Vanguard Municipal Money Market VMSXX 1.39%

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bck63
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by bck63 »

Electron wrote: Mon May 20, 2019 2:02 pm Since we are forgoing FDIC insurance when investing in Money Market funds, I'm more comfortable with the taxable Federal and Treasury Money Market funds.
+1. The only money market funds I use are Fidelity FDLXX and Vanguard VMFXX.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by am »

bck63 wrote: Sat Jun 29, 2019 3:57 pm
Electron wrote: Mon May 20, 2019 2:02 pm Since we are forgoing FDIC insurance when investing in Money Market funds, I'm more comfortable with the taxable Federal and Treasury Money Market funds.
+1. The only money market funds I use are Fidelity FDLXX and Vanguard VMFXX.
I consider FDIC insurance a non issue when considering vanguard money market funds. I feel like if we get to the point that we regret not having it for vanguard money market, then we have MUCH bigger issues to deal with...
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by bck63 »

am wrote: Sat Jun 29, 2019 4:26 pm
bck63 wrote: Sat Jun 29, 2019 3:57 pm
Electron wrote: Mon May 20, 2019 2:02 pm Since we are forgoing FDIC insurance when investing in Money Market funds, I'm more comfortable with the taxable Federal and Treasury Money Market funds.
+1. The only money market funds I use are Fidelity FDLXX and Vanguard VMFXX.
I consider FDIC insurance a non issue when considering vanguard money market funds. I feel like if we get to the point that we regret not having it for vanguard money market, then we have MUCH bigger issues to deal with...
I was replying to the second part of Electron's comment, not the first. Should have clarified. FDIC insurance is, in fact a non-issue with money market funds, since they're not covered. I just prefer a fund that is backed by the full faith and credit of the US government. Actually, that may not apply to the Vanguard Federal MMF, since it contains repurchase agreements.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by UpperNwGuy »

I personally think the "full faith and credit of the US government" is overrated on this board. I use Vanguard's Prime Money Market Fund, and I sleep very very well at night. I also invest in Total Bond and Intermediate-Term Tax-Exempt. I have no holdings in pure Treasuries.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by am »

bck63 wrote: Sat Jun 29, 2019 5:32 pm
am wrote: Sat Jun 29, 2019 4:26 pm
bck63 wrote: Sat Jun 29, 2019 3:57 pm
Electron wrote: Mon May 20, 2019 2:02 pm Since we are forgoing FDIC insurance when investing in Money Market funds, I'm more comfortable with the taxable Federal and Treasury Money Market funds.
+1. The only money market funds I use are Fidelity FDLXX and Vanguard VMFXX.
I consider FDIC insurance a non issue when considering vanguard money market funds. I feel like if we get to the point that we regret not having it for vanguard money market, then we have MUCH bigger issues to deal with...
I was replying to the second part of Electron's comment, not the first. Should have clarified. FDIC insurance is, in fact a non-issue with money market funds, since they're not covered. I just prefer a fund that is backed by the full faith and credit of the US government. Actually, that may not apply to the Vanguard Federal MMF, since it contains repurchase agreements.
What I meant is that when a vanguard money market of any kind breaks the buck or prevents withdrawals, then there are much greater things to worry about. And I highly doubt this will ever happen. Like I said, Having or not having FDIC insurance is a non issue. I am not worried about losing a penny with vanguard money markets. For me equivalent to treasuries.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by bck63 »

