[Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

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Kevin M
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by Kevin M »

Electron wrote: Fri Aug 28, 2020 1:10 pm In recent weeks Prime Money Market has been yielding less than the Federal and Treasury Money Market funds. That is generally not the case.
Last 90 days:

Image

Of course this is for Prime investor shares. Admiral shares is at 0.10%
Electron wrote: Fri Aug 28, 2020 1:10 pm The higher yields may be the result of the two year Treasury Floating Rate Notes (FRNs) held in the Federal and Treasury Money Market funds. Treasury Floating Rate Notes pay a rate determined by the most recent 13 week T-Bill discount rate plus a fixed spread determined at the time of the FRN auction.

The Treasury fund recently held six FRNs with spreads of 0.300%, 0.220%, 0.154%, 0.139%, 0.115%, and 0.114%. Those spreads are quite attractive at present with 13 week T-Bills at 0.101%.

The two year FRNs should add incremental yield as long as they remain in the fund.
That could explain why Treasury MM yield is 0.08% compared to my model yield of 0.03%. Model yield is 7-day average of 1m, 2m and 3m averages of 1m, 2m and 3m Treasury yields respectively minus 0.09% ER.

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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by Electron »

Kevin M wrote: Fri Aug 28, 2020 5:16 pmThat could explain why Treasury MM yield is 0.08% compared to my model yield of 0.03%. Model yield is 7-day average of 1m, 2m and 3m averages of 1m, 2m and 3m Treasury yields respectively minus 0.09% ER.
Great looking charts. The Vanguard site is now showing seven FRNs in the Treasury Money Market fund. They appear to be quoting current yield and not spread. Presumably the new Cash Reserves Federal Money Market fund would invest in these as well.

Here is the Treasury site showing results from recent Treasury auctions for others reading this thread.

You can click on Bills, CMBs, Notes, Bonds, TIPS, and FRNs. CUSIP numbers on the Vanguard site can be referenced to the current list of FRNs to see the spread.

https://www.treasurydirect.gov/instit/a ... result.htm
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by S_Track »

Northern Flicker wrote: Fri Aug 28, 2020 4:52 pm Federal MM needs to meet the liquidity requirements of a settlement fund, but Cash Reserves will not need to. Cash Reserves will still be a cash fund managed for a stable share price.
Would you explain what this means in further detail. Does it mean during a crisis (large withdrawals) the cash reserves will have a better chance of not breaking the buck? Thanks
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by abuss368 »

S_Track wrote: Fri Aug 28, 2020 3:41 pm Looking at the total net assets for the three MM accounts, shows most investors prefer the Federal. This is what's on VG's site as of today. Is there a way to see this over time, I would be curious to the amounts pre-March?

Federal (Settlement account): Fund total net assets $196.4 billion
Prime: Fund total net assets $125.3 billion
Treasury: Fund total net assets $38.9 billion
Honestly I don’t know why Vanguard simply does not offer just one money market fund. Perhaps Federal.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by 000 »

abuss368 wrote: Fri Aug 28, 2020 10:34 pm
S_Track wrote: Fri Aug 28, 2020 3:41 pm Looking at the total net assets for the three MM accounts, shows most investors prefer the Federal. This is what's on VG's site as of today. Is there a way to see this over time, I would be curious to the amounts pre-March?

Federal (Settlement account): Fund total net assets $196.4 billion
Prime: Fund total net assets $125.3 billion
Treasury: Fund total net assets $38.9 billion
Honestly I don’t know why Vanguard simply does not offer just one money market fund. Perhaps Federal.
I've often wondered why there are both Federal and Treasury funds. What's the point?
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by abuss368 »

000 wrote: Fri Aug 28, 2020 10:37 pm
abuss368 wrote: Fri Aug 28, 2020 10:34 pm
S_Track wrote: Fri Aug 28, 2020 3:41 pm Looking at the total net assets for the three MM accounts, shows most investors prefer the Federal. This is what's on VG's site as of today. Is there a way to see this over time, I would be curious to the amounts pre-March?

Federal (Settlement account): Fund total net assets $196.4 billion
Prime: Fund total net assets $125.3 billion
Treasury: Fund total net assets $38.9 billion
Honestly I don’t know why Vanguard simply does not offer just one money market fund. Perhaps Federal.
I've often wondered why there are both Federal and Treasury funds. What's the point?
Exactly. I think Vanguard could easily do some fund pruning.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by Dead Man Walking »

Having had a bad experience with a transition of the check writing privileges for my Prime MM account, I don’t trust Vanguard to manage the transition from Prime to the new Cash Reserves fund; consequently, I’m simply going to transition to the existing Federal MM fund that is used for their settlement accounts.

