[Vanguard Federal Money Market Fund Reopened - MUST USE]

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riley42
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[Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by riley42 » Mon Nov 30, 2015 5:24 pm

I just received this in an email and wanted to get your opinions on how this may affect all of us at Vanguard. Thanks so much for your insight.
https://investor.vanguard.com/mutual-fu ... et-reform/

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Re: Vanguard Money Market Changes

Post by saltycaper » Mon Nov 30, 2015 5:45 pm

Seems like the change most people will see first is the use of the Federal Money Market Fund for settlements:
If you have a brokerage account, money market reform will affect your settlement fund choice in 2016.

Vanguard Federal Money Market Fund will be the only money market fund you can use to settle brokerage trades later in 2016. Vanguard Brokerage selected this fund for retail accounts because it's open to all investors and won't have fees and gates. Also, after considering factors such as yield, fees, investment objectives, risks, and current market conditions, Vanguard Brokerage believes it's the most appropriate alternative to current money market settlement funds.

Most investors will still be able to invest in any of our other money market funds. They just can't be used as a settlement fund.

More details on the timing of the settlement fund change will be available in 2016.
I don't think the above impact is significant.

The liquidity fees and gates are more significant:
Liquidity fees and gates are tools to help money market fund managers keep the funds stable during times of extreme market duress. Under the rules:

A fund may impose a fee of up to 2% on redemptions if a fund's weekly liquid assets fall below 30% of its total assets.

A fund must impose a 1% fee on redemptions (with the option of imposing a fee of up to 2%) if a fund's weekly liquid assets fall below 10% of its total assets—unless the fund's board determines a fee would not be in the fund's best interest.

A fund may impose a gate—that is, suspend redemptions—for up to 10 business days in a 90-day period.

The fees and gates rules only apply to retail and institutional funds, although government funds may voluntarily adopt them if the fees and gates are previously disclosed to investors.

The boards of directors of Vanguard's government funds have decided to impose neither fees nor gates.
I haven't used money market funds before for anything other than settlement, but I suppose I would hesitate to put funds that I was counting on as being highly liquid in something like Prime Money Market Fund. For point of reference, Vanguard Prime Money Market Fund's 30% liquidity level was breached during the Great Financial Crisis, but the 10% level was not.

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Re: Vanguard Money Market Changes

Post by abuss368 » Mon Nov 30, 2015 6:30 pm

Interesting. Thanks!
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Vanguard Federal Money Market Fund Reopened - MUST USE

Post by Doc » Tue Dec 01, 2015 6:08 pm

Also other changes to MM accounts.
Money market reform: What you need to know
Changes are in the works for our money market fund lineup to comply with new Securities and Exchange Commission (SEC) rules. We don't expect a significant impact on our management of these funds
.
Vanguard Federal Money Market Fund will be the only money market fund you can use to settle brokerage trades later in 2016.
https://investor.vanguard.com/mutual-fu ... et-reform/

Edited title.
Last edited by Doc on Wed Dec 02, 2015 7:38 am, edited 3 times in total.
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Re: Vanguard Federal Money Market Fund Reopened

Post by small_index » Tue Dec 01, 2015 7:15 pm

...
Last edited by small_index on Sat Dec 12, 2015 1:02 am, edited 1 time in total.

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Re: Vanguard Federal Money Market Fund Reopened - Must Use

Post by Doc » Wed Dec 02, 2015 7:35 am

Edited title to call attention to the requirement that we must use this fund as settlement fund on brokerage platform.
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Re: Vanguard Federal Money Market Fund Reopened - MUST USE

Post by Levett » Wed Dec 02, 2015 7:46 am

Vanguard is doing its brokerage customers a huge favor in light of SEC reform.

