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Admiral Treasury Money Market Fund

Posted: Tue Jun 19, 2007 8:59 pm
by Tigershark
Don't forget Admiral Treasury Money Market Fund. Sure, it is $50K minimum to open, but once opened, you can drop below $50K. And it is backed by US Govt Obligations, so it could be exempt from State income tax.

Of course, it has all the other benefits of Vanguard's Money Market Funds like Checkwriting, etc.

What about Federal MM?

Posted: Wed Jun 20, 2007 8:48 am
by dm200
While I believe all Vanguard MM Funds are very safe, it seems to me that the federal MM offers more real or apparent safety compared with Prime, but almost the yield of Prime MM.

dan

Re: What about Federal MM?

Posted: Thu Jun 21, 2007 12:50 am
by sport
dm200 wrote:While I believe all Vanguard MM Funds are very safe, it seems to me that the federal MM offers more real or apparent safety compared with Prime, but almost the yield of Prime MM.

dan
Not only that, but the Federal MM fund also has a partial state income tax exemption. If you live in a state with an income tax, the Federal MM fund may have a higher after-tax yield than the Prime MM fund in addition to being lower risk.

Best wishes,
Jeff

It surprises me

Posted: Thu Jun 21, 2007 8:46 am
by dm200
a little that the Federal MM is not more popular. I manage money for a highly regulated/audited organization, and I/we picked the Federal MM fund because of the actual (or perceived) extra safety. The tax issue is not relevant to the organization in our case.

I think all major MM funds are very safe, even a bit more seems worth the very, very small difference in return for money that needs to be "extra safe".

dan

Posted: Thu Jun 21, 2007 9:33 am
by alexander
Anyone know where to find out how much of Federal is state-tax-free?

Posted: Thu Jun 21, 2007 10:01 am
by tfb
Not all states allow partial state tax free. NY, CT, CA require 50% assets in US Govt issues, which Federal MMF doesn't meet. For other states, 22% of income from this fund came from US Gov't issues. See

https://flagship.vanguard.com/VGApp/hnw ... ontent.jsp

Posted: Thu Jun 21, 2007 5:16 pm
by sport
alexander wrote:Anyone know where to find out how much of Federal is state-tax-free?
As tfb explained, it varies from state to state. It also varies from year to year, for those states that allow the exemption. I believe that it has varied between approximately 20% and 40% historically. However, I cannot document this.

Best wishes,
Jeff

Posted: Thu Jun 21, 2007 11:18 pm
by RiskAverse
The Govenment (not pure treasury) funds mostly invest in GSE paper issued by Fannie/Freddie since it pays more than TBills.

Posted: Thu Jun 21, 2007 11:26 pm
by joe8d
Not sure how this thread started, but both the Admiral and regular Vanguard Treasury MMF's have been 100% State/local Tax exempt.

Re: Admiral Treasury Money Market Fund

Posted: Fri Jun 22, 2007 4:14 pm
by PatrickS
Tigershark wrote:Don't forget Admiral Treasury Money Market Fund. Sure, it is $50K minimum to open, but once opened, you can drop below $50K.
While this is technically true, you will drop out of the admiral level of this fund if your balance drops below $50k when they do one of their periodic checks. I own this MM fund and just got off the phone with VG rep asking this question. He said he thinks they do checks maybe twice a year and will inform you if you're dropping out of the admiral level fund to give you a chance to add to the balance.

Re: Admiral Treasury Money Market Fund

Posted: Fri Jun 22, 2007 8:14 pm
by Tigershark
PatrickS wrote:
Tigershark wrote:Don't forget Admiral Treasury Money Market Fund. Sure, it is $50K minimum to open, but once opened, you can drop below $50K.
While this is technically true, you will drop out of the admiral level of this fund if your balance drops below $50k when they do one of their periodic checks. I own this MM fund and just got off the phone with VG rep asking this question. He said he thinks they do checks maybe twice a year and will inform you if you're dropping out of the admiral level fund to give you a chance to add to the balance.