am wrote: Sat Jun 29, 2019 5:40 pm
bck63 wrote: Sat Jun 29, 2019 5:32 pm
am wrote: Sat Jun 29, 2019 4:26 pm
bck63 wrote: Sat Jun 29, 2019 3:57 pm
Electron wrote: Mon May 20, 2019 2:02 pm Since we are forgoing FDIC insurance when investing in Money Market funds, I'm more comfortable with the taxable Federal and Treasury Money Market funds.
+1. The only money market funds I use are Fidelity FDLXX and Vanguard VMFXX.
I consider FDIC insurance a non issue when considering vanguard money market funds. I feel like if we get to the point that we regret not having it for vanguard money market, then we have MUCH bigger issues to deal with...
I was replying to the second part of Electron's comment, not the first. Should have clarified. FDIC insurance is, in fact a non-issue with money market funds, since they're not covered. I just prefer a fund that is backed by the full faith and credit of the US government. Actually, that may not apply to the Vanguard Federal MMF, since it contains repurchase agreements.
What I meant is that when a vanguard money market of any kind breaks the buck or prevents withdrawals, then there are much greater things to worry about. And I highly doubt this will ever happen. Like I said, Having or not having FDIC insurance is a non issue. I am not worried about losing a penny with vanguard money markets. For me equivalent to treasuries.
Totally agree!
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Re: Vanguard Municipal Money Market VMSXX 1.39%

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This thread is now in the Investing - Theory, News & General forum (general discussion).
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Kevin M »

The national and CA muni MM fund yields already seemed to have reached the peak for this cycle, having flatlined at 1.75% and 1.50% respectively for the three days ending Friday 6/28. TEY SEC yields for me as of Friday:

2.61% = Treasury MM
2.48% = Muni MM
2.31% = CA Muni MM

So the muni MM TEYs didn't rise above my Treasury MM TEY this cycle, unless the cycle heads up again after a brief pause.
sperry8 wrote: Fri Jun 28, 2019 6:09 pm
Kevin M wrote: Fri Jun 28, 2019 3:40 pm
sperry8 wrote: Fri Jun 28, 2019 2:49 pm Rates are going up again (if math is correct). 7 day SEC Yield is now 1.75%. In 32% bracket that's 2.57% equivalent. Might transfer back in to pick up the extra basis points next week
Right. The national muni fund taxable equivalent yield (TEY) is approaching that of Treasury MM fund for me, but not quite there yet. Be sure to check TEY of the Treasury and Fed MM funds if you pay state income tax. Last time I switched, earlier this year, the CA muni MM TEY was only higher for me for about one week.
I don't pay State income tax (I live in FL) so I believe that makes Muni MM higher by ~20 basis points over Treasury MM (on a tax equivalent basis). Vanguard Prime MM is also higher than Treasury by 3 basis points. Is there a difference between Prime MM and Treasury?
Yes, assuming 32% is your marginal tax rate, and not just your tax bracket, then Muni MM currently has the highest TEY for you at 2.57%, compared to Prime at 2.35% and Treasury at 2.32%. Muni MM TEY crossed above Prime MM yield on 6/19, when it hit 2.38% compared to Prime at 2.37%.

Be sure you are doing the calculation with your marginal tax rate, and not just your tax bracket. For example, if you pay NIIT, you should add that to your federal marginal tax rate. Also need to include any phase-out or phase-in of deductions, credits, etc.

Last time it was higher than Prime for you was from about 4/22/2019 to about 5/13/2019, but the muni MM yield went much higher than what it appears to be peaking at for this cycle. Here's the way it looks for you since the beginning of the year.

Image

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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Electron »

It looks like Treasury Bill yields have already discounted a Fed rate cut expected next week.

https://fred.stlouisfed.org/series/DGS3MO

The drop in yields over the last few months is more than I expected. It will be interesting to see what happens after the Fed decision.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Kevin M »

Electron wrote: Fri Jul 26, 2019 12:32 pm It looks like Treasury Bill yields have already discounted a Fed rate cut expected next week.

https://fred.stlouisfed.org/series/DGS3MO
<snip>
No doubt!

Interesting to look at the 3m Tbill and the FFR together:
Image

We see that the Tbill yield anticipated the FFR rate increases on the way up, so would expect it to do so on the way down as well.

Looking back to last time short term yields went up, plateaued, then went down:

Image

This chart shows the 1-month average Tbill yield and FFR, as it's easier to see the trend than with the daily rates; we see the 3m Tbill leading the way down here as well.

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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Ricchan »

Thanks for showing the graph of the FFR with the 3m treasury rate. I was curious and included the FFR with Vanguard Prime MM and Muni MM yields, from 2017 to now.

