0.00% Yield on the Vanguard Short-Term Treasury Fund

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Rick Ferri
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0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Rick Ferri »

Here is where things are, folks.

The Vanguard Short-Term Treasury Fund Investor Shares (VFISX) had a 30-day SEC yield of 0.00% as of 7/16/20.

A security's income, for the purposes of this calculation, is based on the current market yield to maturity (for bonds) or projected dividend yield (for stocks) of the fund's holdings over a trailing 30-day period.

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gasman
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by gasman »

Rick Ferri wrote: Sat Jul 18, 2020 5:39 pm Here is where things are, folks.

The Vanguard Short-Term Treasury Fund Investor Shares (VFISX) had a 30-day SEC yield of 0.00% as of 7/16/20.

A security's income, for the purposes of this calculation, is based on the current market yield to maturity (for bonds) or projected dividend yield (for stocks) of the fund's holdings over a trailing 30-day period.

Rick Ferri
Very sad :( . What do you like for Short term fixed income in this environment? Taxable and Tax deferred. I own this fund in taxable. It is currently amazingly tax efficient.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by rockstar »

On the short end, it makes more sense to buy treasuries at auction through your broker or at tresurydirect.gov than through via an ETF or fund.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Elysium »

I will still take something with Zero returns over something that may have negative returns, could be what stocks are in for.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Rick Ferri »

What do you like for Short term fixed income in this environment?
CDs are one of the best short-term government-guaranteed investments today. You can still find 1% APR yield CDs for one year.

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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Angst »

Rick Ferri wrote: Sat Jul 18, 2020 5:39 pm The Vanguard Short-Term Treasury Fund Investor Shares (VFISX) had a 30-day SEC yield of 0.00% as of 7/16/20.
[EDIT] Yep, that would be consistent with the current yield curve, out to 90 days, net of the Investor ER of 0.10% Actually, that still leaves one basis point to be accounted for.

I've reconsidered my first take on this: viewtopic.php?f=10&t=320558&newpost=5379615#p5379615
Last edited by Angst on Sat Jul 18, 2020 6:43 pm, edited 1 time in total.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by livesoft »

This might drive people into higher yielding bonds thus increasing the prices of those bonds.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by arcticpineapplecorp. »

ally savings account is 1%. isn't that better than 0%? And guaranteed up to $250k per fdic. wouldn't that be an equal level of safety with higher yield?
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by WoodSpinner »

All the more reason to use the ETF or Admiral Share version of the fund!

VGSH has an SEC Yield of .14% !
VSBSX has a SEC Yield of ,12% !

Living the dream ...

:annoyed

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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by willthrill81 »

I saw a credit union offering a 1.35% 5 year CD earlier today.

Heck, Ally is still paying 1% on savings accounts.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Rick Ferri »

livesoft wrote: Sat Jul 18, 2020 5:56 pm This might drive people into higher yielding bonds thus increasing the prices of those bonds.
It's also driving people into high-yielding stocks. Listen to my podcast with Burton Malkiel. It's what he advocates.

Episode 023: Dr. Burton Malkiel, host Rick Ferri

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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Elysium »

All this negative bond talk had me peek at my returns this year. I was surprised to see that my bond funds have annualized returns of 12.3% so far! I think I will worry about next year returns when that happens, so continue holding my bond funds.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Blue456 »

willthrill81 wrote: Sat Jul 18, 2020 5:59 pm I saw a credit union offering a 1.35% 5 year CD earlier today.

Heck, Ally is still paying 1% on savings accounts.
TIAA Bank offers 1.35% on 5 year CD as well
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by rockstar »

My go to purchase now with yields so low is WFC/PRX as long as I can buy it at par or below. *fingers crossed* I used to buy 3 or 6 month treasury bills at auction until the Fed cut rates.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Angst »

The more I look at this yield the more I question it. Over 20% of this fund's market value is actually held in TIPS, and two of those TIPS comprising almost $2B in market value mature next year, in January and April. I think this is distorting the 30 day SEC yield. If this were a TIPS fund it would have a couple extra footnotes next to its surely negative yield. Hopefully someone else can better understand and explain the implications. I suspect it's not really as bad as 0.00%
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by whodidntante »

I am rooting for at least mildly negative short term yields for long enough that it cannot easily be dismissed, say -0.5% for a year. It's because I want to see how people and how MMFs react to it. Reducing MMF "expenses" that were mostly profit anyway is one thing, but I somehow doubt that Vanguard, Fidelity, or Schwab are not going to pay huge amounts of money to avoid breaking the buck. Purchase blocks and account fees could be introduced. Would they dare to liquidate the funds?