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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by Northern Flicker »

S_Track wrote: Fri Aug 28, 2020 9:24 pm
Northern Flicker wrote: Fri Aug 28, 2020 4:52 pm Federal MM needs to meet the liquidity requirements of a settlement fund, but Cash Reserves will not need to. Cash Reserves will still be a cash fund managed for a stable share price.
Would you explain what this means in further detail. Does it mean during a crisis (large withdrawals) the cash reserves will have a better chance of not breaking the buck? Thanks
It means Cash Reserve's portfolio will have lower liquidity (slower turnover), which means Federal MM will support a higher withdrawal rate, which certainly makes it at least somewhat more likely that Cash Reserve breaks the buck. If they have to sell agency paper before it matures to process a withdrawal, and there are liquidity problems with short-term agency debt, either fund theoretically could break the buck, but the longer maturity fund has a greater odds of needing to sell securities to process a withdrawal.

I think it will be an unlikely event for either fund, but if you are concerned about it, you may as well hold cash in a govt-insured account at a bank or credit union. Interest rate spreads between a money market fund and even a credit union checking account are single digits of basis points. High yield insured savings accounts are higher than MMFs right now.

I suspect this change was in response to the liquidity squeeze in March. My guess is that there were some internal issues with the Prime fund and Vanguard became uncomfortable supporting a 1.00 share price moving forward, but it is just my guess. I expect the Cash Reserves average maturity to look like how Federal MM is or was, and Federal MM to start using a shorter average maturity to improve liquidity, but this is just a guess.

I don't know if Cash Reserves will be subject to Dodd-Frank liquidity gates like Prime MMF was. I suspect it will be, but just a guess.
Last edited by Northern Flicker on Sun Aug 30, 2020 3:24 pm, edited 1 time in total.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by btq96r »

Made the switch to Admiral shares...took all of ten seconds. This fund is just for some *cash* holdings, so I'm not looking to chase yields from it as long as I'm not losing at the end of the day. Also never used the check writing, but I can see how that's convenient for folks in retirement...so sorry for anyone hit by that.

The bigger question is why Vanguard felt the need to take these moves. I'm hoping this is the equivalent of bread and milk buying before a Tennessee snowstorm, because a liquidity crisis would be some bad juju right about now.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by pascalwager »

abuss368 wrote: Fri Aug 28, 2020 10:56 pm
000 wrote: Fri Aug 28, 2020 10:37 pm
abuss368 wrote: Fri Aug 28, 2020 10:34 pm
S_Track wrote: Fri Aug 28, 2020 3:41 pm Looking at the total net assets for the three MM accounts, shows most investors prefer the Federal. This is what's on VG's site as of today. Is there a way to see this over time, I would be curious to the amounts pre-March?

Federal (Settlement account): Fund total net assets $196.4 billion
Prime: Fund total net assets $125.3 billion
Treasury: Fund total net assets $38.9 billion
Honestly I don’t know why Vanguard simply does not offer just one money market fund. Perhaps Federal.
I've often wondered why there are both Federal and Treasury funds. What's the point?
Exactly. I think Vanguard could easily do some fund pruning.
The Treasury MMF is a convenient way to hold 100% T-bills. Last year I had $1.3 million in this fund for awhile. The Federal MMF is not exclusively T-bills but includes somewhat riskier assets--maybe suitable for amounts less than $50k.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by nisiprius »

Any thoughts on the 20% position in Yankee/Foreign... both why it was there before and why it is not going to be there now?
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by pascalwager »

Kevin M wrote: Fri Aug 28, 2020 11:25 am
capran wrote: Fri Aug 28, 2020 11:06 am <snip> we do have the ability to transfer money to our credit union via electronic process. When we are required to be switched from Prime to the new Admiral Share, will we lose that feature? <snip>
No, you will not lose your EFT/ACH capability. External banks (or credit unions) are linked to one or more accounts. You can transfer to or from any fund in the account from or to the linked bank or CU. Both investor shares and admiral shares versions of Prime MM are just another fund in the account. You can do the same transfers from stock or bond funds in the account as well.

Kevin
I have three Vanguard brokerage accounts and only the Federal MMF is linked, in each account, to my bank--not the stock or bond funds.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by sycamore »

abuss368 wrote: Fri Aug 28, 2020 10:56 pm
000 wrote: Fri Aug 28, 2020 10:37 pm
abuss368 wrote: Fri Aug 28, 2020 10:34 pm
S_Track wrote: Fri Aug 28, 2020 3:41 pm Looking at the total net assets for the three MM accounts, shows most investors prefer the Federal. This is what's on VG's site as of today. Is there a way to see this over time, I would be curious to the amounts pre-March?

