Muni Money Market funds starting to look good!

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bligh
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Muni Money Market funds starting to look good!

Post by bligh » Wed Dec 27, 2017 2:06 pm

So the thread about the Prime Money Market fund made me take a quick look at the rates on some of the Municipal Money market funds and they are looking really good (for people in high tax brackets)!

As of right now here are yields :

Vanguard Municipal Money Market Fund (VMSXX) - 1.20%
Vanguard New York Municipal Money Market Fund (VYFXX) - 1.20%
Vanguard California Municipal Money Market Fund (VCTXX) 1.14%

These are tax free yields, and New York's in particular looks really good. I can see these guys providing a better return than what you would get in a savings account .. for those in higher tax brackets these would be almost as good as CD rates, but with the liquidity of a savings account.

Looks like a pretty sweet deal! I just transfered by cash reserve over to my state's municipal money market fund at Vanguard and I am seeing a pretty big jump in after tax yield as a result.

Just wanted to get the word out. :sharebeer
Last edited by bligh on Wed Dec 27, 2017 2:15 pm, edited 1 time in total.

ZinCO
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Re: Muni Money Market funds starting to look good!

Post by ZinCO » Wed Dec 27, 2017 2:12 pm

I am reasonably sure that last week VMSXX was 1.07%. I almost posted about it because I hadn't noticed myself that it had increased from the 0.7% it yielded back in November or so.

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Re: Muni Money Market funds starting to look good!

Post by jebmke » Wed Dec 27, 2017 2:16 pm

Treasury yield curve has become less steep so the 2 year is now at ~1.9% and the 10 year is ~2.4% -- not a good payoff for extending out.
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Re: Muni Money Market funds starting to look good!

Post by saltycaper » Wed Dec 27, 2017 2:20 pm

Still terrible IMO. (As are savings account yields.)
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Re: Muni Money Market funds starting to look good!

Post by triceratop » Wed Dec 27, 2017 2:29 pm

saltycaper wrote:
Wed Dec 27, 2017 2:20 pm
Still terrible IMO. (As are savings account yields.)
For a New York investor in the 35% bracket this is a tax-equivalent yield comparable to that of a ~1.5 year treasury on today's yield curve.
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Re: Muni Money Market funds starting to look good!

Post by ohai » Wed Dec 27, 2017 2:37 pm

Hi, OP. Keep in mind that you're still going to lose about 1% on those yields, after adjusting for inflation. Also, if you believe in market risk premium, whatever your alternative investment was when rates were lower should have similar excess return to what they had when interest rates were lower.

Of course, 1% is much better than close to 0% before.

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Re: Muni Money Market funds starting to look good!

Post by onourway » Wed Dec 27, 2017 2:52 pm

Any downsides in moving cash I typically keep in high-yield savings to one of these accounts? No government protection I guess, but other than that?

Vanguard's calculator says my tax-equivalent yield is 1.79% which is much better than the taxable 1.3% I'm getting at Capital One.

Can I set up check writing against this account?

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Re: Muni Money Market funds starting to look good!

Post by visualguy » Wed Dec 27, 2017 3:07 pm

One thing to note is that these are the SEC yields, not the actual distribution yields which have been much lower. For example, VCTXX has an SEC yield of 1.14%, but the distribution yield was 0.76% in November. Not sure what conclusion to draw from this. The distribution yields have been going up gradually.

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Re: Muni Money Market funds starting to look good!

Post by saltycaper » Wed Dec 27, 2017 3:13 pm

triceratop wrote:
Wed Dec 27, 2017 2:29 pm
saltycaper wrote:
Wed Dec 27, 2017 2:20 pm
Still terrible IMO. (As are savings account yields.)
For a New York investor in the 35% bracket this is a tax-equivalent yield comparable to that of a ~1.5 year treasury on today's yield curve.
Those stink too.

I'm trying to uncondition myself (maybe others too?) to the low yields of recent years. When T-Bills beat inflation, then after-tax equivalent yields will start to look pretty good. Until then, meh.

You're right in that it's all relative.
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Re: Muni Money Market funds starting to look good!

Post by bligh » Wed Dec 27, 2017 4:13 pm

ohai wrote:
Wed Dec 27, 2017 2:37 pm
Hi, OP. Keep in mind that you're still going to lose about 1% on those yields, after adjusting for inflation. Also, if you believe in market risk premium, whatever your alternative investment was when rates were lower should have similar excess return to what they had when interest rates were lower.