"Liquidity fees and gates are tools to help money market fund managers keep the funds stable during times of extreme market duress. Under the rules:
A fund may impose a fee of up to 2% on redemptions if a fund's weekly liquid assets fall below 30% of its total assets.
A fund must impose a 1% fee on redemptions (with the option of imposing a fee of up to 2%) if a fund's weekly liquid assets fall below 10% of its total assets—unless the fund's board determines a fee would not be in the fund's best interest.
A fund may impose a gate—that is, suspend redemptions—for up to 10 business days in a 90-day period.
The fees and gates rules only apply to retail and institutional funds, although government funds may voluntarily adopt them if the fees and gates are previously disclosed to investors.
The boards of directors of Vanguard's government funds have decided to impose neither fees nor gates."


Note boldface which I added.

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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by LadyGeek » Wed Dec 02, 2015 5:00 pm

I merged Doc's thread into here. The combined thread is now in the Investing - Theory, News & General forum. I also retitled the thread.
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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by Longdog » Wed Dec 02, 2015 5:08 pm

I wonder - if you purchase securities, does the transfer from the money maket fund on the settlement date count as a redemption? If so, it is (unlikely, but) plausible that, through no fault of your own, you might not have enough funds to settle the trade without the 1% mandatory fee. I also wonder, despite what Vanguard said, if they can avoid that fee - which was not identified as optional.
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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by Coles » Wed Dec 02, 2015 6:06 pm

Longdog wrote:I also wonder, despite what Vanguard said, if they can avoid that fee - which was not identified as optional.
It is optional for Government funds such as the Vanguard Federal Money Market Fund.

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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by dm200 » Wed Dec 02, 2015 6:33 pm

Third quarter 2016
• Investors ineligible to invest in retail money market funds must move their assets out of these funds prior to the October 14, 2016, compliance date.
The Investments I manage are for a "corporation" (legal entity of the organization), and it appears that the Federal Money Market will not be an "eligible" investment for a corporation - so what do we do for a brokerage settlement account??

I will have to call Vanguard to find out (and prepare).

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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by richardglm » Wed Dec 02, 2015 7:23 pm

There is a terminology mismatch which may cause confusion. The "Federal Money Market Fund" is not a retail money market fund, even though it is open to retail investors. It is a government money market fund that is not subject to fees and gates. "Prime Money Market" invests in non-government securities that in a crisis may become illiquid.
Longdog wrote:I wonder - if you purchase securities, does the transfer from the money maket fund on the settlement date count as a redemption? If so, it is (unlikely, but) plausible that, through no fault of your own, you might not have enough funds to settle the trade without the 1% mandatory fee. I also wonder, despite what Vanguard said, if they can avoid that fee - which was not identified as optional.
That is exactly why they are switching from Prime Money Market (which may be subject to fees and gates) to Federal Money Market. The risk of brokerage settlements failing due to fees and gates is not a scenario they ever want to happen.
dm200 wrote: The Investments I manage are for a "corporation" (legal entity of the organization), and it appears that the Federal Money Market will not be an "eligible" investment for a corporation - so what do we do for a brokerage settlement account??
I believe that in general only retail money market funds have restrictions as you describe. Federal Money Market is not a retail money market fund, even though it is open to retail investors. So I think Vanguard will confirm that you must use Federal Money Market along with everyone else.
Levett wrote:Vanguard is doing its brokerage customers a huge favor in light of SEC reform.
You are exactly correct. Vanguard is doing the responsible thing. The only reason now to use Prime Money Market as a settlement fund would be to grab a extra few cents of interest while placing (some) undue risk on the brokerage settlement system. It is not worth it to get greedy here.

