder if they are closing it because they fear the Expense ratio will be higher than interest earned?

Or

They are desperately seeking Prime-money market clients.

[Gekko]

hmmn. coincidentally, i just opened up the VG Treasury MM back in November when it looked like the world was about to end. it satisfied my need to "do something". up until that time, i had just used VG Prime MM and VG Tax Exempt MM. VG Treasury MM yield is really, really, really low. i don't think that i'm necessarily lucky or unlucky that i squeaked in just in time.

[cajj]

Fido has done the same thing. I called them to ask the reason and was told too many investors have switched in and out to cause problem in the fund to achieve satisfying return. I then told the representative to consider the impact to investors. This could send a wrong signal to those who prioritize safety to move money to FDIC insured CD. And if they don't want to lose lots of business, they should do something from customer point of view before the end of April where some money fund guarantee will expire. The representative told me he would bring such feedback upward.

[DA]