Of course, 1% is much better than close to 0% before.
Absolutely. I am not saying anyone should sell any of their holdings or to "invest" in the above Money Market funds. I hold my usual cash reserves (aka Emergency fund) in a 1.3% savings account. When I had last checked, the yield on these money market funds did not compete too well with the yield you got in a plain old fashioned savings account. That is no longer the case.

My emergency fund is still losing to inflation, just losing to it a little less than before.

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Re: Muni Money Market funds starting to look good!

Post by Small Law Survivor » Wed Dec 27, 2017 5:00 pm

visualguy wrote:
Wed Dec 27, 2017 3:07 pm
One thing to note is that these are the SEC yields, not the actual distribution yields which have been much lower. For example, VCTXX has an SEC yield of 1.14%, but the distribution yield was 0.76% in November. Not sure what conclusion to draw from this. The distribution yields have been going up gradually.
Would appreciate an explanation for this, or a pointer to an existing explanation.

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Re: Muni Money Market funds starting to look good!

Post by TD2626 » Wed Dec 27, 2017 5:11 pm

Thanks for the links and post. It's good to see that short-term yields are rising in both taxable and tax exempt funds.

That being said, rising rates on savings accounts probably aren't as important as many think.

If a hypothetical investor has $90,000 in stocks and $10,000 in cash, and gets (in a hypothetical year) 10% on their stocks (to make the math easy) and 1% on their cash, they have returns for that year of $9000 in stocks and $100 from cash --- e.g. only 100/9100 = ~1.1% of the portfolio's return coming from cash.

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Re: Muni Money Market funds starting to look good!

Post by Artsdoctor » Wed Dec 27, 2017 5:59 pm

Those yields still don't look very enticing but they have steadily crept up over the past year to be sure.

I'm not sure why the distribution yield and SEC yield are so disparate. The SEC yield is calculated based on the last 7 days so perhaps we're seeing an up-sloping curve.

Still, the CA municipal money market SEC yield of 1.14% translates to a 2% equivalent yield when figuring taxes (for me). However, the money markets have some of that income subject to the AMT so it's not an exact calculation.
Last edited by Artsdoctor on Wed Dec 27, 2017 6:20 pm, edited 1 time in total.

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Re: Muni Money Market funds starting to look good!

Post by White Coat Investor » Wed Dec 27, 2017 6:12 pm

bligh wrote:
Wed Dec 27, 2017 2:06 pm
So the thread about the Prime Money Market fund made me take a quick look at the rates on some of the Municipal Money market funds and they are looking really good (for people in high tax brackets)!

As of right now here are yields :

Vanguard Municipal Money Market Fund (VMSXX) - 1.20%
Vanguard New York Municipal Money Market Fund (VYFXX) - 1.20%
Vanguard California Municipal Money Market Fund (VCTXX) 1.14%

These are tax free yields, and New York's in particular looks really good. I can see these guys providing a better return than what you would get in a savings account .. for those in higher tax brackets these would be almost as good as CD rates, but with the liquidity of a savings account.

Looks like a pretty sweet deal! I just transfered by cash reserve over to my state's municipal money market fund at Vanguard and I am seeing a pretty big jump in after tax yield as a result.

Just wanted to get the word out. :sharebeer
I agree. I noticed that too. I switched over from Ally Bank (1.25% taxable) to Tax Exempt MMF (1.21% federal tax-free) earlier this year. The equivalent taxable yield for me would be 2.04%. No brainer there. Even the G fund is only paying 2.375% right now.
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Re: Muni Money Market funds starting to look good!

Post by jebmke » Wed Dec 27, 2017 6:16 pm

Yield curve is flattening

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Re: Muni Money Market funds starting to look good!

Post by Artsdoctor » Wed Dec 27, 2017 6:31 pm

It definitely pays to do your own math. Everyone's marginal tax rate for investments will be different, depending on federal, NIIT, state, and other changes associated with AGI variability. The figures I'm getting on the back of the envelope are:

The Federal Money Market Fund, the default for your brokerage accounts, is 1.18%
The National Muni Money Market Fund is yielding 1.20% (about 1.75% taxable equivalent for me)
The CA Muni Money Market Fund is yielding 1.14% (about 1.95% taxable equivalent for me)
The Short-Term Muni Fund is yielding 1.45% (about 2.12% taxable equivalent for me)
The Limited-Term Muni Fund is yielding 1.72% (about 2.95% taxable equivalent for me)

As the duration increases, the distribution yield and SEC yields become less disparate.