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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by Doc » Wed Dec 02, 2015 7:43 pm

Good discussion, despite Lady Geeks removal of "Doc" from the lead when she merged the threads. :)
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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by LadyGeek » Wed Dec 02, 2015 7:56 pm

You need to be fast on this forum. The software sorts posts by time, the earliest goes first. (Plausible deniability at it's finest.)
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Re: Vanguard Money Market Changes

Post by alex_686 » Wed Dec 02, 2015 7:58 pm

saltycaper wrote:I haven't used money market funds before for anything other than settlement, but I suppose I would hesitate to put funds that I was counting on as being highly liquid in something like Prime Money Market Fund. For point of reference, Vanguard Prime Money Market Fund's 30% liquidity level was breached during the Great Financial Crisis, but the 10% level was not.
Saltycaper, where did you find the chart? I find it interesting that you found one consider the rules on weekly liquidity are pretty new.

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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by saltycaper » Wed Dec 02, 2015 8:38 pm

^Chart here (toward bottom of page): https://investor.vanguard.com/mutual-fu ... tor-impact
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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by dbCooperAir » Wed Dec 02, 2015 9:41 pm

If I read it correctly this is the fund we will now need to use?
https://personal.vanguard.com/us/funds/ ... IntExt=INT

Does this mean we will need to keep a minimum of $3,000 in this fund? Not a huge fan if this is the case, for those who reinvest dividends manually its $3,000 of dead money. Not a huge deal but its kind of thorn if this is the case.

edited to remove Prime MM remark.
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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by Geologist » Wed Dec 02, 2015 9:45 pm

There is no difference in the official minimum between the Federal Money Market and Prime Money Market Funds ($3000 for each). Having said that, for settlement accounts, you don't have to keep that amount in the fund anyway.

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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by dbCooperAir » Wed Dec 02, 2015 10:08 pm

Geologist wrote:There is no difference in the official minimum between the Federal Money Market and Prime Money Market Funds ($3000 for each). Having said that, for settlement accounts, you don't have to keep that amount in the fund anyway.
That was my thought as well, they sent me this email last year however for the Prime MM fund.
During our annual review of shareholders' accounts, we noticed that your account(s) listed below had a balance below the $1,000 minimum necessary to remain open, and we want to give you an opportunity to increase the balance by July 31, 2015. Note that if you add assets and subsequent market fluctuations cause the balance to drop below $1,000, we'll still close the account. You'll receive a check for the remaining balance in any account we close.
I just took what little was in the fund and added it to another fund, in the mean time the dividends are still going to the MM fund, waiting for another email :?
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Settlement fund for Vanguard brokerage

Post by P&C actuary » Fri Dec 04, 2015 4:38 pm

[Thread merged into here, see below. --admin LadyGeek]

I just received an email from Vanguard with a change for the MMF for brokerage accounts. I currently have tax-exempt MMF and would like to keep it. I guess I will be adding the Federal MMF and making transfers to the tax-exempt MMF.

Below is from the email:


In February 2016, VBS will be adding Vanguard Federal Money Market Fund as a settlement fund option and using it as the money market settlement fund for all new brokerage accounts.

Later in 2016, all brokerage clients will be required to use Vanguard Federal Money Market Fund as their money market settlement fund. We'll send you information closer to the effective date of this change. But until then, you can continue to use your current money market settlement fund to settle your brokerage trades. However, as an existing brokerage client, you won't be able to switch your settlement fund between February and May 2016.

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Re: Settlement fund for Vanguard brokerage

Post by Grasshopper » Sat Dec 05, 2015 7:52 am

This will be painful for me as I use VanguardsAdvantage to manage bills, credit card payments ACH from Prime MM. :beer

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Re: Settlement fund for Vanguard brokerage

Post by SpringMan » Sat Dec 05, 2015 9:14 am

Grasshopper wrote:This will be painful for me as I use VanguardsAdvantage to manage bills, credit card payments ACH from Prime MM. :beer
Couldn't you do the same thing with any Vanguard MM?
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Re: Settlement fund for Vanguard brokerage

Post by goingup » Sat Dec 05, 2015 9:22 am

P&C actuary wrote: I currently have tax-exempt MMF and would like to keep it. I guess I will be adding the Federal MMF and making transfers to the tax-exempt MMF.
Why is it important to keep the TE MMF? The interest paid in these accounts is so insignificant that it can't make much difference.

