Auto-roll Tbill experience at Schwab

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
User avatar
Topic Author
Nate79
Posts: 8437
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Auto-roll Tbill experience at Schwab

Post by Nate79 »

Previously I had posted that I was going to try Schwab's new auto-roll treasury option to buy a 4 week T Bill.
viewtopic.php?f=1&t=280001&p=4974406&hi ... l#p4974406

I just wanted to report my experience for those who are thinking about it in the future.

Here is the timeline:
1. Purchased $10,000 4-week tbill on 1/16, settled on 1/21 for $9988.29 matures on 2/18/2020 --> selected the auto-roll box in the purchase process
2. received an email notice of an upcoming auto-roll on 1/31
3. On 2/18 $10000 was received in my settlement account and tbill was labelled as matured
3. received an email notice of rollover transaction of 2/19 with the statement "For treasuries, you may cancel before our cutoff on the morning of the auction, typically 10:00 a.m. ET."
4. tbill auction date was 2/20 (settlement date is 2/25) for purchase of new 4 week tbill $10,000 for $9987.75.

Overall process was pretty simple with good transparency with email notices.
User avatar
jhfenton
Posts: 4752
Joined: Sat Feb 07, 2015 11:17 am
Location: Ohio

Re: Auto-roll Tbill experience at Schwab

Post by jhfenton »

I've never used the treasury auto-roll feature at Fidelity. Is it also the case with Fidelity's auto-roll that you spend one week out of every five uninvested--assuming that you're rolling 4-week T-bills? That seems suboptimal.

Edited: I see now that someone else had mentioned that drawback in the other thread. That would seem to make the Schwab feature a non-starter.
User avatar
Topic Author
Nate79
Posts: 8437
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: Auto-roll Tbill experience at Schwab

Post by Nate79 »

jhfenton wrote: Thu Feb 20, 2020 10:10 pm I've never used the treasury auto-roll feature at Fidelity. Is it also the case with Fidelity's auto-roll that you spend one week out of every five uninvested--assuming that you're rolling 4-week T-bills? That seems suboptimal.

Edited: I see now that someone else had mentioned that drawback in the other thread. That would seem to make the Schwab feature a non-starter.
That's why I wanted to try it out. But if I understand how the process worked the auto roll is doing exactly what you could do on your own. Once the money hits your settlement account Schwab is just buying the next available tbill which is exactly what you could do manually.
User avatar
indexfundfan
Posts: 3631
Joined: Tue Feb 20, 2007 11:21 am
Contact:

Re: Auto-roll Tbill experience at Schwab

Post by indexfundfan »

jhfenton wrote: Thu Feb 20, 2020 10:10 pm I've never used the treasury auto-roll feature at Fidelity. Is it also the case with Fidelity's auto-roll that you spend one week out of every five uninvested--assuming that you're rolling 4-week T-bills? That seems suboptimal.

Edited: I see now that someone else had mentioned that drawback in the other thread. That would seem to make the Schwab feature a non-starter.
I think Fidelity's auto-roll keeps you fully invested.

It seems like Schwab's sub optimal implementation is in line with their goal of profiting from your uninvested cash.
My signature has been deleted.
ofckrupke
Posts: 852
Joined: Mon Jan 10, 2011 2:26 pm

Re: Auto-roll Tbill experience at Schwab

Post by ofckrupke »

Nate79,
Nate79 wrote: Thu Feb 20, 2020 10:18 pm
jhfenton wrote: Thu Feb 20, 2020 10:10 pm I've never used the treasury auto-roll feature at Fidelity. Is it also the case with Fidelity's auto-roll that you spend one week out of every five uninvested--assuming that you're rolling 4-week T-bills? That seems suboptimal.