Considering a lot of people use all of the above for an "emergency fund" equivalent, it's always good to do your independent calculations periodically. And your tax equivalent yield may be very different next year so these numbers will be outdated in a week.

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Re: Muni Money Market funds starting to look good!

Post by Ready3Retire » Wed Dec 27, 2017 10:08 pm

Agree! I love my FMHTX Fidelity Michigan Muni Income Fund. Up over 4% YTD.

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Re: Muni Money Market funds starting to look good!

Post by GMan82 » Wed Dec 27, 2017 10:59 pm

The Vanguard municipal fund seems like a good spot to park savings for things like a new car or other large purchase expected within a year.

That’s what I use it for. Only now, being in the new “35%” bracket (formerly 33%) bracket, it seems almost like a no-brainer to use that fund, even moreso than the Ally 1.75% No penalty CD. Wouldn’t my tax-equivalent yield be 1.85% using only my federal bracket?

Of course, I’m also subject to those extra investment taxes and additional medicare taxes. Doesn’t that mean my tax-equivalent yield approaches 2%??

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Re: Muni Money Market funds starting to look good!

Post by NYCwriter » Thu Dec 28, 2017 4:44 am

I don't feel very savvy about bonds in comparison to most here, but I've held the NY Long (really, intermediate?) Muni Fund for a few years as part of taxable. I'm not near the 35% tax bracket but there was some benefit for NY residents and I viewed it as a long term hold--which it still is. My other core fund is Intermediate, and recently I opened VFSTX as a short term holding for some investable cash from individual equities profits.

My general feeling is pfffft. The Muni fund has a small unrealized capital loss that annoys me, balanced against steady payout. I'm worried about next year and 4 planned hikes, but I was worried about last year, and the year before, so....

I had an amount in CDs, then rolled into a MM earning 1.10% that serves as my emergency fund. I also hold PFF (securities) yielding 5% but I treat that as equities, which one should.

I'll actually be in a slightly lower tax bracket next year, so I don't know whether it's worth keeping a Muni fund. I just don't like fretting over my core Vanguard portfolio, as I've just rebalanced with new money and left it alone. It's hard to get excited about yield these days.

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Re: Muni Money Market funds starting to look good!

Post by Moneybags1 » Thu Dec 28, 2017 5:34 am

Just emptied my Prime MM into Municipal Money Mkt.. MMM at 1.24% is worth 1.38% in the 10% bracket, the Prime pays 1.36% and the tax free yield does NOT mess with the Savers Tax Credit.

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Re: Muni Money Market funds starting to look good!

Post by MikeG62 » Thu Dec 28, 2017 8:23 am

Small Law Survivor wrote:
Wed Dec 27, 2017 5:00 pm
visualguy wrote:
Wed Dec 27, 2017 3:07 pm
One thing to note is that these are the SEC yields, not the actual distribution yields which have been much lower. For example, VCTXX has an SEC yield of 1.14%, but the distribution yield was 0.76% in November. Not sure what conclusion to draw from this. The distribution yields have been going up gradually.
Would appreciate an explanation for this, or a pointer to an existing explanation.
Found this...

https://obliviousinvestor.com/distribut ... re-useful/
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Re: Muni Money Market funds starting to look good!

Post by heartwood » Thu Dec 28, 2017 9:30 am

Take this as anecdotal since I'm have not been a subscriber for many years, but I seem to recall Dan Wiener mentioning that municipal yields tend to rise a lot in December only to fall back in January. He probably had some technical explanation for it that I don't recall, perhaps some artifact of accruals, payments, whatever.

I quickly searched for SEC yields for NY TE and was unable to find a day by day, weekly or monthly table.

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Re: Muni Money Market funds starting to look good!

Post by kaneohe » Thu Dec 28, 2017 9:40 am

visualguy wrote:
Wed Dec 27, 2017 3:07 pm
One thing to note is that these are the SEC yields, not the actual distribution yields which have been much lower. For example, VCTXX has an SEC yield of 1.14%, but the distribution yield was 0.76% in November. Not sure what conclusion to draw from this. The distribution yields have been going up gradually.
Thanks for pointing this out. Since money mkt funds are more for liquid funds, wouldn't the distribution yld be a more realistic/conservative guess as to what you would earn over the near term?

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Re: Muni Money Market funds starting to look good!