Federal (Settlement account): Fund total net assets $196.4 billion
Prime: Fund total net assets $125.3 billion
Treasury: Fund total net assets $38.9 billion
Honestly I don’t know why Vanguard simply does not offer just one money market fund. Perhaps Federal.
I've often wondered why there are both Federal and Treasury funds. What's the point?
Exactly. I think Vanguard could easily do some fund pruning.
What's the point? The Federal and Treasury funds have different investment strategies to meet the needs of different investors.

Here's the strategy for the Federal fund: "The fund invests primarily in high-quality, short-term money market instruments issued by the U.S. government and its agencies and instrumentalities. Although these securities are high-quality, most of the securities held by the fund are neither guaranteed by the U.S. Treasury nor supported by the full faith and credit of the U.S. government."

And for the Treasury fund: "The fund invests solely in high-quality, short-term money market securities whose interest and principal payments are backed by the full faith and credit of the U.S. government. Under normal circumstances, at least 80% of the fund’s assets will be invested in U.S. Treasury securities; the remainder of the assets may be invested in securities issued by U.S. governmental agencies."

So the Treasury fund is invested in safer securities. I personally think either fund suffices for my needs but many people much prefer the safety of the Treasury fund.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by capran »

pascalwager wrote: Sat Aug 29, 2020 5:40 am
Kevin M wrote: Fri Aug 28, 2020 11:25 am
capran wrote: Fri Aug 28, 2020 11:06 am <snip> we do have the ability to transfer money to our credit union via electronic process. When we are required to be switched from Prime to the new Admiral Share, will we lose that feature? <snip>
No, you will not lose your EFT/ACH capability. External banks (or credit unions) are linked to one or more accounts. You can transfer to or from any fund in the account from or to the linked bank or CU. Both investor shares and admiral shares versions of Prime MM are just another fund in the account. You can do the same transfers from stock or bond funds in the account as well.

Kevin
I have three Vanguard brokerage accounts and only the Federal MMF is linked, in each account, to my bank--not the stock or bond funds.
Did some checking with my CU. They suggested a wire transfer from Vanguard for large amounts, but noted they only allow 10k and under of on line out-going transfers and limit of six per month. At this point it is probably not worth the hassle to gain only 800 in annual interest after taxes. I know I should find a different bank, but that means going back to the attorney to change our trust, which would again cost substantially more than the net gain of any comparable account. sure seems like earning interest is more the anomaly since the 2008 crisis, as rates last year were the only time we earned anything. guess that comes with the territory of not subjecting myself to the risks of loss of principal in stocks.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by jeffyscott »

capran wrote: Sat Aug 29, 2020 10:13 am
pascalwager wrote: Sat Aug 29, 2020 5:40 am
Kevin M wrote: Fri Aug 28, 2020 11:25 am
capran wrote: Fri Aug 28, 2020 11:06 am <snip> we do have the ability to transfer money to our credit union via electronic process. When we are required to be switched from Prime to the new Admiral Share, will we lose that feature? <snip>
No, you will not lose your EFT/ACH capability. External banks (or credit unions) are linked to one or more accounts. You can transfer to or from any fund in the account from or to the linked bank or CU. Both investor shares and admiral shares versions of Prime MM are just another fund in the account. You can do the same transfers from stock or bond funds in the account as well.

Kevin
I have three Vanguard brokerage accounts and only the Federal MMF is linked, in each account, to my bank--not the stock or bond funds.
Did some checking with my CU. They suggested a wire transfer from Vanguard for large amounts, but noted they only allow 10k and under of on line out-going transfers and limit of six per month. At this point it is probably not worth the hassle to gain only 800 in annual interest after taxes. I know I should find a different bank, but that means going back to the attorney to change our trust, which would again cost substantially more than the net gain of any comparable account. sure seems like earning interest is more the anomaly since the 2008 crisis, as rates last year were the only time we earned anything. guess that comes with the territory of not subjecting myself to the risks of loss of principal in stocks.
Not sure what the issue is :?: , but if you can do an ACH transfer from Vanguard to your credit union now that capability will not change. Whether the process is that when you sell the money goes directly to the credit union account via ACH or if you can only move the money from the settlement account to the credit union, that process should be the same whether you are using investor share class or admiral share class of the current prime money market fund and the process should not change with the change to the name of the fund.