These low rates are no good for savers, however. Especially those who "stay the course." I guess that's what happens when you start from a weak position and hit a downturn as the current Fed governors subscribe to MMT.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Northern Flicker »

The short-term treasury index fund VSBSX/VGSH has a non-zero yield because of its lower expense ratio.
Risk is not a guarantor of return.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by SantaClaraSurfer »

Aside from basic rebalancing, our plan has stayed the same, stay the course with our AA and overall plan.

I recently did some research on Bonds in taxable and we went with the following (SEC 30 Day Yield as of 7/17 in bold):

Vanguard CA LT Municipal Bond Fund (VCITX) SEC 30 Day Yield 1.49%
Schwab CA Intermediate Muni Bond Fund (SWCAX) SEC 30 Day Yield 0.89%
Schwab US Bond Index (SWAGX) SEC 30 Day 1.38%
Schwab US Short Term Bond Index (SWSBX) SEC 30 Day 0.45%
I Bonds Currently 0.0% Fixed / 1.06% Composite (Varies with CPI Inflation, reset every 6 mos.)
EE Bonds Currently 0.1% Fixed / 3.5% Upon Maturity in 20 Years

VCITX and SWCAX are tax free in CA, so the tax equivalent yield will be a higher.
I Bonds and EE Bonds are tax deferred, and State and Local tax free when you sell.

The VCITX, SWAGX and SWCAX shares have all increased in price since purchase (as livesoft suggests), and the yields have decreased.
Last edited by SantaClaraSurfer on Sat Jul 18, 2020 7:24 pm, edited 1 time in total.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Stinky »

As someone who lived through the great inflation of the late 1970s/early 1980s, I am amazed at today’s low rates.

There was one month during 1981 when my Fidelity money market fund earned at the annualized rate of 20%. I expect that I’ll never see that again.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Kevin M »

whodidntante wrote: Sat Jul 18, 2020 6:53 pm I am rooting for at least mildly negative short term yields for long enough that it cannot easily be dismissed, say -0.5% for a year. It's because I want to see how people and how MMFs react to it. Reducing MMF "expenses" that were mostly profit anyway is one thing, but I somehow doubt that Vanguard, Fidelity, or Schwab are not going to pay huge amounts of money to avoid breaking the buck. Purchase blocks and account fees could be introduced. Would they dare to liquidate the funds?
FWIW, Vanguard never dropped the yield on their money market funds below 0.10% during the approximately seven years that the lower bound of the federal funds rate (FFR) was 0% after the GFC. Their Treasury MM fund has been at 0.10% now since July 6. After subtracting the ER of 0.09%, the yield would be about 0.04% if VG weren't subsidizing the expenses.

Fidelity has higher ERs, and they have allowed the SEC yield on most of their MM funds to drop to 0.01%, but not below that so far.

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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Triple digit golfer »

Stinky wrote: Sat Jul 18, 2020 7:18 pm As someone who lived through the great inflation of the late 1970s/early 1980s, I am amazed at today’s low rates.

There was one month during 1981 when my Fidelity money market fund earned at the annualized rate of 20%. I expect that I’ll never see that again.
My dad said that my grandpa had a savings account paying almost double his mortgage rate, both at the same bank. The bank offered him all kinds of incentives to pay it off early but he didn't.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by abyan »

Rick Ferri wrote: Sat Jul 18, 2020 5:56 pm
What do you like for Short term fixed income in this environment?
CDs are one of the best short-term government-guaranteed investments today. You can still find 1% APR yield CDs for one year.

Rick Ferri
Ally, for example, has no penalty 11 months CDs for .95%. I’m using several for my savings, and my emergency fund.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by rockstar »

Stinky wrote: Sat Jul 18, 2020 7:18 pm As someone who lived through the great inflation of the late 1970s/early 1980s, I am amazed at today’s low rates.