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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Kevin M »

Ricchan wrote: Tue Jul 30, 2019 8:15 am Thanks for showing the graph of the FFR with the 3m treasury rate. I was curious and included the FFR with Vanguard Prime MM and Muni MM yields, from 2017 to now.
Thanks for sharing that. Yeah, all the short term, relatively safe non-muni rates are going to track pretty closely. The munis dance to their own tune with the cyclical volatility.

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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Electron »

The SIFMA Municipal Swap Index Yield which is updated every Wednesday is currently at 5.20%. That suggests higher rates ahead for VMSXX which had an SEC yield of 2.10% on Friday.

https://www.bloomberg.com/quote/MUNIPSA:IND

To see the chart click on 1Y and then View Full Chart. I expect to stay with the Treasury Money Market fund.
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Re: Vangaurd Municipal Money Market VMSXX 1.39%

Post by abuss368 »

am wrote: Sat May 19, 2018 7:00 pm How about the Vang. Short term muni fund as a replacement for the money market at high brackets? The yield for short term muni is 1.76% and the price has fluctuated about 1% over the year. There’s also no frequent trading restriction as far as I know.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by gjlynch17 »

Electron wrote: Sun Mar 22, 2020 2:01 pm The SIFMA Municipal Swap Index Yield which is updated every Wednesday is currently at 5.20%. That suggests higher rates ahead for VMSXX which had an SEC yield of 2.10% on Friday.

https://www.bloomberg.com/quote/MUNIPSA:IND

To see the chart click on 1Y and then View Full Chart. I expect to stay with the Treasury Money Market fund.
Clearly, there are liquidity issues with municipal money market funds (and muni bonds more broadly). However, I am having a hard time understanding the practical impact on muni money market funds. Yes, there is downward pressure on price. VMSXX price dropped from $1.0006 on March 10 to $0.9986 on Friday. Downward pressure, but not close to breaking $1. Further, the weekly liquidity is strong, at 66.17% as of Thursday (the most recent data I could find). This is consistent with historical liquidity and well above the 30% threshold for imposing gates and fees. Moreover, the Fed announced that they were effectively backstopping muni money market funds so the risk of any daily liquidity issues has significantly diminished.

What are the practical risks of owning a muni money market fund? If Vanguard's or Fidelity's broke a buck, I am guessing that this would be fairly low on our list of concerns.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by am »

gjlynch17 wrote: Sun Mar 22, 2020 2:59 pm
Electron wrote: Sun Mar 22, 2020 2:01 pm The SIFMA Municipal Swap Index Yield which is updated every Wednesday is currently at 5.20%. That suggests higher rates ahead for VMSXX which had an SEC yield of 2.10% on Friday.

https://www.bloomberg.com/quote/MUNIPSA:IND

To see the chart click on 1Y and then View Full Chart. I expect to stay with the Treasury Money Market fund.
Clearly, there are liquidity issues with municipal money market funds (and muni bonds more broadly). However, I am having a hard time understanding the practical impact on muni money market funds. Yes, there is downward pressure on price. VMSXX price dropped from $1.0006 on March 10 to $0.9986 on Friday. Downward pressure, but not close to breaking $1. Further, the weekly liquidity is strong, at 66.17% as of Thursday (the most recent data I could find). This is consistent with historical liquidity and well above the 30% threshold for imposing gates and fees. Moreover, the Fed announced that they were effectively backstopping muni money market funds so the risk of any daily liquidity issues has significantly diminished.

