Is VMFXX safer than VMMXX

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blackwhisker
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Is VMFXX safer than VMMXX

Post by blackwhisker »

I have money market funds in both Vanguard and Fidelity.

In uncertain economic times like right now, is VMFXX a safer fund than VMMXX? or is there another safer place to park cash in Vanguard or Fidelity?

Using the same logic, is FDRXX safer than FZDXX?

Thank you.
retired@50
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Re: Is VMFXX safer than VMMXX

Post by retired@50 »

The VMFXX fund is likely safer than VMMXX since it is comprised of US Government securities. The yield is also slightly lower on VMFXX, so the safety has a small price.

Regards,
This is one person's opinion. Nothing more.
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blackwhisker
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Re: Is VMFXX safer than VMMXX

Post by blackwhisker »

retired@50 wrote: Sun Mar 15, 2020 7:28 pm The VMFXX fund is likely safer than VMMXX since it is comprised of US Government securities. The yield is also slightly lower on VMFXX, so the safety has a small price.

Regards,
Thank you retired@50.
palanzo
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Re: Is VMFXX safer than VMMXX

Post by palanzo »

retired@50 wrote: Sun Mar 15, 2020 7:28 pm The VMFXX fund is likely safer than VMMXX since it is comprised of US Government securities. The yield is also slightly lower on VMFXX, so the safety has a small price.

Regards,
Even safer is VUSXX.
justaddh30
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Re: Is VMFXX safer than VMMXX

Post by justaddh30 »

You can see the composition of the funds here:
https://investor.vanguard.com/mutual-fu ... file/VMFXX
https://investor.vanguard.com/mutual-fu ... file/VMMXX

Scroll down to "Portfolio composition"
UpperNwGuy
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Re: Is VMFXX safer than VMMXX

Post by UpperNwGuy »

palanzo wrote: Sun Mar 15, 2020 9:14 pm
retired@50 wrote: Sun Mar 15, 2020 7:28 pm The VMFXX fund is likely safer than VMMXX since it is comprised of US Government securities. The yield is also slightly lower on VMFXX, so the safety has a small price.

Regards,
Even safer is VUSXX.
Unfortunately, VUSXX has a $50,000 minimum. That rules it out for many investors who would never have a reason for investing such a large sum in a money market fund.
palanzo
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Re: Is VMFXX safer than VMMXX

Post by palanzo »

UpperNwGuy wrote: Sun Mar 15, 2020 9:28 pm
palanzo wrote: Sun Mar 15, 2020 9:14 pm
retired@50 wrote: Sun Mar 15, 2020 7:28 pm The VMFXX fund is likely safer than VMMXX since it is comprised of US Government securities. The yield is also slightly lower on VMFXX, so the safety has a small price.

Regards,
Even safer is VUSXX.
Unfortunately, VUSXX has a $50,000 minimum. That rules it out for many investors who would never have a reason for investing such a large sum in a money market fund.
I understand. Wanted to make sure the OP was aware of all possible options depending on circumstances.
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blackwhisker
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Re: Is VMFXX safer than VMMXX

Post by blackwhisker »

UpperNwGuy wrote: Sun Mar 15, 2020 9:28 pm
palanzo wrote: Sun Mar 15, 2020 9:14 pm
retired@50 wrote: Sun Mar 15, 2020 7:28 pm The VMFXX fund is likely safer than VMMXX since it is comprised of US Government securities. The yield is also slightly lower on VMFXX, so the safety has a small price.

Regards,
Even safer is VUSXX.
Unfortunately, VUSXX has a $50,000 minimum. That rules it out for many investors who would never have a reason for investing such a large sum in a money market fund.
Thank you for pointing out the minimum UpperNwGuy! that's helpful to know.
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blackwhisker
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Re: Is VMFXX safer than VMMXX

Post by blackwhisker »

palanzo wrote: Sun Mar 15, 2020 9:14 pm
retired@50 wrote: Sun Mar 15, 2020 7:28 pm The VMFXX fund is likely safer than VMMXX since it is comprised of US Government securities. The yield is also slightly lower on VMFXX, so the safety has a small price.

Regards,
Even safer is VUSXX.
Thank you palanzo!

Do you know if money in VUSXX can be used directly to buy ETFs or stocks? Or would I have to sell it first and wait till it goes to the sweep account before I can use it to buy ETFs? No worries if you don't have the answer. I will try to call Vanguard. but I imagine they will be quite busy this week. Thanks again.
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Re: Is VMFXX safer than VMMXX

Post by puc_ytpme »

blackwhisker wrote: Sun Mar 15, 2020 10:14 pm
palanzo wrote: Sun Mar 15, 2020 9:14 pm
retired@50 wrote: Sun Mar 15, 2020 7:28 pm The VMFXX fund is likely safer than VMMXX since it is comprised of US Government securities. The yield is also slightly lower on VMFXX, so the safety has a small price.