Several years ago Vanguard instructed customers to move to Prime MM from Federal MM. I didn't know why but it was pretty much a non-event. I think this is a non-event, too.

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Re: Settlement fund for Vanguard brokerage

Post by jhfenton » Sat Dec 05, 2015 9:57 am

I was already looking to change from the TE MMF to prime for my settlement fund. When I set up our accounts in October, I picked TE MMF for our taxable account, because I assumed that made sense. But I noticed recently that the SEC yield on Prime is 0.12% compared to 0.01% on TE MMF. There's no tax rate that makes that a good trade. (We have Prime MMF in our Roth and IRA accounts, of course.)

I assume a phone call is required to change settlement funds?

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Re: Settlement fund for Vanguard brokerage

Post by Grasshopper » Sat Dec 05, 2015 11:07 am

SpringMan wrote:
Grasshopper wrote:This will be painful for me as I use VanguardsAdvantage to manage bills, credit card payments ACH from Prime MM. :beer
Couldn't you do the same thing with any Vanguard MM?
Yes, and the pain is 15 credit cards on balance ACH paid with Prime, several banks transfer to the Prime MM. Plus they want you to use Federal for your brokerage settlement account.. Certainly not a big deal, except everything was working just perfectly as long as the Prime had money in it.

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Re: Settlement fund for Vanguard brokerage

Post by dm200 » Sat Dec 05, 2015 11:17 am

For an organization I manage, we used the Federal MM Fund for some short term funds, as well as settlement for Brokered CDs. When short term rates tanked, Vanguard closed the Federal MM and no longer allowed it to be used for a settlement account. Presumably, those close to zero rates that the Federal MM could invest in squeezed the Fund sp that is was not "profitable". I am wondering now, with short term rates still being very low, how and why the Federal MM Fund is now being pushed for increased use, in general AND as a settlement fund for Brokerage accounts. What has changed?

In a related question, do other, similar entities (such as Fidelity) require MM Funds for brokerage settlement, or do some actually use "bank" (FDIC Insured) accounts for settlement? If so, I wonder why Vanguard requires the MM Fund for settlement?

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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by LadyGeek » Sat Dec 05, 2015 11:36 am

I merged P&C actuary's thread into here. The combined thread is in the Investing - Theory, News & General forum.
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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by MnD » Sat Dec 05, 2015 12:36 pm

Schwab uses FDIC insured Bank Sweep for cash in most retail accounts - I guess they won't have to make any changes......

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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by mickeyd » Sat Dec 05, 2015 12:37 pm

The deadline for mutual funds to comply with the rules is October 14, 2016
Looks like we don't have to make any sudden moves in January.
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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by Doc » Sat Dec 05, 2015 12:46 pm

jhfenton wrote:I assume a phone call is required to change settlement funds?
From P&C acturary's post

Below is from the email:

In February 2016, VBS will be adding Vanguard Federal Money Market Fund as a settlement fund option and using it as the money market settlement fund for all new brokerage accounts.

Later in 2016, all brokerage clients will be required to use Vanguard Federal Money Market Fund as their money market settlement fund. We'll send you information closer to the effective date of this change. But until then, you can continue to use your current money market settlement fund to settle your brokerage trades. However, as an existing brokerage client, you won't be able to switch your settlement fund between February and May 2016.

I interpreted this as being told nicely that the transition will be staged over a four month period and we are not going to have any choice on the timing. As the short instruments in prime mature Vg will reinvest the $'s in Fed MM and make enough clients switch to cover the dollar amount of the trades. No net inflows/outflows from the two funds combined. :idea:
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Re: Settlement fund for Vanguard brokerage

Post by tj » Sat Dec 05, 2015 1:01 pm

dm200 wrote:For an organization I manage, we used the Federal MM Fund for some short term funds, as well as settlement for Brokered CDs. When short term rates tanked, Vanguard closed the Federal MM and no longer allowed it to be used for a settlement account. Presumably, those close to zero rates that the Federal MM could invest in squeezed the Fund sp that is was not "profitable". I am wondering now, with short term rates still being very low, how and why the Federal MM Fund is now being pushed for increased use, in general AND as a settlement fund for Brokerage accounts. What has changed?