Edited: I see now that someone else had mentioned that drawback in the other thread. That would seem to make the Schwab feature a non-starter.
That's why I wanted to try it out. But if I understand how the process worked the auto roll is doing exactly what you could do on your own. Once the money hits your settlement account Schwab is just buying the next available tbill which is exactly what you could do manually.
in a margin account at Schwab you may buy a t-bill at auction with zero settled cash, and if its issue date is on or after the maturity date of an existing holding of like size then that maturing security can cover the cost of the new bill at issuance, with some residual cash to spare (provided the auction strikes at a positive interest rate) so the week is not lost AND no margin interest cost ensues. In a cash/non-margin account at Schwab I believe you can't place the auction order without settled funds so you'd lose the week.

So, is yours a margin account?
If not, can someone else confirm that the week is lost to autoroll in their margin account at Schwab?
That would be a complete fail...even for 26 or 52 week bills.
Hmm.
User avatar
Topic Author
Nate79
Posts: 8437
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: Auto-roll Tbill experience at Schwab

Post by Nate79 »

ofckrupke wrote: Thu Feb 20, 2020 10:33 pm Nate79,
Nate79 wrote: Thu Feb 20, 2020 10:18 pm
jhfenton wrote: Thu Feb 20, 2020 10:10 pm I've never used the treasury auto-roll feature at Fidelity. Is it also the case with Fidelity's auto-roll that you spend one week out of every five uninvested--assuming that you're rolling 4-week T-bills? That seems suboptimal.

Edited: I see now that someone else had mentioned that drawback in the other thread. That would seem to make the Schwab feature a non-starter.
That's why I wanted to try it out. But if I understand how the process worked the auto roll is doing exactly what you could do on your own. Once the money hits your settlement account Schwab is just buying the next available tbill which is exactly what you could do manually.
in a margin account at Schwab you may buy a t-bill at auction with zero settled cash, and if its issue date is on or after the maturity date of an existing holding of like size then that maturing security can cover the cost of the new bill at issuance, with some residual cash to spare (provided the auction strikes at a positive interest rate) so the week is not lost AND no margin interest cost ensues. In a cash/non-margin account at Schwab I believe you can't place the auction order without settled funds so you'd lose the week.

So, is yours a margin account?
If not, can someone else confirm that the week is lost to autoroll in their margin account at Schwab?
That would be a complete fail...even for 26 or 52 week bills.
Hmm.
Mine is not a margin account.
drzzzzz
Posts: 881
Joined: Sat Sep 22, 2012 9:56 pm

Re: Auto-roll Tbill experience at Schwab

Post by drzzzzz »

Fidelity's auto-roll keeps you fully invested and uses the maturing t bill funds to purchase the t bill that was bought earlier in the week. At least for my 3 month t bill auto-roll, the system places an order and executes a purchase on Monday for a t- bill that is coming due and settles on Thursday of that week.
kaneohe
Posts: 6786
Joined: Mon Sep 22, 2008 12:38 pm

Re: Auto-roll Tbill experience at Schwab

Post by kaneohe »

Nate...........thanks for posting your actual experience. I believe that is what one of the reps warned me
about when I tried to sign up for the autoroll. Not sure if he knew at the time that I have a margin account so
I may have to call back and clarify.

With the current manual roll process, I get notice of the maturing the week before. I then have until Friday of that wk (before maturity) or very early the next Monday AM to place the next order . The maturing funds
show up Thurs and the new Treasuries are bought that day or the next day so no 1 wk gap.
User avatar
jhfenton
Posts: 4752
Joined: Sat Feb 07, 2015 11:17 am
Location: Ohio

Re: Auto-roll Tbill experience at Schwab

Post by jhfenton »

indexfundfan wrote: Thu Feb 20, 2020 10:29 pm I think Fidelity's auto-roll keeps you fully invested.

It seems like Schwab's sub optimal implementation is in line with their goal of profiting from your uninvested cash.
+1 It's one of a handful of little things that keeps Schwab one notch below Vanguard and Fidelity on the list of brokers I want to do business with. (Account transfer/closure fees are another.)
caklim00
Posts: 2401
Joined: Mon May 26, 2008 10:09 am

Re: Auto-roll Tbill experience at Schwab

Post by caklim00 »

Does Schwab allow the T-Bills to serve as cash requirement for futures?
MikeG62
Posts: 4529
Joined: Tue Nov 15, 2016 3:20 pm
Location: New Jersey

Re: Auto-roll Tbill experience at Schwab

Post by MikeG62 »

OP, I had done some auto-rolling at Fidelity back in 2018 and early 2019 - when Treasury yields were better. Process was smooth and simple.