There was one month during 1981 when my Fidelity money market fund earned at the annualized rate of 20%. I expect that I’ll never see that again.
Inflation was so bad back then that All in the Family had episodes about inflation.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by protagonist »

Rick Ferri wrote: Sat Jul 18, 2020 5:39 pm Here is where things are, folks.

The Vanguard Short-Term Treasury Fund Investor Shares (VFISX) had a 30-day SEC yield of 0.00% as of 7/16/20.

A security's income, for the purposes of this calculation, is based on the current market yield to maturity (for bonds) or projected dividend yield (for stocks) of the fund's holdings over a trailing 30-day period.

Rick Ferri
Interesting. Especially since some online bank accounts still offer rates greater than 1%, which is literally an infinitely better rate. I can't imagine a huge market to buy those treasuries.

I wonder if, in a few months or less, the best fixed income investment will be to stick the money under your pillow.
Last edited by protagonist on Sat Jul 18, 2020 7:39 pm, edited 1 time in total.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Wind_Reaver »

Potential opportunity for Vanguard to merge the legacy high-expense active treasury funds with the indexed equivalents. At current rates, even a .07% bond fund expense ratio is looking like highway robbery.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by palanzo »

SantaClaraSurfer wrote: Sat Jul 18, 2020 7:12 pm Aside from basic rebalancing, our plan has stayed the same, stay the course with our AA and overall plan.

I recently did some research on Bonds in taxable and we went with the following (SEC 30 Day Yield as of 7/17 in bold):

Vanguard CA LT Municipal Bond Fund (VCITX) SEC 30 Day Yield 1.49%
Schwab CA Intermediate Muni Bond Fund (SWCAX) SEC 30 Day Yield 0.89%
Schwab US Bond Index (SWAGX) SEC 30 Day 1.38%
Schwab US Short Term Bond Index (SWSBX) SEC 30 Day 0.45%
I Bonds Currently 0.0% Fixed / 1.06% Composite (Varies with CPI Inflation, reset every 6 mos.)
EE Bonds Currently 0.1% Fixed / 3.5% Upon Maturity in 20 Years

VCITX and SWCAX are tax free in CA, so the tax equivalent yield will be a higher.
I Bonds and EE Bonds are tax deferred, and State and Local tax free when you sell.

The VCITX, SWAGX and SWCAX shares have all increased in price since purchase (as livesoft suggests), and the yields have decreased.
Why did you pick so many funds for taxable?
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by anon_investor »

Wind_Reaver wrote: Sat Jul 18, 2020 7:35 pm Potential opportunity for Vanguard to merge the legacy high-expense active treasury funds with the indexed equivalents. At current rates, even a .07% bond fund expense ratio is looking like highway robbery.
Can they merge those funds? The ETF versions of the treasury index funds have only a 0.05% ER.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by arcticpineapplecorp. »

abyan wrote: Sat Jul 18, 2020 7:28 pm
Rick Ferri wrote: Sat Jul 18, 2020 5:56 pm
What do you like for Short term fixed income in this environment?
CDs are one of the best short-term government-guaranteed investments today. You can still find 1% APR yield CDs for one year.

Rick Ferri
Ally, for example, has no penalty 11 months CDs for .95%. I’m using several for my savings, and my emergency fund.
but why would you want 0.95% from a CD (no penalty or not) when you can get 1% from their savings account?

https://www.ally.com/bank/online-savings-account/
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by anon_investor »

arcticpineapplecorp. wrote: Sat Jul 18, 2020 7:56 pm
abyan wrote: Sat Jul 18, 2020 7:28 pm
Rick Ferri wrote: Sat Jul 18, 2020 5:56 pm
What do you like for Short term fixed income in this environment?
CDs are one of the best short-term government-guaranteed investments today. You can still find 1% APR yield CDs for one year.