In a related question, do other, similar entities (such as Fidelity) require MM Funds for brokerage settlement, or do some actually use "bank" (FDIC Insured) accounts for settlement? If so, I wonder why Vanguard requires the MM Fund for settlement?

Fidelity, Schwab, Merrill Edge, and ETrade all have bank options. I'm surprised Vanguard doesn't just contract with some Philadelphia-based bank for this.

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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by dm200 » Sat Dec 05, 2015 1:24 pm

Fidelity, Schwab, Merrill Edge, and ETrade all have bank options. I'm surprised Vanguard doesn't just contract with some Philadelphia-based bank for this.
It is curious to me as well.

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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by sport » Sat Dec 05, 2015 1:28 pm

They would probably have to pay a bank to do this. Vanguard is all about low costs.

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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by Doc » Sat Dec 05, 2015 1:53 pm

I went to a great deal of trouble moving all our Vanguard mutual funds to the VBS platform and now you guys think they should undo it all by adding a bank that isn't even their's. No how. No way.

I have enough trouble now moving money among our three Vg accounts (his, hers, ours) and I should now add three more. AARRGGHH!!

Schwab is now paying a
Competitive 0.06% APY. Earn 0.06% variable Annual Percentage Yield

And Schwab has its own bank.
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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by riley42 » Sat Dec 05, 2015 1:56 pm

by Doc » Wed Dec 02, 2015 7:43 pm

Good discussion, despite Lady Geeks removal of "Doc" from the lead when she merged the threads.
I am truly sorry if I caused a problem by my post being the first one and Doc's post got merged. If you tell me how to fix that, I will be glad to get my post deleted.....I appreciate all the advice on this forum, and I don't want to cause problems for the administrators or the contributors.

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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by Doc » Sat Dec 05, 2015 2:09 pm

riley42 wrote:
by Doc » Wed Dec 02, 2015 7:43 pm

Good discussion, despite Lady Geeks removal of "Doc" from the lead when she merged the threads.
I am truly sorry if I caused a problem by my post being the first one and Doc's post got merged. If you tell me how to fix that, I will be glad to get my post deleted.....I appreciate all the advice on this forum, and I don't want to cause problems for the administrators or the contributors.
:sharebeer

You posted first but in the "Personal" section. When Lady Geek combined the threads she moved your thread to the "Theory" section so you went to the top since you posted before me. What I thought was funny is that she used my title but it now it has your name.
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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by LadyGeek » Sat Dec 05, 2015 2:55 pm

riley42 wrote:I am truly sorry if I caused a problem by my post being the first one and Doc's post got merged. If you tell me how to fix that, I will be glad to get my post deleted.....I appreciate all the advice on this forum, and I don't want to cause problems for the administrators or the contributors.

This is just a misunderstanding, nothing is wrong. The software decides the order of posting - you were first. I changed the thread title because I thought Doc's was more descriptive. I use brackets [ ] to indicate the title was changed (but not by the member).

If you wish to change the thread title again, just edit the Subject: line in Post #1.
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Vanguad Brokerage settlements

Post by dmcmahon » Sat Dec 05, 2015 3:41 pm

[Thread merged into here, see below. --admin LadyGeek]

Well, so much for the new rule about floating-value MM funds only affecting institutions. I just got a letter from VBS and if I'm reading it right, I'll be required to use a new MM fund as the settlement account for any transactions, and this account will be exposed to fluctuating valuation. Frankly, this stinks. I'm not someone trying to squeeze a few more basis points from cash like investments - I'm just an ordinary schmuck who's now stuck using one of these vehicles because se of the way the brokerage works. I expect I'll have the same issue with several other brokers. Anything I can do besides move my business elsewhere? TD and Wells sweep to FDIC accounts that presumably won't suffer from this exposure.