Regards,
Even safer is VUSXX.
Thank you palanzo!

Do you know if money in VUSXX can be used directly to buy ETFs or stocks? Or would I have to sell it first and wait till it goes to the sweep account before I can use it to buy ETFs? No worries if you don't have the answer. I will try to call Vanguard. but I imagine they will be quite busy this week. Thanks again.
No, not directly like one can with VMFXX(settlement fund). Sell the amount you desire from VUSXX, direct it to VMFXX. The next day it will be ready!
No person ever steps in the same river twice, for it’s not the same river & they’re not the same person
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Re: Is VMFXX safer than VMMXX

Post by puc_ytpme »

blackwhisker wrote: Sun Mar 15, 2020 10:14 pm
palanzo wrote: Sun Mar 15, 2020 9:14 pm
retired@50 wrote: Sun Mar 15, 2020 7:28 pm The VMFXX fund is likely safer than VMMXX since it is comprised of US Government securities. The yield is also slightly lower on VMFXX, so the safety has a small price.

Regards,
Even safer is VUSXX.
Thank you palanzo!

Do you know if money in VUSXX can be used directly to buy ETFs or stocks? Or would I have to sell it first and wait till it goes to the sweep account before I can use it to buy ETFs? No worries if you don't have the answer. I will try to call Vanguard. but I imagine they will be quite busy this week. Thanks again.
No, not directly like one can with VMFXX(settlement fund). Sell the amount you desire from VUSXX, direct it to VMFXX. The next day it will be ready!
No person ever steps in the same river twice, for it’s not the same river & they’re not the same person
palanzo
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Re: Is VMFXX safer than VMMXX

Post by palanzo »

puc_ytpme wrote: Sun Mar 15, 2020 10:32 pm
blackwhisker wrote: Sun Mar 15, 2020 10:14 pm
palanzo wrote: Sun Mar 15, 2020 9:14 pm
retired@50 wrote: Sun Mar 15, 2020 7:28 pm The VMFXX fund is likely safer than VMMXX since it is comprised of US Government securities. The yield is also slightly lower on VMFXX, so the safety has a small price.

Regards,
Even safer is VUSXX.
Thank you palanzo!

Do you know if money in VUSXX can be used directly to buy ETFs or stocks? Or would I have to sell it first and wait till it goes to the sweep account before I can use it to buy ETFs? No worries if you don't have the answer. I will try to call Vanguard. but I imagine they will be quite busy this week. Thanks again.
No, not directly like one can with VMFXX(settlement fund). Sell the amount you desire from VUSXX, direct it to VMFXX. The next day it will be ready!
That's not exactly true. You can exchange from VUSXX to another Vanguard fund if you are not on the brokerage platform.
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puc_ytpme
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Re: Is VMFXX safer than VMMXX

Post by puc_ytpme »

palanzo wrote: Sun Mar 15, 2020 10:51 pm
puc_ytpme wrote: Sun Mar 15, 2020 10:32 pm
blackwhisker wrote: Sun Mar 15, 2020 10:14 pm
palanzo wrote: Sun Mar 15, 2020 9:14 pm
retired@50 wrote: Sun Mar 15, 2020 7:28 pm The VMFXX fund is likely safer than VMMXX since it is comprised of US Government securities. The yield is also slightly lower on VMFXX, so the safety has a small price.

Regards,
Even safer is VUSXX.
Thank you palanzo!

Do you know if money in VUSXX can be used directly to buy ETFs or stocks? Or would I have to sell it first and wait till it goes to the sweep account before I can use it to buy ETFs? No worries if you don't have the answer. I will try to call Vanguard. but I imagine they will be quite busy this week. Thanks again.
No, not directly like one can with VMFXX(settlement fund). Sell the amount you desire from VUSXX, direct it to VMFXX. The next day it will be ready!
That's not exactly true. You can exchange from VUSXX to another Vanguard fund if you are not on the brokerage platform.
This is correct, but only “ETFs Or Stocks” was mentioned
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CoastalWinds
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Re: Is VMFXX safer than VMMXX

Post by CoastalWinds »

retired@50 wrote: Sun Mar 15, 2020 7:28 pm The VMFXX fund is likely safer than VMMXX since it is comprised of US Government securities. The yield is also slightly lower on VMFXX, so the safety has a small price.