Rick Ferri
Ally, for example, has no penalty 11 months CDs for .95%. I’m using several for my savings, and my emergency fund.
but why would you want 0.95% from a CD (no penalty or not) when you can get 1% from their savings account?

https://www.ally.com/bank/online-savings-account/
Because there is a very good chance you'll end up better with the 0.95% 11 month np CD, as the savings account rate keeps dropping. Over the last 2 months I think it has dropped from 1.2% to 1.1% and now to 1%.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Kevin M »

arcticpineapplecorp. wrote: Sat Jul 18, 2020 7:56 pm
but why would you want 0.95% from a CD (no penalty or not) when you can get 1% from their savings account?

https://www.ally.com/bank/online-savings-account/
Because the savings account rate almost certainly will continue to drop (it was 1.10% a week or so ago), and you're likely to earn more at 0.95% locked in (if you want) over the next 11 months (the term of Ally's NP CD).

Having said that, the Ally savings rate never dropped below 0.84% during the seven years the FFR lower rate was 0%.

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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by acegolfer »

VFISX is not an index fund. Instead, one should use VSBSX (Vanguard Short-Term Treasury Index Fund), which has lower ER and higher yield.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by rockstar »

Kevin M wrote: Sat Jul 18, 2020 8:02 pm
arcticpineapplecorp. wrote: Sat Jul 18, 2020 7:56 pm
but why would you want 0.95% from a CD (no penalty or not) when you can get 1% from their savings account?

https://www.ally.com/bank/online-savings-account/
Because the savings account rate almost certainly will continue to drop (it was 1.10% a week or so ago), and you're likely to earn more at 0.95% locked in (if you want) over the next 11 months (the term of Ally's NP CD).

Having said that, the Ally savings rate never dropped below 0.84% during the seven years the FFR lower rate was 0%.

Kevin
Let's say the Fed follows their dot plot graphs and keeps rates low for at least the next two years. It's reasonable to expect that rates on CDs and savings will continue to drop. You can lock in a low rate today with a CD for a year, but in another year, you're going to run this same problem a year from now. But do you want really want to buy a 2 year CD today? This is really pushing people into equities with already high valuations. It's tricky. I wonder what folks did back in the 50s before inflation and rates took off. https://fred.stlouisfed.org/series/DFF
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by SantaClaraSurfer »

palanzo wrote: Sat Jul 18, 2020 7:49 pm Why did you pick so many funds for taxable?
I have a solid reason for each of them.

VCITX (LongTerm CA Muni) and I Bonds/EE Bonds are the main investments.

The others each fit a specific purpose.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by BogleBuddy12 »

Rick Ferri wrote: Sat Jul 18, 2020 6:03 pm
livesoft wrote: Sat Jul 18, 2020 5:56 pm This might drive people into higher yielding bonds thus increasing the prices of those bonds.
It's also driving people into high-yielding stocks. Listen to my podcast with Burton Malkiel. It's what he advocates.

Episode 023: Dr. Burton Malkiel, host Rick Ferri

Rick Ferri
Hi Rick. Do you have any thoughts on Dr. Malkiel’s recommended bond portfolio these days? His new book recommends a mix of Emerging Markets Bonds, Long-Term Corporate Bonds, and Dividend Yielding Stocks. I think most Bogleheads would take issue with this. But are adjustments necessary during periods of financial repression, as Dr. Malkiel suggests?
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Munir »

I am using Federal Short Term Bond Fund (VSGBX/VSGDX) in place of a MM fund. It has a duration of 2 years and an SEC 30 day Rate of 1.22%. Vanguard gives it the safest rating #1 and Morningstar gives it 5 stars. You might want to check its volatility and see if you are comfortable with it- it should be very low.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by anoop »

Munir wrote: Sun Jul 19, 2020 12:26 am I am using Federal Short Term Bond Fund (VSGBX/VSGDX) in place of a MM fund. It has a duration of 2 years and an SEC 30 day Rate of 1.22%. Vanguard gives it the safest rating #1 and Morningstar gives it 5 stars. You might want to check its volatility and see if you are comfortable with it- it should be very low.
That will continue to taper off too and by around 03/2022 it will yield ~0% unless something changes.