What are the practical risks of owning a muni money market fund? If Vanguard's or Fidelity's broke a buck, I am guessing that this would be fairly low on our list of concerns.
I wonder if these funds could be locked or break the buck if this crisis goes on for months and bonds start defaulting. The yield is not free, This is worse than Great Depression because entire industries are being decimated. The coming data will bear this out.
Last edited by am on Sun Mar 22, 2020 4:24 pm, edited 1 time in total.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by anon_investor »

The current listed 7 day SEC yield is enticing. However, for me not worth the risk right now, since liquidity is important to me and there still is the risk of redemption gates... I am not afraid of it breaking the buck though.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Electron »

gjlynch17 wrote: Sun Mar 22, 2020 2:59 pmWhat are the practical risks of owning a muni money market fund? If Vanguard's or Fidelity's broke a buck, I am guessing that this would be fairly low on our list of concerns.
Here is a Forbes article from 2008 that I posted earlier.

https://www.forbes.com/2008/02/28/munic ... fb35c23ec6

The concern is likely the VRDO securities held in these funds. VRDOs appear to be derivative securities based on long term municipal bonds and backed by banks to provide short term liquidity. Investors now need to be concerned about the underlying securities as well as the banks.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by am »

What I find interesting is that the sec yield of the money market is significantly higher than even long term tax exempt. 1.63% long term versus 2.1% for the money market. How do you explain that?

Like poster said, it’s enticing but too risky for this part of my portfolio. I am very nervous about interm. Muni fund which has also been falling with stock like moves daily.

I guess risk of defaults is rising as it’ll be hard for municipalities to pay bonds when so many are out of work. Treasuries are issued by the money printers so much safer.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Kevin M »

am wrote: Sun Mar 22, 2020 4:30 pm What I find interesting is that the sec yield of the money market is significantly higher than even long term tax exempt. 1.63% long term versus 2.1% for the money market. How do you explain that?
Good question. Maybe the VRDOs mentioned in post before yours has something to do with it. At any rate, as I said, I don't expect these crazy-high muni MM yields to last for long, especially with the Fed stepping into the short-term muni market. Since the credit risk in short-term munis is less than longer-term munis, I think it has to be related mostly to a liquidity crunch. Maybe folks would rather sell their muni MM funds to rebalance into stocks than taking the losses on longer-term munis to do so.

I actually sold some VCADX and VCLAX to rebalance into stocks on 3/11 and 3/12 (as I recall), which were both down days for muni funds, but much bigger down days for stocks. On my next round of rebalancing, I used cash rather than take further losses on the muni bond funds. In my case, the cash was in a bank account, but if it were in a money market fund of any sort, I would have used that.
am wrote: Sun Mar 22, 2020 4:30 pmLike poster said, it’s enticing but too risky for this part of my portfolio. I am very nervous about interm. Muni fund which has also been falling with stock like moves daily.
Maybe "with stock like moves" in normal times, but not lately in general; perhaps on one or two days.

Image
am wrote: Sun Mar 22, 2020 4:30 pmI guess risk of defaults is rising as it’ll be hard for municipalities to pay bonds when so many are out of work. Treasuries are issued by the money printers so much safer.
True, but we also saw surprisingly large declines in bonds with any credit risk in late 2008, and they recovered, as did stocks. I'm just thinking of my bonds with any credit risk as partially a portion of my stock allocation.

Even Treasuries have behaved unexpectedly on some days recently, with large drops when stocks also dropped a lot.

Cash and FDIC-insured CDs have been a source of comfort lately. Even taking the hit of an early withdrawal penalty in direct CDs might make sense to rebalance into stocks, rather than taking a 10% (hopefully temporary) hit on a bond fund. A 3% CD with an early withdrawal penalty of six months of interest is only a 1.5% hit. On the other hand, I'd be reluctant to give up 3% when intermediate-term bond funds are only yielding 2%.

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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by TBillT »

I recall in 2008 when taxable MMF went to zero, the tax free MMF had a month or of two looking great before they also went to zero.
anyways I've been moving to Treasury MMF but do have Fido and VG tax free MMF but worried about it a little.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Kevin M »

Crazy! VMSXX SEC yield jumped more than 150 bps over the weekend from 2.10% on Friday to 3.77% today. For me that's a TEY of 4.77%.

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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Leif »

Wow! Is the Fed buying Muni's?