Post by onourway » Thu Dec 28, 2017 9:49 am

kaneohe wrote:
Thu Dec 28, 2017 9:40 am
Thanks for pointing this out. Since money mkt funds are more for liquid funds, wouldn't the distribution yld be a more realistic/conservative guess as to what you would earn over the near term?
As far as I understand it the distribution yield is backward looking - it is what you would have been paid over previous time period x. SEC yield is forward looking. It is what you are likely to be paid over the future 30-days.

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Re: Muni Money Market funds starting to look good!

Post by kaneohe » Thu Dec 28, 2017 10:13 am

onourway wrote:
Thu Dec 28, 2017 9:49 am
kaneohe wrote:
Thu Dec 28, 2017 9:40 am
Thanks for pointing this out. Since money mkt funds are more for liquid funds, wouldn't the distribution yld be a more realistic/conservative guess as to what you would earn over the near term?
As far as I understand it the distribution yield is backward looking - it is what you would have been paid over previous time period x. SEC yield is forward looking. It is what you are likely to be paid over the future 30-days.
Can't I calculate my own "current" distribution yld based on last mo. distribution so it would be pretty current ...yes still backward looking but only 30 days.

"VCTXX has an SEC yield of 1.14%, but the distribution yield was 0.76% in November" was given as an example by another poster. Is the month to month change likely to be be so large that the 1 mo. distribution yield changes this much in 1 month....by 0.3%+

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Re: Muni Money Market funds starting to look good!

Post by ZinCO » Thu Dec 28, 2017 10:18 am

kaneohe wrote:
Thu Dec 28, 2017 10:13 am

"VCTXX has an SEC yield of 1.14%, but the distribution yield was 0.76% in November" was given as an example by another poster. Is the month to month change likely to be be so large that the 1 mo. distribution yield changes this much in 1 month....by 0.3%+
Yes. As I mentioned back at the beginning of the thread, the yield (and I was referring to SEC yield) back in November was around 0.7% or maybe a little higher... I think the point of this post is that the yield has risen dramatically in that one-two month span.

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Re: Muni Money Market funds starting to look good!

Post by bligh » Fri Dec 29, 2017 11:28 am

heartwood wrote:
Thu Dec 28, 2017 9:30 am
Take this as anecdotal since I'm have not been a subscriber for many years, but I seem to recall Dan Wiener mentioning that municipal yields tend to rise a lot in December only to fall back in January. He probably had some technical explanation for it that I don't recall, perhaps some artifact of accruals, payments, whatever.

I quickly searched for SEC yields for NY TE and was unable to find a day by day, weekly or monthly table.
I suspect you might be right. The jump in yield seems almost too good to be true. There's probably a catch.. we'll see.

Vanguard Municipal Money Market Fund (VMSXX) is now at 1.27%

so its risen even more since the thread started.

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Re: Muni Money Market funds starting to look good!

Post by FactualFran » Fri Dec 29, 2017 3:57 pm

bligh wrote:
Fri Dec 29, 2017 11:28 am

I suspect you might be right. The jump in yield seems almost too good to be true. There's probably a catch.. we'll see.

Vanguard Municipal Money Market Fund (VMSXX) is now at 1.27%

so its risen even more since the thread started.
Wait a few weeks. The yield of municipal money market funds rise temporarily approaching the end of many calendar quarters. In a few weeks, the ratio of tax-exempt money market yield to taxable money market yield will likely be back to what is usual is.

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Re: Muni Money Market funds starting to look good!

Post by poundwise » Sun Dec 31, 2017 12:57 pm

I just acted on the higher muni MM yields, moving my "dry powder" from VUSXX (treasury money market) to VCTXX (California muni money market). I've used VUSXX as my money market fund since 2009-10, when it gave me moderate comfort about "end of the financial world" scenarios. Now that yields are finally rising, it seemed like time to take a bit more risk.

From what I've read, the risks of VCTXX vs VUSXX are 1) higher default risk 2) the recent laws limiting redemptions/liquidity from which VUSXX is exempt. I have no way to assess 1 and can't see 2 being pivotal for me, so I am just rolling the dice to take the higher effective yield of VCTXX. But I'm no expert, so if anyone sees flaws with this logic, I would greatly value this!

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Re: Muni Money Market funds starting to look good!

Post by am » Sun Dec 31, 2017 1:29 pm

For int. Muni, recent distribution yield was 2.7 versus sec yield of 2.09? Can anyone explain?