At most, if it is a brokerage account, you may have to sell and then transfer the cash from the settlement account. But if that is going to be the process with the new fund, it should also be the process with the current fund as the current prime money market is not a settlement account, it is just another mutual fund. In a brokerage account just using the settlement account (Federal Money Market), instead of a separately purchased money market mutual fund (such as Prime or ) might mean the money can be moved faster as you would not have wait for the trade to settle.


Unless CWR means something other than "check writing :?:" (no idea what the "R" is doing there), that seems to be the only thing that will be lost.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by Eagle33 »

jeffyscott wrote: Sat Aug 29, 2020 10:59 am Unless CWR means something other than "check writing :?:" (no idea what the "R" is doing there), that seems to be the only thing that will be lost.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by Northern Flicker »

nisiprius wrote: Sat Aug 29, 2020 5:35 am Any thoughts on the 20% position in Yankee/Foreign... both why it was there before and why it is not going to be there now?
Yankee bonds are USD-denominated bonds issued by foreign entities. I don't see how they would be held by the new fund if it will be composed of treasuries, agency debt, and instruments collateralized by those.

Treasury money market funds often are only required by design (contractually per statutory prospectus) to have at least 80% of assets in treasuries. The Federal Money market fund is a peer for these, but without the 80% contractual minimum.

If you want the safety of a fund that is 100% backed by the full faith and credit of the US treasury, the Vanguard US treasury fund provides that. It still theoretically could break the buck if interest earned was not enough to cover expenses and Vanguard was not able and willing to subdidize it, or if it had to sell t-bills before maturity to process withdrawals and could not sell them at par and/or could not cover the broker commissions.

Back before Benham Funds merged with 20th Century Investments to form American Century, Benham had a US treasury fund with a 1-day maturity. This was perhaps the very safest MMF ever. I doubt it would be implementable at today's yields.
Last edited by Northern Flicker on Sat Aug 29, 2020 3:56 pm, edited 2 times in total.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by Northern Flicker »

btq96r wrote: Sat Aug 29, 2020 4:00 am Made the switch to Admiral shares...took all of ten seconds. This fund is just for some *cash* holdings, so I'm not looking to chase yields from it as long as I'm not losing at the end of the day. Also never used the check writing, but I can see how that's convenient for folks in retirement...so sorry for anyone hit by that.

The bigger question is why Vanguard felt the need to take these moves. I'm hoping this is the equivalent of bread and milk buying before a Tennessee snowstorm, because a liquidity crisis would be some bad juju right about now.
I'd guess it more likely was a response to what happened in March than a prediction of the future.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by Electron »

Here is a surprise in regards to fee waivers on Money Market funds.

https://www.reuters.com/article/us-vang ... SKBN2481U0

"Vanguard Group Inc reallocated expenses on a $1.9 billion municipal money market fund, a spokesman said, a move akin to the fee waivers that rivals have granted."

"Because of Vanguard’s client-owned structure it cannot simply waive fees and cover them, the industry’s traditional method of protecting investors from low interest rates."

"Instead, as yields fall below expenses on the Vanguard Pennsylvania Municipal Money Market Fund, expenses of the fund are being temporarily reallocated to other funds within Vanguard, company spokesman Freddy Martino said via e-mail."

"Vanguard, the world’s largest mutual fund manager with some $6 trillion in assets, said in a securities filing late on Monday that it made the change to maintain a zero or positive yield for the fund."
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by capran »

jeffyscott wrote: Sat Aug 29, 2020 10:59 am
capran wrote: Sat Aug 29, 2020 10:13 am
pascalwager wrote: Sat Aug 29, 2020 5:40 am
Kevin M wrote: Fri Aug 28, 2020 11:25 am
capran wrote: Fri Aug 28, 2020 11:06 am <snip> we do have the ability to transfer money to our credit union via electronic process. When we are required to be switched from Prime to the new Admiral Share, will we lose that feature? <snip>
No, you will not lose your EFT/ACH capability. External banks (or credit unions) are linked to one or more accounts. You can transfer to or from any fund in the account from or to the linked bank or CU. Both investor shares and admiral shares versions of Prime MM are just another fund in the account. You can do the same transfers from stock or bond funds in the account as well.