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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by BlackcatCA »

Where do you see this high yields? Just checked Vanguard investor site and it is showing Sec yield 2.12%.
How about yield of VCADX? Lost a whole bunch and very hard to hold unless yield has adjusted...
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by gmaynardkrebs »

BlackcatCA wrote: Mon Mar 23, 2020 9:12 pm Where do you see this high yields? Just checked Vanguard investor site and it is showing Sec yield 2.12%.
Me too.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Leif »

BlackcatCA wrote: Mon Mar 23, 2020 9:12 pm Where do you see this high yields? Just checked Vanguard investor site and it is showing Sec yield 2.12%.
How about yield of VCADX? Lost a whole bunch and very hard to hold unless yield has adjusted...
TEY = (My) "Tax Equivalent Yield". Note the post from Kevin before mine.

Goggle VCADX to see a chart and the fund's TTM yield. Also note the steep price decline. Now click on the 1 year chart to see the drama.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by am »

Kevin M wrote: Mon Mar 23, 2020 7:45 pm Crazy! VMSXX SEC yield jumped more than 150 bps over the weekend from 2.10% on Friday to 3.77% today. For me that's a TEY of 4.77%.

Kevin
Says sec yield for muni mm vanguard at 3.37%! That’s crazy and enticing. But am hesitant to transfer money in because the yield is probably signaling big trouble.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by gmaynardkrebs »

am wrote: Tue Mar 24, 2020 7:17 am
Kevin M wrote: Mon Mar 23, 2020 7:45 pm Crazy! VMSXX SEC yield jumped more than 150 bps over the weekend from 2.10% on Friday to 3.77% today. For me that's a TEY of 4.77%.

Kevin
Says sec yield for muni mm vanguard at 3.37%! That’s crazy and enticing. But am hesitant to transfer money in because the yield is probably signaling big trouble.
Yes, it could signal risk. I'm still not convinced that the Fed has committed to the $1 NAV, However, as it's a 7 day yield, it could be lagging the actual rates, which are now closer to 0.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Starfox »

I'm really loving seeing this 3.42% compound yield. that's almost $100/day in my emergency fund bucket.

BUT - I do see the daily market value shows it being 0.9986, so maybe there is some underlying losses currently, not sure how that works.

https://investor.vanguard.com/mutual-fu ... file/VMSXX
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by am »

Starfox wrote: Tue Mar 24, 2020 11:39 am I'm really loving seeing this 3.42% compound yield. that's almost $100/day in my emergency fund bucket.

BUT - I do see the daily market value shows it being 0.9986, so maybe there is some underlying losses currently, not sure how that works.

https://investor.vanguard.com/mutual-fu ... file/VMSXX

Do you think the coming distribution will be higher? This just seems too good to be true.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Starfox »

am wrote: Tue Mar 24, 2020 11:59 am
Starfox wrote: Tue Mar 24, 2020 11:39 am I'm really loving seeing this 3.42% compound yield. that's almost $100/day in my emergency fund bucket.

BUT - I do see the daily market value shows it being 0.9986, so maybe there is some underlying losses currently, not sure how that works.

https://investor.vanguard.com/mutual-fu ... file/VMSXX

Do you think the coming distribution will be higher? This just seems too good to be true.
I do. yes.
i.e. $1M with regular 1.00% yield = $10,000 income / 365 days = $27.39/day
i.e. $1M with regular 3.00% yield = $30,000 income / 365 days = $82.19/day

March 31 days @ 1% = $27.39 * 31 = $849 regular income

March 20 days @ 1% and 11 days at 3% = (20 * $27.39) + (11 * $82.19) = $1451.89.