Now there are lots of better options than Treasuries. Two examples would be the no-penalty CD’s at Marcus (both currently at 1.9% - Ally requires higher minimum). Both have online savings accounts with rates higher than 4 week treasuries too.

FWIW, I have not bought Treasuries in roughly a year now. Yields are not compelling in my view.
Real Knowledge Comes Only From Experience
Joe Public
Posts: 108
Joined: Mon Jul 27, 2020 8:36 pm

Re: Auto-roll Tbill experience at Schwab

Post by Joe Public »

kaneohe wrote: Thu Feb 20, 2020 11:40 pm Nate...........thanks for posting your actual experience. I believe that is what one of the reps warned me
about when I tried to sign up for the autoroll. Not sure if he knew at the time that I have a margin account so
I may have to call back and clarify.

With the current manual roll process, I get notice of the maturing the week before. I then have until Friday of that wk (before maturity) or very early the next Monday AM to place the next order . The maturing funds
show up Thurs and the new Treasuries are bought that day or the next day so no 1 wk gap.
Bumping this thread in case anyone has more recent experience. Based on the above, it looks like I will go with manual rollover instead of using the auto-roll feature. I don't want funds to sit for a week waiting for the next auction. I wonder how the automatic reinvesting is at Treasury Direct - I have an account there as well for I Bonds.
Joe Public
Posts: 108
Joined: Mon Jul 27, 2020 8:36 pm

Re: Auto-roll Tbill experience at Schwab

Post by Joe Public »

I have a T bill maturing on August 9 in my Schwab account. I want to purchase the 26-week T bill at auction with the following relevant dates:

Announcement Date: August 4
Auction Date: August 8
Settlement Date: August 11

Is this like ETFs, where I just need to have the funds in the account by the settement date? If so, the maturing T bill funds will cover it (manual rollover). If not, then is it common to have gaps like this in T bill rollovers, and what do people do to minimize the gaps? TIA.
grateful75
Posts: 18
Joined: Mon Jul 26, 2021 9:04 pm

Re: Auto-roll Tbill experience at Schwab

Post by grateful75 »

Joe Public wrote: Tue Jul 26, 2022 1:29 pm I have a T bill maturing on August 9 in my Schwab account. I want to purchase the 26-week T bill at auction with the following relevant dates:

Announcement Date: August 4
Auction Date: August 8
Settlement Date: August 11

Is this like ETFs, where I just need to have the funds in the account by the settement date? If so, the maturing T bill funds will cover it (manual rollover). If not, then is it common to have gaps like this in T bill rollovers, and what do people do to minimize the gaps? TIA.
I've been contemplating the auto-rollover of t-bills at Schwab. Before committing, I came here for advise and ran into this thread. I did have a chat with Fixed income specialist few days ago and I can verify that the funds should be in account by settlement date and not buy/auction date.
Based upon this thread, I will just buy new t-bills manually rather than taking a chance with auto-rollover.
grateful75
Posts: 18
Joined: Mon Jul 26, 2021 9:04 pm

Re: Auto-roll Tbill experience at Schwab

Post by grateful75 »

Joe Public wrote: Tue Jul 26, 2022 1:29 pm I have a T bill maturing on August 9 in my Schwab account. I want to purchase the 26-week T bill at auction with the following relevant dates:

Announcement Date: August 4
Auction Date: August 8
Settlement Date: August 11

Is this like ETFs, where I just need to have the funds in the account by the settement date? If so, the maturing T bill funds will cover it (manual rollover). If not, then is it common to have gaps like this in T bill rollovers, and what do people do to minimize the gaps? TIA.
I've been contemplating the auto-rollover of t-bills at Schwab. Before committing, I came here for advise and ran into this thread. I did have a chat with Fixed income specialist few days ago and I can verify that the funds should be in account by settlement date and not buy/auction date.
Based upon this thread, I will just buy new t-bills manually rather than taking a chance with auto-rollover.
123
Posts: 8982
Joined: Fri Oct 12, 2012 3:55 pm