Regards,
The yields on both are about to go to 0%, so this becomes a non-factor.
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Re: Is VMFXX safer than VMMXX

Post by retired@50 »

CoastalWinds wrote: Sun Mar 15, 2020 11:55 pm
retired@50 wrote: Sun Mar 15, 2020 7:28 pm The VMFXX fund is likely safer than VMMXX since it is comprised of US Government securities. The yield is also slightly lower on VMFXX, so the safety has a small price.

Regards,
The yields on both are about to go to 0%, so this becomes a non-factor.
Correct. With the recent Fed move, over the next 30 days or so you can now expect the payout to drift down into the range of 0% to .25%. I guess motivated savers of cash will have to go back to seeking out interest bearing accounts at institutions who are actually interested in attracting deposits.

Regards,
This is one person's opinion. Nothing more.
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Re: Is VMFXX safer than VMMXX

Post by nisiprius »

Ultimate safety is hard to gauge. I don't think anyone is going to say that VMMXX is safer than VMFXX.

Let's back up. No money market mutual fund is as safe as an FDIC-insured bank account, and the collapse of the Reserve Primary Money Fund in 2008 shows that's "something that can really happen," not just theory. So if you are looking for safety, get as much money as practical into the bank. Seriously. I keep my money market fund balances at Vanguard down. I only put money into the settlement account, VMFXX, if I'm about to do something.

However, although the investors in Reserve Primary endured a lot of misery, they but got almost all of their money back, in fits and starts, over a period of around two years. It wasn't like investing in Enron.

After the collapse of Reserve Primary, the government moved to have the FDIC insure money market funds for a while, maybe a year and a half.

I think Vanguard money market funds are pretty safe, for two reasons, both loosey-goosey and not to be trusted much. First, I think what followed Reserve Primary set a precedent. If money market funds get really shaky, yeah, I think the government will step in and insure them again. Second, Vanguard has tended to be conservative and stodgy about things like that, at a time when some other companies were being more aggressive and sailing closer to the wind. I know this is just a brand-loyalty kind of thing, but there's some evidence for it. Schwab drastically screwed up their YieldPlus account, which was widely thought to be almost as safe as a money market account, Fidelity drastically screwed up their Ultrashort Bond Fund. Vanguard didn't do anything like that. There is also a wonderful story, just an anecdote, but it is about a Vanguard analyst named Mabel Yu. Vanguard mostly avoided the kinds of mortgage-backed securities that collapsed. She said she just couldn't understand the basis for the good ratings these bonds had.
Yu says she was told repeatedly that she worried too much. "I felt so dumb," she says, adding that she was told, "Don't worry about it. Have a life. After Mabel Yu at Vanguard raised her concerns, Vanguard stopped buying those mortgage-related bonds.
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ResearchMed
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Re: Is VMFXX safer than VMMXX

Post by ResearchMed »

nisiprius wrote: Mon Mar 16, 2020 10:40 am Ultimate safety is hard to gauge. I don't think anyone is going to say that VMMXX is safer than VMFXX.

Let's back up. No money market mutual fund is as safe as an FDIC-insured bank account, and the collapse of the Reserve Primary Money Fund in 2008 shows that's "something that can really happen," not just theory. So if you are looking for safety, get as much money as practical into the bank. Seriously. I keep my money market fund balances at Vanguard down. I only put money into the settlement account, VMFXX, if I'm about to do something.

However, although the investors in Reserve Primary endured a lot of misery, they but got almost all of their money back, in fits and starts, over a period of around two years. It wasn't like investing in Enron.

After the collapse of Reserve Primary, the government moved to have the FDIC insure money market funds for a while, maybe a year and a half.

I think Vanguard money market funds are pretty safe, for two reasons, both loosey-goosey and not to be trusted much. First, I think what followed Reserve Primary set a precedent. If money market funds get really shaky, yeah, I think the government will step in and insure them again. Second, Vanguard has tended to be conservative and stodgy about things like that, at a time when some other companies were being more aggressive and sailing closer to the wind. I know this is just a brand-loyalty kind of thing, but there's some evidence for it. Schwab drastically screwed up their YieldPlus account, which was widely thought to be almost as safe as a money market account, Fidelity drastically screwed up their Ultrashort Bond Fund. Vanguard didn't do anything like that. There is also a wonderful story, just an anecdote, but it is about a Vanguard analyst named Mabel Yu. Vanguard mostly avoided the kinds of mortgage-backed securities that collapsed. She said she just couldn't understand the basis for the good ratings these bonds had.
Yu says she was told repeatedly that she worried too much. "I felt so dumb," she says, adding that she was told, "Don't worry about it. Have a life. After Mabel Yu at Vanguard raised her concerns, Vanguard stopped buying those mortgage-related bonds.
Is Mabel Yu still around? Did she get appropriate recognition?
If so... what does she recommend *now*? :wink:

Also, what's the best/safest "retail level" MM fund at Schwab now?
"Returns" are the least of our concerns, except for "return of principal".