Kevin
I have three Vanguard brokerage accounts and only the Federal MMF is linked, in each account, to my bank--not the stock or bond funds.
Did some checking with my CU. They suggested a wire transfer from Vanguard for large amounts, but noted they only allow 10k and under of on line out-going transfers and limit of six per month. At this point it is probably not worth the hassle to gain only 800 in annual interest after taxes. I know I should find a different bank, but that means going back to the attorney to change our trust, which would again cost substantially more than the net gain of any comparable account. sure seems like earning interest is more the anomaly since the 2008 crisis, as rates last year were the only time we earned anything. guess that comes with the territory of not subjecting myself to the risks of loss of principal in stocks.
Not sure what the issue is :?: , but if you can do an ACH transfer from Vanguard to your credit union now that capability will not change. Whether the process is that when you sell the money goes directly to the credit union account via ACH or if you can only move the money from the settlement account to the credit union, that process should be the same whether you are using investor share class or admiral share class of the current prime money market fund and the process should not change with the change to the name of the fund.

At most, if it is a brokerage account, you may have to sell and then transfer the cash from the settlement account. But if that is going to be the process with the new fund, it should also be the process with the current fund as the current prime money market is not a settlement account, it is just another mutual fund. In a brokerage account just using the settlement account (Federal Money Market), instead of a separately purchased money market mutual fund (such as Prime or ) might mean the money can be moved faster as you would not have wait for the trade to settle.


Unless CWR means something other than "check writing :?:" (no idea what the "R" is doing there), that seems to be the only thing that will be lost.
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It is a brokerage account, so there is a settlement fund and a prime money market that was absorbed by the brokerage account when we set it up. it had been a stand alone Prime MMKT. That said, the issue really lies with the CU. They were aweful to deal with when transferring our roths to Vanguard and wanted to charge us 100 each for some signature guarantee form. Thankfully Vanguard accepted the transfer without the extra signature guarantee. My biggest issue now is the CU saying there are limits of 10k to transfer on line. With the rates so low everywhere, certainly not worth spending several thousand to revamp the trust to earn 800 extra interest. Live and learn. It will just allow us to convert that much more from IRA to Roth.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by Kevin M »

capran wrote: Sat Aug 29, 2020 6:38 pm
jeffyscott wrote: Sat Aug 29, 2020 10:59 am
capran wrote: Sat Aug 29, 2020 10:13 am
pascalwager wrote: Sat Aug 29, 2020 5:40 am
Kevin M wrote: Fri Aug 28, 2020 11:25 am No, you will not lose your EFT/ACH capability. External banks (or credit unions) are linked to one or more accounts. You can transfer to or from any fund in the account from or to the linked bank or CU. Both investor shares and admiral shares versions of Prime MM are just another fund in the account. You can do the same transfers from stock or bond funds in the account as well.

Kevin
I have three Vanguard brokerage accounts and only the Federal MMF is linked, in each account, to my bank--not the stock or bond funds.
Did some checking with my CU. They suggested a wire transfer from Vanguard for large amounts, but noted they only allow 10k and under of on line out-going transfers and limit of six per month. At this point it is probably not worth the hassle to gain only 800 in annual interest after taxes. I know I should find a different bank, but that means going back to the attorney to change our trust, which would again cost substantially more than the net gain of any comparable account. sure seems like earning interest is more the anomaly since the 2008 crisis, as rates last year were the only time we earned anything. guess that comes with the territory of not subjecting myself to the risks of loss of principal in stocks.
Not sure what the issue is :?: , but if you can do an ACH transfer from Vanguard to your credit union now that capability will not change. Whether the process is that when you sell the money goes directly to the credit union account via ACH or if you can only move the money from the settlement account to the credit union, that process should be the same whether you are using investor share class or admiral share class of the current prime money market fund and the process should not change with the change to the name of the fund.

At most, if it is a brokerage account, you may have to sell and then transfer the cash from the settlement account. But if that is going to be the process with the new fund, it should also be the process with the current fund as the current prime money market is not a settlement account, it is just another mutual fund. In a brokerage account just using the settlement account (Federal Money Market), instead of a separately purchased money market mutual fund (such as Prime or ) might mean the money can be moved faster as you would not have wait for the trade to settle.


Unless CWR means something other than "check writing :?:" (no idea what the "R" is doing there), that seems to be the only thing that will be lost.
Image
It is a brokerage account, so there is a settlement fund and a prime money market that was absorbed by the brokerage account when we set it up. it had been a stand alone Prime MMKT. That said, the issue really lies with the CU. They were aweful to deal with when transferring our roths to Vanguard and wanted to charge us 100 each for some signature guarantee form. Thankfully Vanguard accepted the transfer without the extra signature guarantee. My biggest issue now is the CU saying there are limits of 10k to transfer on line. With the rates so low everywhere, certainly not worth spending several thousand to revamp the trust to earn 800 extra interest. Live and learn. It will just allow us to convert that much more from IRA to Roth.
You are mixing up a bunch of things.

Transferring IRAs has nothing to do with what we're talking about here.