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Re: Muni Money Market funds starting to look good!

Post by Hodor » Sun Dec 31, 2017 2:00 pm

am wrote:
Sun Dec 31, 2017 1:29 pm
For int. Muni, recent distribution yield was 2.7 versus sec yield of 2.09? Can anyone explain?
I think distribution yield can include return of principal, which is not included in SEC yield.

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Re: Muni Money Market funds starting to look good!

Post by am » Sun Dec 31, 2017 3:41 pm

Hodor wrote:
Sun Dec 31, 2017 2:00 pm
am wrote:
Sun Dec 31, 2017 1:29 pm
For int. Muni, recent distribution yield was 2.7 versus sec yield of 2.09? Can anyone explain?
I think distribution yield can include return of principal, which is not included in SEC yield.
What do mean by return of principal? I thought munis only pay interest?

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Re: Muni Money Market funds starting to look good!

Post by Geologist » Sun Dec 31, 2017 3:49 pm

From the Vanguard website:

"The SEC yield for a money market fund is calculated by annualizing its daily income distributions for the previous 7 days."

The distribution yield tells you what was actually distributed (0.83% for November; the December value hasn't been posted yet). It will include only interest (assuming the fund hasn't broken the buck). The distribution yield for November for a money market fund will not be as good a predictor as the SEC yield because it is old info. The average maturity of the fund is 38 days so most of the holdings have renewed (at presumably higher rates).

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Re: Muni Money Market funds starting to look good!

Post by MikeMak27 » Sun Dec 31, 2017 4:00 pm

Is there a good municipal money market fund at Fidelity that anyone can recommend? I currently am using SPRXX and it’s 7 Day yield is 1.20%. I would like to get a better after tax rate if possible (22% federal bracket for 2018 and 4.95% state bracket). I am an Illinois resident if that matters.
Mac 4 fund portfolio: 45% US small cap value (IJS, VBR), 40% Emerging Markets (IEMG, VWO, FPMAX), 10% long term US treasuries (TLT), 5% US REITS (VNQ)

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Re: Muni Money Market funds starting to look good!

Post by whodidntante » Sun Dec 31, 2017 4:28 pm

MikeMak27 wrote:
Sun Dec 31, 2017 4:00 pm
Is there a good municipal money market fund at Fidelity that anyone can recommend? I currently am using SPRXX and it’s 7 Day yield is 1.20%. I would like to get a better after tax rate if possible (22% federal bracket for 2018 and 4.95% state bracket). I am an Illinois resident if that matters.
FTEXX FIDELITY MUNICIPAL MONEY MARKET, 1.06%. $5k minimum initial, 2k required balance.

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Re: Muni Money Market funds starting to look good!

Post by mega317 » Mon Jan 01, 2018 10:58 am

poundwise wrote:
Sun Dec 31, 2017 12:57 pm
Now that yields are finally rising, it seemed like time to take a bit more risk.
...
if anyone sees flaws with this logic, I would greatly value this!
I see flaws. Your need/willingness/ability to take risk shouldn't depend on market factors. This is market timing.

(I realize we are talking about money market funds here. Just the logic I think is flawed.)

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Re: Muni Money Market funds starting to look good!

Post by minesweep » Mon Jan 01, 2018 11:26 am

bligh wrote:
Wed Dec 27, 2017 2:06 pm
So the thread about the Prime Money Market fund made me take a quick look at the rates on some of the Municipal Money market funds and they are looking really good (for people in high tax brackets)!

As of right now here are yields :

Vanguard Municipal Money Market Fund (VMSXX) - 1.20%
Vanguard New York Municipal Money Market Fund (VYFXX) - 1.20%
Vanguard California Municipal Money Market Fund (VCTXX) 1.14%

These are tax free yields, and New York's in particular looks really good. I can see these guys providing a better return than what you would get in a savings account .. for those in higher tax brackets these would be almost as good as CD rates, but with the liquidity of a savings account.

Looks like a pretty sweet deal! I just transfered by cash reserve over to my state's municipal money market fund at Vanguard and I am seeing a pretty big jump in after tax yield as a result.

Just wanted to get the word out. :sharebeer
Today I'm seeing:
Vanguard Municipal Money Market Fund (VMSXX) - 1.29%
Vanguard New York Municipal Money Market Fund (VYFXX) - 1.29%
Vanguard California Municipal Money Market Fund (VCTXX) 1.22%
PA Municipal Money Market Fund (VPTXX) - 1.33%
NJ Municipal Money Market Fund (VNJXX) - 1.23%
Vanguard Prime Money Market (VMMXX) - 1.36%

money market funds

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Re: Muni Money Market funds starting to look good!