That is my understanding as well. I know the other Admiral Funds have the same periodic checks - but they always notify you and give you a chance to bring your balance up to the required level to maintain Admiral status. The main thing is that your balance can drop below $50K occassionally (it is a MMF after all), as long as you bring it back up as necessary.

Why a seperate thread?

Posted: Fri Jun 22, 2007 8:17 pm
by Tigershark
joe8d wrote:Not sure how this thread started, but both the Admiral and regular Vanguard Treasury MMF's have been 100% State/local Tax exempt.

To be honest, it is because I hit "New Topic" instead of "Post Reply" to another thread about Money Market Funds. However, I find that in any MMF discussion, no one ever mentions Admiral Treasury MMF so perhaps a separate thread is a good way to give it some publicity.

Also, the minimum is just $50K, not $100K like the other Admiral funds, which actually makes it a bit more obtainable.

Federal Money Market Fund

Posted: Fri Jun 22, 2007 9:15 pm
by minesweep
Anyone know where to find out how much of Federal is state-tax-free?
The percentage of income from Direct U.S. Obligations varies from year to year. I pulled my tax return folders and calculated a 32% average for the past eight years.

1999 – 27.40%
2000 - 23.29%
2001 - 26.77%
2002 - 31.11%
2003 - 35.88%
2004 – 56.64%
2005 – 32.76%
2006 – 22.06%

Mike K

Re: Admiral Treasury Money Market Fund

Posted: Fri Jun 22, 2007 10:07 pm
by Stephan
PatrickS wrote:
Tigershark wrote:Don't forget Admiral Treasury Money Market Fund. Sure, it is $50K minimum to open, but once opened, you can drop below $50K.
While this is technically true, you will drop out of the admiral level of this fund if your balance drops below $50k when they do one of their periodic checks. I own this MM fund and just got off the phone with VG rep asking this question. He said he thinks they do checks maybe twice a year and will inform you if you're dropping out of the admiral level fund to give you a chance to add to the balance.
Patrick,

This fund is not an Admiral Shares version of a fund and different rules
as such apply here, as it cannot be re-leveled. According to what
Vanguard told me earlier this year, once invested in this fund investors
only have to worry about the possibility of low-balance fees (<$10k for
most investors, but waived for Voyager and Flagship) and liquidation
below $500.

Stephan

Posted: Fri Jun 22, 2007 10:17 pm
by joe8d
Tigershark,
I find that in any MMF discussion, no one ever mentions Admiral Treasury MMF
Yes I agree. I think that is because of the 50K min and the fact that most advocate only holding enough in a MMF to cover "Emergency" or unanticipated expenses. I've had the the Admiral TMMF since it's inception and have used it to cover both unanticipated and anticipated expenses. Having done that has allowed me to have never payed a penny of credit card or any other interest.

Re: Admiral Treasury Money Market Fund

Posted: Sat Jun 23, 2007 1:58 pm
by kramer
Stephan wrote:
PatrickS wrote:
Tigershark wrote:Don't forget Admiral Treasury Money Market Fund. Sure, it is $50K minimum to open, but once opened, you can drop below $50K.
While this is technically true, you will drop out of the admiral level of this fund if your balance drops below $50k when they do one of their periodic checks. I own this MM fund and just got off the phone with VG rep asking this question. He said he thinks they do checks maybe twice a year and will inform you if you're dropping out of the admiral level fund to give you a chance to add to the balance.
Patrick,

This fund is not an Admiral Shares version of a fund and different rules
as such apply here, as it cannot be re-leveled. According to what
Vanguard told me earlier this year, once invested in this fund investors
only have to worry about the possibility of low-balance fees (<$10k for
most investors, but waived for Voyager and Flagship) and liquidation
below $500.

Stephan
I would be interested in a definitive answer on this question. According to what I have read at Vanguard's site, I tend to agree with Stephan here. I am about to switch over and this issue is probably the deciding factor for me.