The $10K transfer limit only applies to transfers initiated at the CU. Initiate the transaction at Vanguard and this limit does not apply.

I don't understand at all the comment about revamping your trust. Why would you have to do that? Maybe you're thinking about the schedule that lists your assets. You don't have to pay a lawyer to update that.

Kevin
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by rkhusky »

pascalwager wrote: Sat Aug 29, 2020 5:40 am
Kevin M wrote: Fri Aug 28, 2020 11:25 am
capran wrote: Fri Aug 28, 2020 11:06 am <snip> we do have the ability to transfer money to our credit union via electronic process. When we are required to be switched from Prime to the new Admiral Share, will we lose that feature? <snip>
No, you will not lose your EFT/ACH capability. External banks (or credit unions) are linked to one or more accounts. You can transfer to or from any fund in the account from or to the linked bank or CU. Both investor shares and admiral shares versions of Prime MM are just another fund in the account. You can do the same transfers from stock or bond funds in the account as well.

Kevin
I have three Vanguard brokerage accounts and only the Federal MMF is linked, in each account, to my bank--not the stock or bond funds.
Only Prime MM in our brokerage account has a "bank transfer" link. I've never tried to send money from any of our other funds to our bank.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by retiringwhen »

rkhusky wrote: Sat Aug 29, 2020 9:02 pm Only Prime MM in our brokerage account has a "bank transfer" link. I've never tried to send money from any of our other funds to our bank.
In my personal Vanguard Taxable Brokerage Account, I can select Sell for any of the funds in my account and after choosing how many shares to sell, it asks, Where is the money going?.

The drop down list has:
  • exchange to another fund
  • into my settlement account
  • CU Checking ****XXXX
  • My Ally Saving ****XXXX
  • send me a check
  • My Joint Taxable Brokerage Account

These options are available for every single fund in the account including money market funds, bond funds and stock index funds: VUSXX, VNJXX, VIGAX, VSMAX, VWIUX and VMMXX.

Will that work for you?
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by rkhusky »

retiringwhen wrote: Sun Aug 30, 2020 7:08 am Will that work for you?
Thanks. I'll take a look at that in case we want that option in the future. At present we are fine directing all transactions through the MM fund, but it is always nice to know the options.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by S_Track »

Electron wrote: Sat Aug 29, 2020 1:53 pm

"Because of Vanguard’s client-owned structure it cannot simply waive fees and cover them, the industry’s traditional method of protecting investors from low interest rates."

"Instead, as yields fall below expenses on the Vanguard Pennsylvania Municipal Money Market Fund, expenses of the fund are being temporarily reallocated to other funds within Vanguard, company spokesman Freddy Martino said via e-mail."
So curious how this works since VG is client owned. As an example, why should share holders of another fund, say Total Stock, be on the hook for subsidizing a Municipal Money Market fund? I suppose this would get spread out across all the funds at VG and be similar to paying other overhead costs but then how is that any different than just waiving the fee?
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by capran »

Kevin M wrote: Sat Aug 29, 2020 8:29 pm
capran wrote: Sat Aug 29, 2020 6:38 pm
jeffyscott wrote: Sat Aug 29, 2020 10:59 am
capran wrote: Sat Aug 29, 2020 10:13 am
pascalwager wrote: Sat Aug 29, 2020 5:40 am
I have three Vanguard brokerage accounts and only the Federal MMF is linked, in each account, to my bank--not the stock or bond funds.
Did some checking with my CU. They suggested a wire transfer from Vanguard for large amounts, but noted they only allow 10k and under of on line out-going transfers and limit of six per month. At this point it is probably not worth the hassle to gain only 800 in annual interest after taxes. I know I should find a different bank, but that means going back to the attorney to change our trust, which would again cost substantially more than the net gain of any comparable account. sure seems like earning interest is more the anomaly since the 2008 crisis, as rates last year were the only time we earned anything. guess that comes with the territory of not subjecting myself to the risks of loss of principal in stocks.
Not sure what the issue is :?: , but if you can do an ACH transfer from Vanguard to your credit union now that capability will not change. Whether the process is that when you sell the money goes directly to the credit union account via ACH or if you can only move the money from the settlement account to the credit union, that process should be the same whether you are using investor share class or admiral share class of the current prime money market fund and the process should not change with the change to the name of the fund.

At most, if it is a brokerage account, you may have to sell and then transfer the cash from the settlement account. But if that is going to be the process with the new fund, it should also be the process with the current fund as the current prime money market is not a settlement account, it is just another mutual fund. In a brokerage account just using the settlement account (Federal Money Market), instead of a separately purchased money market mutual fund (such as Prime or ) might mean the money can be moved faster as you would not have wait for the trade to settle.