Post by ZinCO » Tue Jan 02, 2018 10:27 pm

And today Municipal Money Market (VMSXX) has jumped to 1.40%. Is there a graph anywhere of yield vs time?

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Re: Muni Money Market funds starting to look good!

Post by am » Tue Jan 02, 2018 10:38 pm

ZinCO wrote:
Tue Jan 02, 2018 10:27 pm
And today Municipal Money Market (VMSXX) has jumped to 1.40%. Is there a graph anywhere of yield vs time?
That may not be the distribution yield as that is what you get.

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Re: Muni Money Market funds starting to look good!

Post by Regressor » Thu Jan 04, 2018 10:14 am

bligh wrote:
Fri Dec 29, 2017 11:28 am
heartwood wrote:
Thu Dec 28, 2017 9:30 am
Take this as anecdotal since I'm have not been a subscriber for many years, but I seem to recall Dan Wiener mentioning that municipal yields tend to rise a lot in December only to fall back in January. He probably had some technical explanation for it that I don't recall, perhaps some artifact of accruals, payments, whatever.

I quickly searched for SEC yields for NY TE and was unable to find a day by day, weekly or monthly table.
I suspect you might be right. The jump in yield seems almost too good to be true. There's probably a catch.. we'll see.

Vanguard Municipal Money Market Fund (VMSXX) is now at 1.27%

so its risen even more since the thread started.
This can't be the right reason - 1 month treasuries are paying 1.28% yield as of today. You can see the yield curve here (choose United States as UK is selected by default)
https://markets.ft.com/data/bonds

We can see that 1 month treasuries rate has spiked over the last month.
So why should money market with an average maturity of 42 days pay much less than the no risk 1 month treasuries?

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Re: Muni Money Market funds starting to look good!

Post by onourway » Thu Jan 04, 2018 10:25 am

Well, yesterday I moved my cash that has been with Capital One for well over a decade to the NY tax-exempt fund. Moving between the two is seamless, and at 1.4% tax-free, that's ~2% tax-equivalent yield. If it doesn't work out as expected I move back at essentially no cost.

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Re: Muni Money Market funds starting to look good!

Post by bligh » Thu Jan 04, 2018 11:29 am

Yeah the effort needed to go for the additional yield is minimal, so why not?

I checked the Municipal MM yields today to see if they have started trending down as mentioned by a few posters and, at least for now, they have gone even higher!

If the yield does fall back down, no harm no foul, it is literally two clicks for me to move the money back to my savings account :mrgreen:

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Re: Muni Money Market funds starting to look good!

Post by am » Thu Jan 04, 2018 4:11 pm

I am getting tempted to transfer some of my cash stash from amex savings (1.35) to vang munic money market (1.42). At my bracket (32-35) I am looking at an extra 100 bucks. Wondering whether its worth it?

RAchip
Posts: 264
Joined: Sat May 07, 2016 7:31 pm

Re: Muni Money Market funds starting to look good!

Post by RAchip » Thu Jan 04, 2018 8:39 pm

It doesn't make a lot of sense to me. The muni MMF yields are getting fairly close to the VG Prime MMF yield. I don't see how that can continue for very long.

grog
Posts: 383
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Re: Muni Money Market funds starting to look good!

Post by grog » Fri Jan 05, 2018 6:14 pm

These are the distribution yields between Prime and Muni MM:

Code: Select all

          Date   Prime    Muni  Spread
     12/29/2017   1.30%   1.06%   0.24%
     11/30/2017   1.16%   0.83%   0.33%
     10/31/2017   1.13%   0.81%   0.32%
      9/29/2017   1.12%   0.75%   0.37%
      8/31/2017   1.10%   0.70%   0.40%
      7/31/2017   1.09%   0.74%   0.35%
      6/30/2017   1.02%   0.70%   0.32%
      5/31/2017   0.96%   0.70%   0.26%
      4/28/2017   0.91%   0.77%   0.14%
      3/31/2017   0.83%   0.60%   0.23%
      2/28/2017   0.79%   0.55%   0.24%
      1/31/2017   0.77%   0.57%   0.20%
     12/30/2016   0.69%   0.55%   0.14%
     11/30/2016   0.61%   0.48%   0.13%
     10/31/2016   0.60%   0.66%  -0.06%
      9/30/2016   0.55%   0.57%  -0.02%
      8/31/2016   0.48%   0.39%   0.09%
      7/29/2016   0.45%   0.34%   0.11%
The spread between Prime and Federal has been more consistent (15-30 bp) while Muni has been more cyclical (for some reason), and there was a small negative spread for two months toward the end of 2016.