The danger with such a fund or any long duration fund, is that when rates recover, these are slowest to move AND their NAV will get depressed.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Harry Livermore »

Good discussion. I moved my bond allocation to this fund for safety back at the start of the COVID crisis (much of it was in the Short-Term Investment Grade fund) and not too worried about it yet. It's about 17% of my portfolio. I have another 34% of the portfolio in Wellesely, but that's exposure to different bonds.
Strange times.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by acegolfer »

Harry Livermore wrote: Sun Jul 19, 2020 6:42 am Good discussion. I moved my bond allocation to this fund for safety back at the start of the COVID crisis (much of it was in the Short-Term Investment Grade fund) and not too worried about it yet. It's about 17% of my portfolio.
Why did you choose the active fund? Why not Vanguard Short-Term Treasury Index Fund (VSBSX)?
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Harry Livermore »

acegolfer wrote: Sun Jul 19, 2020 6:44 am
Harry Livermore wrote: Sun Jul 19, 2020 6:42 am Good discussion. I moved my bond allocation to this fund for safety back at the start of the COVID crisis (much of it was in the Short-Term Investment Grade fund) and not too worried about it yet. It's about 17% of my portfolio.
Why did you choose the active fund? Why not Vanguard Short-Term Treasury Index Fund (VSBSX)?
I may be mistaken, but I have always thought active management has done well in the bond world. VFIRX has better performance in YTD, 1-year, 3-year, and 5-year time frames. I know VFIRX has a slightly higher ER though.
I think, inasmuch as I had any moment of weakness when it hit the fan in March, I really made the change without too much thought behind it, other than a quick skim and the use of VG's compare tool.
I will proudly say that this was the only change I made to my AA.
I suppose maybe there is less to "manage" in the world of short term Treasuries, so fewer choices when you are running a fund? Meaning, going forward, the managers will have fewer levers to pull and performance will suffer. And maybe the higher ER will be a drag, but I think it will do fine compared to the index.
That's my bumbling logic...
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by andypanda »

"There was one month during 1981 when my Fidelity money market fund earned at the annualized rate of 20%. I expect that I’ll never see that again."

I was on the other side of that, but avoided the worst of the mortgage rate runup. I bought my antique fixer-upper house in January of 1980 and got a 30-yr conventional mortgage with 25% down. I paid a 1% origination fee and a 1% fee for something or other. The interest rate was 12.75%. Okay, so the mortgage was only $32k, that was a lot of money back then. I'd finished grad school and was only making $15k.

Fwiw, I refi'd it twice at 9.25% and 7% and finally paid it off in '97. I sold it in April and cleaned up because it's now in a historic district that's hot - the one Monument Avenue runs through :) I sold it standing on the sidewalk out front, got my asking price without advertising, didn't pay a broker fee, the buyer had cash and the purchase agreement was short and simple. Closed in two weeks. I was already living in my new wife's house.


edited to add: If you live in the greater Richmond VA area, Henrico FCU has a 12-mo CD paying 1.15%. The 2-yr is 1.20%.
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by happysteward »

Here is the ytd performance of the fund, how do we process this, the SEC yield is 0% but the return so far this year is upwards of 3-4%. So if I am holding these bonds to reduce volatility in my portfolio (I.e. ballast) they are still appropriate and even adding to the total return of my portfolio. Am I missing something ?

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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by acegolfer »

happysteward wrote: Sun Jul 19, 2020 7:39 am Here is the ytd performance of the fund, how do we process this, the SEC yield is 0% but the return so far this year is upwards of 3-4%. So if I am holding these bonds to reduce volatility in my portfolio (I.e. ballast) they are still appropriate and even adding to the total return of my portfolio. Am I missing something ?

Image
Average investors think bond yield = bond return. This is a misconception. Academically, yield to maturity is the annualized return, IF one holds till maturity. OTOH, most ppl's holding period is not equal to time to maturity of the bond so yield (0%) and return (3-4% in your example) are not the same.

Are they appropriate? Yes but there's a corresponding index fund with positive yield (see above). Will it add to the total return? It can, it may not. Just like stocks, no guarantee in bond returns.
Seasonal
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Seasonal »

Government bonds are at negative yields in many major countries. A zero yield is obviously higher than that. Given GDP, unemployment, the virus, decreased spending in many areas, etc., it's hard to see why yields should be much higher.