Unless CWR means something other than "check writing :?:" (no idea what the "R" is doing there), that seems to be the only thing that will be lost.
Image
It is a brokerage account, so there is a settlement fund and a prime money market that was absorbed by the brokerage account when we set it up. it had been a stand alone Prime MMKT. That said, the issue really lies with the CU. They were aweful to deal with when transferring our roths to Vanguard and wanted to charge us 100 each for some signature guarantee form. Thankfully Vanguard accepted the transfer without the extra signature guarantee. My biggest issue now is the CU saying there are limits of 10k to transfer on line. With the rates so low everywhere, certainly not worth spending several thousand to revamp the trust to earn 800 extra interest. Live and learn. It will just allow us to convert that much more from IRA to Roth.
You are mixing up a bunch of things.

Transferring IRAs has nothing to do with what we're talking about here.

The $10K transfer limit only applies to transfers initiated at the CU. Initiate the transaction at Vanguard and this limit does not apply.

I don't understand at all the comment about revamping your trust. Why would you have to do that? Maybe you're thinking about the schedule that lists your assets. You don't have to pay a lawyer to update that.

Kevin
I mentioned the IRA's in the context for some of the blocks established by my CU. For example transfer fees going out from the CU. And yes, on the Vanguard side they are accommodation, but on the CU side not so much. I certainly hope and envision a time when I would want to move the money back to Vanguard, and that is where the CU fails us. I double checked and they clearly say electronic transfers are limited to 10k and six per month. which led to my comment about changing the trust IF I were to change banks. (we were led to believe when/if we make changes of banks or accounts listed in the trust we needed to go back in to modify the trust. although from what you are saying that may not be necessary and is likely a ploy by unethical lawyers who set up the trust.) and we were sold a bill of goods about avoiding probate with a trust, which I doubt is possible when a possible letter of testamentary is needed for things like a wrap-around will to deal with vehicles or things not owned by the trust.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by abuss368 »

So is Vanguard PAS going to continue to simply use the Federal Money Market?
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by Electron »

S_Track wrote: Sun Aug 30, 2020 9:01 amSo curious how this works since VG is client owned. As an example, why should share holders of another fund, say Total Stock, be on the hook for subsidizing a Municipal Money Market fund? I suppose this would get spread out across all the funds at VG and be similar to paying other overhead costs but then how is that any different than just waiving the fee?
That's a very good question. Here is a paragraph from the Statement of Additional Information (SAI).

"Vanguard employs a supporting staff of management and administrative personnel needed to provide the requisite services to the funds and also furnishes the funds with necessary office space, furnishings, and equipment. Each fund (other than a fund of funds) pays its share of Vanguard’s total expenses, which are allocated among the funds under methods approved by the board of trustees of each fund. In addition, each fund bears its own direct expenses, such as legal, auditing, and custodial fees."

This could be a concern if interest rates remain low for a long period of time and most or all Vanguard Money Market funds earn less than their expenses.

Other fund groups waive fees by reducing their profits which is not possible at Vanguard.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by rossington »

capran wrote: Sun Aug 30, 2020 10:59 am
Kevin M wrote: Sat Aug 29, 2020 8:29 pm
capran wrote: Sat Aug 29, 2020 6:38 pm
jeffyscott wrote: Sat Aug 29, 2020 10:59 am
capran wrote: Sat Aug 29, 2020 10:13 am
Did some checking with my CU. They suggested a wire transfer from Vanguard for large amounts, but noted they only allow 10k and under of on line out-going transfers and limit of six per month. At this point it is probably not worth the hassle to gain only 800 in annual interest after taxes. I know I should find a different bank, but that means going back to the attorney to change our trust, which would again cost substantially more than the net gain of any comparable account. sure seems like earning interest is more the anomaly since the 2008 crisis, as rates last year were the only time we earned anything. guess that comes with the territory of not subjecting myself to the risks of loss of principal in stocks.
Not sure what the issue is :?: , but if you can do an ACH transfer from Vanguard to your credit union now that capability will not change. Whether the process is that when you sell the money goes directly to the credit union account via ACH or if you can only move the money from the settlement account to the credit union, that process should be the same whether you are using investor share class or admiral share class of the current prime money market fund and the process should not change with the change to the name of the fund.

At most, if it is a brokerage account, you may have to sell and then transfer the cash from the settlement account. But if that is going to be the process with the new fund, it should also be the process with the current fund as the current prime money market is not a settlement account, it is just another mutual fund. In a brokerage account just using the settlement account (Federal Money Market), instead of a separately purchased money market mutual fund (such as Prime or ) might mean the money can be moved faster as you would not have wait for the trade to settle.