The SEC yields are about the same at the moment, but I'd guess it'll be back to a good 20-30 bp spread in a month or two.

zzz
Posts: 16
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Location: NY

Re: Muni Money Market funds starting to look good!

Post by zzz » Wed Jan 10, 2018 9:28 pm

After going as high as 1.4% a few days ago, the Vanguard NY Muni Money Market has a SEC yield of 1.22% today. So the predictions of an end of year run up and a January fall off appear to be on target. The highest marginal rate for a New Yorker with the new tax plan is 37% (Fed) + 8.82% (NY State) + 3.8% (Obama NIIT) = 49.62%. That yields a 1.985X multiplier so even a 1.22% rate is equivalent to a 2.42% rate. The question is, how much lower will the rate go.
There are 10 types of people, | those that understand binary | and those that don't

LSLover
Posts: 97
Joined: Thu May 19, 2016 1:39 pm

Re: Muni Money Market funds starting to look good!

Post by LSLover » Wed Jan 10, 2018 9:47 pm

zzz wrote:
Wed Jan 10, 2018 9:28 pm
After going as high as 1.4% a few days ago, the Vanguard NY Muni Money Market has a SEC yield of 1.22% today. So the predictions of an end of year run up and a January fall off appear to be on target. The highest marginal rate for a New Yorker with the new tax plan is 37% (Fed) + 8.82% (NY State) + 3.8% (Obama NIIT) = 49.62%. That yields a 1.985X multiplier so even a 1.22% rate is equivalent to a 2.42% rate. The question is, how much lower will the rate go.
Muni income is, indeed, not added back to AGI for the purposes of NIIT.
Last edited by LSLover on Sat Jan 13, 2018 12:09 pm, edited 1 time in total.

zzz
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Location: NY

Re: Muni Money Market funds starting to look good!

Post by zzz » Wed Jan 10, 2018 10:21 pm

LSLover wrote:
Wed Jan 10, 2018 9:47 pm
zzz wrote:
Wed Jan 10, 2018 9:28 pm
After going as high as 1.4% a few days ago, the Vanguard NY Muni Money Market has a SEC yield of 1.22% today. So the predictions of an end of year run up and a January fall off appear to be on target. The highest marginal rate for a New Yorker with the new tax plan is 37% (Fed) + 8.82% (NY State) + 3.8% (Obama NIIT) = 49.62%. That yields a 1.985X multiplier so even a 1.22% rate is equivalent to a 2.42% rate. The question is, how much lower will the rate go.
Muni income is added back to AGI for the purposes of NIIT. So, the 3.8% is not avoided by investing in munis.
Hmm, what about https://www.forbes.com/sites/kellyphill ... 0534f86c81, a Forbes article titled "Outwitting The NIIT: 12 Ways To Avoid The New Net Investment Income Tax" which says:

1. Buy munis. The NIIT isn't levied on any interest and dividends that are normally excluded from federal income tax. At the top of the list for investors: tax-exempt state and municipal bond interest. Moreover, tax-exempt interest doesn't count in your MAGI for NIIT, so it could help keep you below the $200,000/$250,000 threshold.
There are 10 types of people, | those that understand binary | and those that don't

ofckrupke
Posts: 555
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Re: Muni Money Market funds starting to look good!

Post by ofckrupke » Wed Jan 10, 2018 10:43 pm

LSLover wrote:
Wed Jan 10, 2018 9:47 pm
Muni income is added back to AGI for the purposes of NIIT. So, the 3.8% is not avoided by investing in munis.
Sure. Just tell me on what line of form 8960 that happens, and on what page of the form 8960 instructions I can find the directions or worksheet for doing so.

LSLover
Posts: 97
Joined: Thu May 19, 2016 1:39 pm

Re: Muni Money Market funds starting to look good!

Post by LSLover » Thu Jan 11, 2018 6:57 am

Post deleted
Last edited by LSLover on Sat Jan 13, 2018 12:07 pm, edited 1 time in total.

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