$602.89 higher income due to higher yield for 11 days of March, with above example.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by am »

What do you think about tax loss harvesting int muni fund to the muni mm while yields are so high?
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by gmaynardkrebs »

am wrote: Tue Mar 24, 2020 1:50 pm What do you think about tax loss harvesting int muni fund to the muni mm while yields are so high?
Personally, I'm adding to my inter muni fund, as the current yield on it is almost certainly much higher than what the 30day SEC is showing; also, mm yields will be down within a week, if not sooner.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Starfox »

am wrote: Tue Mar 24, 2020 1:50 pm What do you think about tax loss harvesting int muni fund to the muni mm while yields are so high?
I think the larger concern of going from VWIUX to money market for 31 days, could be that VWIUX goes up 5% while you are waiting. If you want to tax loss harvest VWIUX which has fallen 10% in the past couple of weeks, I would consider 50% into VWLUX long-term, and 50% into VWSUX/VMLUX Short/Limited Term. The idea is you get your tax loss harvesting completed, and while you were counting down the days you were barbelled into two funds equally, giving you the similar duration/risk profile. You may find in 31 days you have slight gains on those two funds you bought, but the slight gains would be offset by the losses you harvested from VWIUX. In the end you have the same amount of money, but now can use losses against future gains and/or ordinary income (up to 3k/year).
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by am »

Starfox wrote: Tue Mar 24, 2020 2:10 pm
am wrote: Tue Mar 24, 2020 1:50 pm What do you think about tax loss harvesting int muni fund to the muni mm while yields are so high?
I think the larger concern of going from VWIUX to money market for 31 days, could be that VWIUX goes up 5% while you are waiting. If you want to tax loss harvest VWIUX which has fallen 10% in the past couple of weeks, I would consider 50% into VWLUX long-term, and 50% into VWSUX/VMLUX Short/Limited Term. The idea is you get your tax loss harvesting completed, and while you were counting down the days you were barbelled into two funds equally, giving you the similar duration/risk profile. You may find in 31 days you have slight gains on those two funds you bought, but the slight gains would be offset by the losses you harvested from VWIUX. In the end you have the same amount of money, but now can use losses against future gains and/or ordinary income (up to 3k/year).
Thanks for your response. How do you feel about these vang funds under the current conditions? I use the int muni fund as a safe part of my portfolio and can not tolerate stock like losses (>20-30%).
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Starfox »

am wrote: Tue Mar 24, 2020 2:15 pm
Starfox wrote: Tue Mar 24, 2020 2:10 pm
am wrote: Tue Mar 24, 2020 1:50 pm What do you think about tax loss harvesting int muni fund to the muni mm while yields are so high?
I think the larger concern of going from VWIUX to money market for 31 days, could be that VWIUX goes up 5% while you are waiting. If you want to tax loss harvest VWIUX which has fallen 10% in the past couple of weeks, I would consider 50% into VWLUX long-term, and 50% into VWSUX/VMLUX Short/Limited Term. The idea is you get your tax loss harvesting completed, and while you were counting down the days you were barbelled into two funds equally, giving you the similar duration/risk profile. You may find in 31 days you have slight gains on those two funds you bought, but the slight gains would be offset by the losses you harvested from VWIUX. In the end you have the same amount of money, but now can use losses against future gains and/or ordinary income (up to 3k/year).
Thanks for your response. How do you feel about these vang funds under the current conditions? I use the int muni fund as a safe part of my portfolio and can not tolerate stock like losses (>20-30%).
The funds themselves are sound, I would not expect 25-30% losses on any 0-7 year duration AAA/AA investment grade bond fund. 10% loss is expected on the intermediate/long-term tax exempt funds because they are riskier than short/intermediate treasuries.

With the federal reserve announcing their historic financial support for debt, I do not foresee any further losses in short/intermediate investment grade funds, like VWIUX/MUB. Basically the federal government is backstopping the state/city government municipal debt.

I was part of the herd that sold VWIUX, selling at 14.59, I was really bothered seeing it drop, but also was using the funds to buy SP500 as it was falling. I personally don't plan on buying VWIUX again, I will stick with VWSUX (short-term municipal bonds). I'm tactically allocated right now, with 95% in SP500 and 5% in VMSXX. I will move to 75% SP500 and 25% VMSXX in the next year or two, ideally whenever SP500 is making all time highs again. Basically I like what I read from Peter Bernstein. Here is an article talking about 75% stocks and 25% cash, versus 60% stocks and 40% bonds - it resonated with me.
https://awealthofcommonsense.com/2015/0 ... portfolio/ and https://www.reuters.com/article/us-mark ... SKBN18R33D
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Kevin M »

am wrote: Tue Mar 24, 2020 7:17 am
Kevin M wrote: Mon Mar 23, 2020 7:45 pm Crazy! VMSXX SEC yield jumped more than 150 bps over the weekend from 2.10% on Friday to 3.77% today. For me that's a TEY of 4.77%.