Kramer

Re: Admiral Treasury Money Market Fund

Posted: Sun Jun 24, 2007 8:37 pm
by WiseNLucky
kramer wrote:I would be interested in a definitive answer on this question. . . . I am about to switch over and this issue is probably the deciding factor for me.
I hadn't considered it before this thread but I might be moving to an income tax state within the next few years and I would like to know as well.

Posted: Sun Jun 24, 2007 8:50 pm
by xenial
The Admiral Treasury Money Market Fund prospectus states
All Vanguard funds reserve the right without prior notice, to liquidate any investment-only retirement-plan fund account or any nonretirement fund account whose balance falls below the minimum initial investment.
However, there's a good deal of anecdotal evidence from posters here suggesting that this provision is not enforced.

Best wishes,
Ken

Re: What about Federal MM?

Posted: Sun Jun 24, 2007 8:57 pm
by White Coat Investor
dm200 wrote:While I believe all Vanguard MM Funds are very safe, it seems to me that the federal MM offers more real or apparent safety compared with Prime, but almost the yield of Prime MM.

dan
Please tell me you don't really worry about the safety of Prime MM. If you do you probably shouldn't be investing in equities or bonds.

Edit: never mind, I just read your next post.

Posted: Mon Jun 25, 2007 12:14 pm
by workingatit
there may be confusion b/t federal and treasury mm funds

correct me if i'm wrong, but i think:

treasury is 100% state and tax free interest

federal is not

admiral T MM

Posted: Mon Jun 25, 2007 11:06 pm
by rockH
To the best of my recollection the Vg rep told me that you need $50K to open the Admiral T MM acount, but that your balance could drop and stay below $50K afterwards with no problems. Mine has been up and down, including under $50K for long periods, and I haven't heard anything from Vg.

On other Admiral bond or equity funds, if you make a withdrawal that takes your balance below $100K, you get a letter telling you that you will soon be demoted. They are more lenient about demotion if your Admiral fund value (bond or equity) goes below the cutoff because of a decline in share price (vs. sale/exchange/withdrawal).

Re: admiral T MM

Posted: Tue Jun 26, 2007 2:58 pm
by Tigershark
rockH wrote:To the best of my recollection the Vg rep told me that you need $50K to open the Admiral T MM acount, but that your balance could drop and stay below $50K afterwards with no problems. Mine has been up and down, including under $50K for long periods, and I haven't heard anything from Vg.

On other Admiral bond or equity funds, if you make a withdrawal that takes your balance below $100K, you get a letter telling you that you will soon be demoted. They are more lenient about demotion if your Admiral fund value (bond or equity) goes below the cutoff because of a decline in share price (vs. sale/exchange/withdrawal).

When I talked to a Vg rep, that is what they told me too. I asked him what would happen if the balance dropped below $50K. I believe his exact words were: "It's OK, it is a Money Market Fund after all." For the record, I have maintained over $50K in this account, until recently when I dropped to about $40K. Let's see what happens if I don't bring it back up.

As a side note, I know the Vanguard disclaimer saying that they can close any fund that falls below the initial investment. However, I would have to believe that they would also consider:

1) Your average balance over time in the account
2) Length of time it stays below the minimum
3) Your other balances with Vanguard.

I would hope that they would cut a Voyager account holder a little slack, right?

% US Government Obligations

Posted: Tue Jun 26, 2007 2:59 pm
by Tigershark
workingatit wrote:there may be confusion b/t federal and treasury mm funds

correct me if i'm wrong, but i think:

treasury is 100% state and tax free interest

federal is not

That is correct. Treasury is 100% US Government Obligations and thus is 100% state tax free interest. Admiral Treasury is the same, just with a $50K minimum investment, a much lower Expense Ratio, and thus much higher Yield.


In summary, here are the % US Govt Obligations of the Money Market Funds, which directly affect how much of the interest would be state tax free (or even if it is eligible):

Prime - Negligible
Federal - About 30%
Treasury - 100%
Admiral Treasury - 100%