Re: Auto-roll Tbill experience at Schwab

Post by 123 »

We recently moved a large account from Schwab to Fidelity because the t-bill automatic rollover function would only handle t-bills of 26 weeks or less. If you want a t-bill of 52 weeks at Schwab you have to do a manual rollover and have the cash or margin to support the new purchase in the account. Schwab seems to have built-in a number of limitations that toss cash into the low-interest Schwab Bank settlement account, for their benefit not yours.
The closest helping hand is at the end of your own arm.
User avatar
whodidntante
Posts: 11301
Joined: Thu Jan 21, 2016 11:11 pm
Location: outside the echo chamber

Re: Auto-roll Tbill experience at Schwab

Post by whodidntante »

caklim00 wrote: Fri Feb 21, 2020 9:59 am Does Schwab allow the T-Bills to serve as cash requirement for futures?
It's doubtful.

They might for large amounts.
Joe Public
Posts: 108
Joined: Mon Jul 27, 2020 8:36 pm

Re: Auto-roll Tbill experience at Schwab

Post by Joe Public »

grateful75 wrote: Wed Sep 21, 2022 7:26 pm
Joe Public wrote: Tue Jul 26, 2022 1:29 pm I have a T bill maturing on August 9 in my Schwab account. I want to purchase the 26-week T bill at auction with the following relevant dates:

Announcement Date: August 4
Auction Date: August 8
Settlement Date: August 11

Is this like ETFs, where I just need to have the funds in the account by the settement date? If so, the maturing T bill funds will cover it (manual rollover). If not, then is it common to have gaps like this in T bill rollovers, and what do people do to minimize the gaps? TIA.
I've been contemplating the auto-rollover of t-bills at Schwab. Before committing, I came here for advise and ran into this thread. I did have a chat with Fixed income specialist few days ago and I can verify that the funds should be in account by settlement date and not buy/auction date.
Based upon this thread, I will just buy new t-bills manually rather than taking a chance with auto-rollover.
I tested the automatic rollover at both Schwab and Treasury DIrect to compare. I purchased 4-week T-bills on the 8/16/22 auction date that were set to mature on 9/13/22. The Treasury website showed that a 4-week T-bill was scheduled for auction on 9/8/22 with settlement on 9/13/22, and the next one was scheduled for auction on 9/15/22 with settlement on 9/20/22. I wondered whether either Schwab or Treasury Direct would get me into the earlier issue.

At Schwab, the T-bill matured on 9/13/22, sat for a few days, and was reinvested in the T-bill that auctioned on 9/15/22 with a settlement date of 9/20/22.

At Treasury Direct, the T-bill matured on 9/13/22 and was reinvested in the T-bill that settled that same day, resulting in zero days out of the market.

I haven't tested a manual rollover at Schwab with funds from a T-bill that hasn't matured by the auction date. I'll be interested to hear how it goes. Between the better auto-roll feature and the ability to schedule purchases further in advance, I'm leaning TD at the moment.
ebeb
Posts: 289
Joined: Sat Dec 23, 2017 2:18 pm

Re: Auto-roll Tbill experience at Schwab

Post by ebeb »

In Schwab when I bought a 1yr t-bill ladder (3,6,9,12mo), there was no auto-roll option. Maybe works only for single bond purchase.
60% VOO | 35% BND | 5% TBILL | | “"Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one." -Mackay
MattB
Posts: 686
Joined: Fri May 28, 2021 12:27 am

Re: Auto-roll Tbill experience at Schwab

Post by MattB »

Joe Public wrote: Wed Sep 21, 2022 10:58 pm ... and the ability to schedule purchases further in advance ...
I recently started purchasing t-bills through Treasury Direct. The ability to schedule purchases further in advance than at fidelity was the deciding factor in my choosing Treasury Direct. Scheduled two months worth of purchases in 5 minutes. Done.
Post Reply