Kevin
Says sec yield for muni mm vanguard at 3.37%! That’s crazy and enticing. But am hesitant to transfer money in because the yield is probably signaling big trouble.
Sorry, I mis-typed the yield for 3/23, which as you say was 3.37% (my TEY was correct at 4.77%). Today yield jumped to 3.77% though--funny it jumped to exactly the yield I mistakenly typed yesterday. For me TEY of latest yield is 5.34%.

Keeping in mind that the yield is a 7-day trailing average, it could still be impacted by higher yields from before the Fed announcement last Friday, but one would think that the yields should have come down since then, and it seems that the 7-day average would be be lower.

Kevin
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by am »

Kevin M wrote: Tue Mar 24, 2020 7:13 pm
am wrote: Tue Mar 24, 2020 7:17 am
Kevin M wrote: Mon Mar 23, 2020 7:45 pm Crazy! VMSXX SEC yield jumped more than 150 bps over the weekend from 2.10% on Friday to 3.77% today. For me that's a TEY of 4.77%.

Kevin
Says sec yield for muni mm vanguard at 3.37%! That’s crazy and enticing. But am hesitant to transfer money in because the yield is probably signaling big trouble.
Sorry, I mis-typed the yield for 3/23, which as you say was 3.37% (my TEY was correct at 4.77%). Today yield jumped to 3.77% though--funny it jumped to exactly the yield I mistakenly typed yesterday. For me TEY of latest yield is 5.34%.

Keeping in mind that the yield is a 7-day trailing average, it could still be impacted by higher yields from before the Fed announcement last Friday, but one would think that the yields should have come down since then, and it seems that the 7-day average would be be lower.

Kevin
Yes 3.77% today. Insane. I am thinking of transferring some money in from high yield savings. Any guesses how long these rates, or even half will last?
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by zonto »

Seems too good to be true. What are the risks here?
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by gmaynardkrebs »

zonto wrote: Wed Mar 25, 2020 7:51 am Seems too good to be true. What are the risks here?
The $1 NAV is slightly above the actual value, which suggests some stress.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Cheez-It Guy »

Someone explain this to a neophyte.

Is this likely to be a very temporary spike in yield for municipal? I've been in Treasury Money Market (preciously best tax equivalent yield), but I know rates are headed to zero there. Worth the switch? I understand it's trivially easy.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by gmaynardkrebs »

Cheez-It Guy wrote: Wed Mar 25, 2020 8:35 am Someone explain this to a neophyte.

Is this likely to be a very temporary spike in yield for municipal? I've been in Treasury Money Market (preciously best tax equivalent yield), but I know rates are headed to zero there. Worth the switch? I understand it's trivially easy.
Not worth it to me. Happy to be corrected here, but to the best of my knowledge, the Fed has not explicitly guaranteed the $1 NAV as it did in 2008 for MM funds.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by LSLover »

gmaynardkrebs wrote: Wed Mar 25, 2020 8:38 am
Cheez-It Guy wrote: Wed Mar 25, 2020 8:35 am Someone explain this to a neophyte.

Is this likely to be a very temporary spike in yield for municipal? I've been in Treasury Money Market (preciously best tax equivalent yield), but I know rates are headed to zero there. Worth the switch? I understand it's trivially easy.
Not worth it to me. Happy to be corrected here, but to the best of my knowledge, the Fed has not explicitly guaranteed the $1 NAV as it did in 2008 for MM funds.
Looks like it actually did...

https://www.federalreserve.gov/monetarypolicy/mmlf.htm
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by am »

LSLover wrote: Wed Mar 25, 2020 8:42 am
gmaynardkrebs wrote: Wed Mar 25, 2020 8:38 am
Cheez-It Guy wrote: Wed Mar 25, 2020 8:35 am Someone explain this to a neophyte.