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Re: Vanguard Federal Money Market Fund Reopened

Post by JoMoney » Sat Dec 05, 2015 3:46 pm

small_index wrote:... The $100 billion Prime MMF is going to experience some chaos, which hopefully Vanguard has planned out. For me, I think I'll make the switch before the deadline, to avoid some possible chaos ...
Anyone know how to change their preferred settlement fund in the upgraded brokerage accounts? I didn't have a settlement fund until I was "upgraded" to the new brokerage accounts, and I don't remember selecting what MMF I wanted to use during the upgrade process. I might not be remembering correctly, but I believe they forced me into the Prime MM fund as the settlement fund, and I don't see any account settings that would allow me to change it if I wanted to be an early adopter of this.
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Re: Vanguad Brokerage settlements

Post by sport » Sat Dec 05, 2015 3:52 pm

My understanding is that things will work the same as always. You will just have a different MM fund for the sweep account.

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Re: Vanguad Brokerage settlements

Post by ruralavalon » Sat Dec 05, 2015 3:52 pm

dmcmahon wrote:Well, so much for the new rule about floating-value MM funds only affecting institutions. I just got a letter from VBS and if I'm reading it right, I'll be required to use a new MM fund as the settlement account for any transactions, and this account will be exposed to fluctuating valuation. Frankly, this stinks. I'm not someone trying to squeeze a few more basis points from cash like investments - I'm just an ordinary schmuck who's now stuck using one of these vehicles because se of the way the brokerage works. I expect I'll have the same issue with several other brokers. Anything I can do besides move my business elsewhere? TD and Wells sweep to FDIC accounts that presumably won't suffer from this exposure.
I got the same letter, saying that there will automatically be a switch to Vanguard's Federal Money Market Fund as the settlement fund in any brokerage account.

It's my understanding that the Vanguard Federal Money Market Fund is not required to use a fluctuating NAV. I can't find a link about that, maybe someone else can.
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TedBk
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Re: Vanguad Brokerage settlements

Post by TedBk » Sat Dec 05, 2015 4:13 pm

As far as I know Vanguard's money market funds have always maintained a steady $1 NAV. I've only used the Prime MM fund though. I'm not really concerned about it as I only use the MM fund to gather some money together before investing it. Since the yield's are practically zero you'd be better off holding cash for the long run in something else like CD's or online savings accounts.

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Re: Vanguad Brokerage settlements

Post by small_index » Sat Dec 05, 2015 4:29 pm

...
Last edited by small_index on Sat Dec 12, 2015 12:59 am, edited 1 time in total.

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Re: Vanguad Brokerage settlements

Post by Geologist » Sat Dec 05, 2015 4:42 pm

dmcmahon wrote:Well, so much for the new rule about floating-value MM funds only affecting institutions. I just got a letter from VBS and if I'm reading it right, I'll be required to use a new MM fund as the settlement account for any transactions, and this account will be exposed to fluctuating valuation. Frankly, this stinks. I'm not someone trying to squeeze a few more basis points from cash like investments - I'm just an ordinary schmuck who's now stuck using one of these vehicles because se of the way the brokerage works. I expect I'll have the same issue with several other brokers. Anything I can do besides move my business elsewhere? TD and Wells sweep to FDIC accounts that presumably won't suffer from this exposure.
There's another thread already on the change in settlement accounts. What makes you think the Federal Money Market account will have a floating NAV? There is nothing in that other thread on this matter.