And thank goodness MIL has her money (needed for her current Assisted Living) in FDIC CD's (I *think* those are FDIC at banks, credit unions?).

If this gets close to 2008-9, it will then ALSO have profound medical/health/life-death issues added in.
Not good at all.

Thanks!

RM
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palanzo
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Re: Is VMFXX safer than VMMXX

Post by palanzo »

nisiprius wrote: Mon Mar 16, 2020 10:40 am Ultimate safety is hard to gauge. I don't think anyone is going to say that VMMXX is safer than VMFXX.

Let's back up. No money market mutual fund is as safe as an FDIC-insured bank account, and the collapse of the Reserve Primary Money Fund in 2008 shows that's "something that can really happen," not just theory. So if you are looking for safety, get as much money as practical into the bank. Seriously. I keep my money market fund balances at Vanguard down. I only put money into the settlement account, VMFXX, if I'm about to do something.

However, although the investors in Reserve Primary endured a lot of misery, they but got almost all of their money back, in fits and starts, over a period of around two years. It wasn't like investing in Enron.

After the collapse of Reserve Primary, the government moved to have the FDIC insure money market funds for a while, maybe a year and a half.

I think Vanguard money market funds are pretty safe, for two reasons, both loosey-goosey and not to be trusted much. First, I think what followed Reserve Primary set a precedent. If money market funds get really shaky, yeah, I think the government will step in and insure them again. Second, Vanguard has tended to be conservative and stodgy about things like that, at a time when some other companies were being more aggressive and sailing closer to the wind. I know this is just a brand-loyalty kind of thing, but there's some evidence for it. Schwab drastically screwed up their YieldPlus account, which was widely thought to be almost as safe as a money market account, Fidelity drastically screwed up their Ultrashort Bond Fund. Vanguard didn't do anything like that. There is also a wonderful story, just an anecdote, but it is about a Vanguard analyst named Mabel Yu. Vanguard mostly avoided the kinds of mortgage-backed securities that collapsed. She said she just couldn't understand the basis for the good ratings these bonds had.
Yu says she was told repeatedly that she worried too much. "I felt so dumb," she says, adding that she was told, "Don't worry about it. Have a life. After Mabel Yu at Vanguard raised her concerns, Vanguard stopped buying those mortgage-related bonds.
Do your comments apply to VUSXX which is composed entirely of Treasuries?
nesdog
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Re: Is VMFXX safer than VMMXX

Post by nesdog »

We've got money in VMMXX. Never occurred to me to look at this from a safety issue and roll over to VMFXX. And here I was having a mostly calm day...thanks guys! Now I gotta start pondering this.
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Re: Is VMFXX safer than VMMXX

Post by ruralavalon »

Vanguard Federal Money Market Fund (VMFXX) is probably very slightly safer. But I think that Vanguard Prime Money Market Fund (VMMXX) is very safe.
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Re: Is VMFXX safer than VMMXX

Post by Alan S. »

ruralavalon wrote: Mon Mar 16, 2020 11:43 am Vanguard Federal Money Market Fund (VMFXX) is probably very slightly safer. But I think that Vanguard Prime Money Market Fund (VMMXX) is very safe.
Fed MM fund is quite a bit safer. All "retail" MM funds such as VMMXX might break the buck in certain situations which I assume to include the fees referred to. This will pose the first real test for money market reform implemented in 2016.

https://investor.vanguard.com/mutual-fu ... et-reform/

Perhaps the feds liquidity actions including QE will forestall such fees for the present. In any event, yields will be plunging as the short term holdings mature and are replaced with those yielding little more than 0.
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Re: Is VMFXX safer than VMMXX

Post by SuperGrafx »

Good thing I saw this post.
I am withdrawing a decent chunk from my VMMXX today and depositing it into my Discover Savings account.

I have no time or patience for a MM fund that has any doubts of safety.
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Re: Is VMFXX safer than VMMXX

Post by nisiprius »

ResearchMed wrote: Mon Mar 16, 2020 10:55 amIs Mabel Yu still around?
She has an account at LinkedIn and it shows her as a "Sr. Investment Analyst at Vanguard, West Chester, Pennsylvania." Whether she's received "appropriate recognition" I can't guess.
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blackwhisker
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Re: Is VMFXX safer than VMMXX

Post by blackwhisker »

Thank you everyone for the helpful replies!
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