Is this likely to be a very temporary spike in yield for municipal? I've been in Treasury Money Market (preciously best tax equivalent yield), but I know rates are headed to zero there. Worth the switch? I understand it's trivially easy.
Not worth it to me. Happy to be corrected here, but to the best of my knowledge, the Fed has not explicitly guaranteed the $1 NAV as it did in 2008 for MM funds.
Looks like it actually did...

https://www.federalreserve.gov/monetarypolicy/mmlf.htm
Yes until September. This yield might be a free lunch then? Wonder how long it will last?
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by gmaynardkrebs »

LSLover wrote: Wed Mar 25, 2020 8:42 am
gmaynardkrebs wrote: Wed Mar 25, 2020 8:38 am
Cheez-It Guy wrote: Wed Mar 25, 2020 8:35 am Someone explain this to a neophyte.

Is this likely to be a very temporary spike in yield for municipal? I've been in Treasury Money Market (preciously best tax equivalent yield), but I know rates are headed to zero there. Worth the switch? I understand it's trivially easy.
Not worth it to me. Happy to be corrected here, but to the best of my knowledge, the Fed has not explicitly guaranteed the $1 NAV as it did in 2008 for MM funds.
Looks like it actually did...

https://www.federalreserve.gov/monetarypolicy/mmlf.htm
Yes, I'm paranoid, but where is the $1 NAV explicitly guaranteed? I don't see that. It was explicit in 2008.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by am »

gmaynardkrebs wrote: Wed Mar 25, 2020 9:19 am
LSLover wrote: Wed Mar 25, 2020 8:42 am
gmaynardkrebs wrote: Wed Mar 25, 2020 8:38 am
Cheez-It Guy wrote: Wed Mar 25, 2020 8:35 am Someone explain this to a neophyte.

Is this likely to be a very temporary spike in yield for municipal? I've been in Treasury Money Market (preciously best tax equivalent yield), but I know rates are headed to zero there. Worth the switch? I understand it's trivially easy.
Not worth it to me. Happy to be corrected here, but to the best of my knowledge, the Fed has not explicitly guaranteed the $1 NAV as it did in 2008 for MM funds.
Looks like it actually did...

https://www.federalreserve.gov/monetarypolicy/mmlf.htm
Yes, I'm paranoid, but where is the $1 NAV explicitly guaranteed? I don't see that. It was explicit in 2008.
I doubt anyone would let a vanguard mm break the buck. The risk of you losing tons more in the market is much more likely.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by am »

https://www.nytimes.com/reuters/2020/03 ... s-fed.html

Looks like it’s a liquidity crunch for short term municipal debt as sellers far out number buyers.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Cheez-It Guy »

But is this like a couple of days special cause, or a couple of months? . . .
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by am »

Cheez-It Guy wrote: Wed Mar 25, 2020 11:41 am But is this like a couple of days special cause, or a couple of months? . . .
Who knows? Right now the country will be running on printed money for months completely decoupled from the real economy and health crisis. Risk on as last 2 days are showing. Munis going up dramatically.
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Leif »

I remember this happening in the GFC, for a short time. I even bought municipals in the retirement account. When I talked with a Fidelity agent about it he said - yes it is unbelievable. I wonder how much additional risk is involved? Normally not a real question for MM I know. So, I'm thinking to xfer some funds from Treasury MM to municipal fund (VMSXX). Anyone else doing that?

The only fund I recall breaking the buck is the Reserve Primary fund, which was closed at $0.97. They bought a lot of stuff from Lehman.

I'm using some TLH cash, that I will need in a few weeks, to buy VMSXX. As I recall there is no short term trading restrictions on money markets at Vanguard.

Also interesting is VMSXX 7 day is 3.77%. Fidelity Muni MM, FTEXX, is 4.12%. Maybe that does not include the ER. Vanguard is 15 bps. Fidelity is 50 bps.
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