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Re: Vanguard Federal Money Market Fund Reopened

Post by jhfenton » Sat Dec 05, 2015 5:17 pm

JoMoney wrote:
small_index wrote:... The $100 billion Prime MMF is going to experience some chaos, which hopefully Vanguard has planned out. For me, I think I'll make the switch before the deadline, to avoid some possible chaos ...
Anyone know how to change their preferred settlement fund in the upgraded brokerage accounts? I didn't have a settlement fund until I was "upgraded" to the new brokerage accounts, and I don't remember selecting what MMF I wanted to use during the upgrade process. I might not be remembering correctly, but I believe they forced me into the Prime MM fund as the settlement fund, and I don't see any account settings that would allow me to change it if I wanted to be an early adopter of this.
I've looked around and don't see any user-accessible setting. As I said above, I've been looking to change our taxable account settlement fund from TE MMF to Prime MMF once I realized that TE was yielding 0.01% while Prime was yielding 0.12%. It matters very little, because I don't leave money in any of our settlement funds, but I was still looking for how to change it before this notice came out this week.

(I chose the TE MMF for our taxable account when I set up our accounts in October.)

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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by dm200 » Sat Dec 05, 2015 5:21 pm

I went to a great deal of trouble moving all our Vanguard mutual funds to the VBS platform and now you guys think they should undo it all by adding a bank that isn't even their's. No how. No way.
Offering the option of an FDIC Insured bank account for settlement on Brokerage accounts, it seems to me, would offer at least the perception of more safety. For those of us investing in Brokered CDs (all FDIC Insured) - that would keep all balances under FDIC insurance.

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Re: Vanguard Federal Money Market Fund Reopened

Post by Geologist » Sat Dec 05, 2015 5:25 pm

JoMoney wrote:
small_index wrote:... The $100 billion Prime MMF is going to experience some chaos, which hopefully Vanguard has planned out. For me, I think I'll make the switch before the deadline, to avoid some possible chaos ...
Anyone know how to change their preferred settlement fund in the upgraded brokerage accounts? I didn't have a settlement fund until I was "upgraded" to the new brokerage accounts, and I don't remember selecting what MMF I wanted to use during the upgrade process. I might not be remembering correctly, but I believe they forced me into the Prime MM fund as the settlement fund, and I don't see any account settings that would allow me to change it if I wanted to be an early adopter of this.
In Doc's post farther up (12:46 pm), it says that existing users will be migrated during the first half of next year. You don't have an option to be an early adopter if you want to. This is probably so they have an orderly process for increasing the assets of the Federal Money market fund.

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Re: Vanguad Brokerage settlements

Post by JoMoney » Sat Dec 05, 2015 5:48 pm

dmcmahon wrote:...and this account will be exposed to fluctuating valuation...
I have not seen that stated anywhere. This says:
https://personal.vanguard.com/pdf/VGMMR.pdf
... U.S. government money market funds will be permitted to retain the stable $1.00 per share NAV and may be offered to institutional investors. In order to be considered a government fund, a portfolio is required to invest at least 99.5% of its total assets in cash, government securities, and/or repurchase agreements that are collateralized solely by government securities or cash. ...
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Re: [Vanguard Federal Money Market Fund Reopened - MUST USE]

Post by LadyGeek » Sat Dec 05, 2015 5:49 pm

I merged dmcmahon's thread into here.
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Re: Vanguad Brokerage settlements

Post by dmcmahon » Sat Dec 05, 2015 7:22 pm

JoMoney wrote:
dmcmahon wrote:...and this account will be exposed to fluctuating valuation...
I have not seen that stated anywhere. This says:
https://personal.vanguard.com/pdf/VGMMR.pdf
... U.S. government money market funds will be permitted to retain the stable $1.00 per share NAV and may be offered to institutional investors. In order to be considered a government fund, a portfolio is required to invest at least 99.5% of its total assets in cash, government securities, and/or repurchase agreements that are collateralized solely by government securities or cash. ...
I hope I'm wrong. The snail mail I received closes with this:

"An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund."

I guess that's just standard boilerplate?

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