I'm partial to Vanguard's ultra-short bond fund, VUSFX, VUBFX, so long as you're not going to sell your entire holding in less than one year. There are many current threads on short term bond alternatives.
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jeffyscott
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by jeffyscott »

rockstar wrote: Sat Jul 18, 2020 8:09 pm
Kevin M wrote: Sat Jul 18, 2020 8:02 pm
arcticpineapplecorp. wrote: Sat Jul 18, 2020 7:56 pm
but why would you want 0.95% from a CD (no penalty or not) when you can get 1% from their savings account?

https://www.ally.com/bank/online-savings-account/
Because the savings account rate almost certainly will continue to drop (it was 1.10% a week or so ago), and you're likely to earn more at 0.95% locked in (if you want) over the next 11 months (the term of Ally's NP CD).

Having said that, the Ally savings rate never dropped below 0.84% during the seven years the FFR lower rate was 0%.

Kevin
Let's say the Fed follows their dot plot graphs and keeps rates low for at least the next two years. It's reasonable to expect that rates on CDs and savings will continue to drop. You can lock in a low rate today with a CD for a year, but in another year, you're going to run this same problem a year from now. But do you want really want to buy a 2 year CD today? This is really pushing people into equities with already high valuations. It's tricky. I wonder what folks did back in the 50s before inflation and rates took off. https://fred.stlouisfed.org/series/DFF
It depends on what CD rates you can find/are eligible for. I just took a 3 year at 1.9%. For 2 year, I could've gotten 1.6%. I preferred the longer term for the higher rate, but I'd take either of those over a lower rate from a savings account or 1 year CD.
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Mr.BB
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Mr.BB »

In my brokerage 401k I have (VTAPX) Vanguard Short Term Inflation Protect Securities. I saw that it's 30 day yield is now (-0.46%). Though it is up 2.31% for the year. I am having a hard time understanding this. Am I paying for a negative rate on this fund?
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Call_Me_Op
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Call_Me_Op »

Rick Ferri wrote: Sat Jul 18, 2020 6:03 pm
livesoft wrote: Sat Jul 18, 2020 5:56 pm This might drive people into higher yielding bonds thus increasing the prices of those bonds.
It's also driving people into high-yielding stocks. Listen to my podcast with Burton Malkiel. It's what he advocates.
Yes - and I strongly disagree. Stocks and (high-quality) bonds are two fundamentally different animals.
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jeffyscott
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by jeffyscott »

Mr.BB wrote: Sun Jul 19, 2020 8:10 am In my brokerage 401k I have (VTAPX) Vanguard Short Term Inflation Protect Securities. I saw that it's 30 day yield is now (-0.46%). Though it is up 2.31% for the year. I am having a hard time understanding this. Am I paying for a negative rate on this fund?
That's the real yield, so you can add inflation to it.

However, there seems to be some anomaly that results in the SEC yield being that "high", since the real yield on the bonds it holds are all actually worse than that: https://www.wsj.com/market-data/bonds/tips
Looks like maybe average real yield to maturity is more like around -1% :?: .
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happysteward
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by happysteward »

Mr BB
Here is a picture to back up your question, I asked a similar one up the thread, I think we need to look at total return for the bond fund which is yield plus NAV return. Oversimplified but helps me to understand why I hold bonds even with a negative return.

Image
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by Call_Me_Op »

Northern Flicker wrote: Sat Jul 18, 2020 6:59 pm The short-term treasury index fund VSBSX/VGSH has a non-zero yield because of its lower expense ratio.
and longer duration
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Re: 0.00% Yield on the Vanguard Short-Term Treasury Fund

Post by S_Track »

acegolfer wrote: Sun Jul 19, 2020 6:44 am
Harry Livermore wrote: Sun Jul 19, 2020 6:42 am Good discussion. I moved my bond allocation to this fund for safety back at the start of the COVID crisis (much of it was in the Short-Term Investment Grade fund) and not too worried about it yet. It's about 17% of my portfolio.
Why did you choose the active fund? Why not Vanguard Short-Term Treasury Index Fund (VSBSX)?
I notice the active version does include Tips. Could this be an advantage over the index version for short term investing? Insurance against unexpected inflation?
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