Unless CWR means something other than "check writing :?:" (no idea what the "R" is doing there), that seems to be the only thing that will be lost.
Image
It is a brokerage account, so there is a settlement fund and a prime money market that was absorbed by the brokerage account when we set it up. it had been a stand alone Prime MMKT. That said, the issue really lies with the CU. They were aweful to deal with when transferring our roths to Vanguard and wanted to charge us 100 each for some signature guarantee form. Thankfully Vanguard accepted the transfer without the extra signature guarantee. My biggest issue now is the CU saying there are limits of 10k to transfer on line. With the rates so low everywhere, certainly not worth spending several thousand to revamp the trust to earn 800 extra interest. Live and learn. It will just allow us to convert that much more from IRA to Roth.
You are mixing up a bunch of things.

Transferring IRAs has nothing to do with what we're talking about here.

The $10K transfer limit only applies to transfers initiated at the CU. Initiate the transaction at Vanguard and this limit does not apply.

I don't understand at all the comment about revamping your trust. Why would you have to do that? Maybe you're thinking about the schedule that lists your assets. You don't have to pay a lawyer to update that.

Kevin
I mentioned the IRA's in the context for some of the blocks established by my CU. For example transfer fees going out from the CU. And yes, on the Vanguard side they are accommodation, but on the CU side not so much. I certainly hope and envision a time when I would want to move the money back to Vanguard, and that is where the CU fails us. I double checked and they clearly say electronic transfers are limited to 10k and six per month. which led to my comment about changing the trust IF I were to change banks. (we were led to believe when/if we make changes of banks or accounts listed in the trust we needed to go back in to modify the trust. although from what you are saying that may not be necessary and is likely a ploy by unethical lawyers who set up the trust.) and we were sold a bill of goods about avoiding probate with a trust, which I doubt is possible when a possible letter of testamentary is needed for things like a wrap-around will to deal with vehicles or things not owned by the trust.
Are you sure you can't just close the trust account at the CU and open a new trust account at another financial institution? Why would any direct modifications to the trust be necessary for that? The bank accounts should just be a portion of the trust's total assets no matter where you have them as they need to be registered to the trust anyway.
"Success is going from failure to failure without loss of enthusiasm." Winston Churchill.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by sycamore »

Electron wrote: Sun Aug 30, 2020 2:07 pm
S_Track wrote: Sun Aug 30, 2020 9:01 amSo curious how this works since VG is client owned. As an example, why should share holders of another fund, say Total Stock, be on the hook for subsidizing a Municipal Money Market fund? I suppose this would get spread out across all the funds at VG and be similar to paying other overhead costs but then how is that any different than just waiving the fee?
That's a very good question. Here is a paragraph from the Statement of Additional Information (SAI).

"Vanguard employs a supporting staff of management and administrative personnel needed to provide the requisite services to the funds and also furnishes the funds with necessary office space, furnishings, and equipment. Each fund (other than a fund of funds) pays its share of Vanguard’s total expenses, which are allocated among the funds under methods approved by the board of trustees of each fund. In addition, each fund bears its own direct expenses, such as legal, auditing, and custodial fees."

This could be a concern if interest rates remain low for a long period of time and most or all Vanguard Money Market funds earn less than their expenses.

Other fund groups waive fees by reducing their profits which is not possible at Vanguard.
Electron, would you expand on that last thought? I'm not sure what you mean it's not possible for Vanguard to reduce their profits.

Do you just mean that Vanguard is bound (by their structure/bylaws) to run "at cost" and therefore can't simply waive fees?
Or that Vanguard is unable/unwilling to cut costs further, e.g., by reducing salaries or benefits, firing employees, etc.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by Electron »

sycamore wrote: Sun Aug 30, 2020 2:51 pmElectron, would you expand on that last thought? I'm not sure what you mean it's not possible for Vanguard to reduce their profits.

Do you just mean that Vanguard is bound (by their structure/bylaws) to run "at cost" and therefore can't simply waive fees?
Or that Vanguard is unable/unwilling to cut costs further, e.g., by reducing salaries or benefits, firing employees, etc.
Here is the information from my earlier post. Vanguard is client owned and does not operate for profit.

https://www.reuters.com/article/us-vang ... SKBN2481U0

"Vanguard Group Inc reallocated expenses on a $1.9 billion municipal money market fund, a spokesman said, a move akin to the fee waivers that rivals have granted."

"Because of Vanguard’s client-owned structure it cannot simply waive fees and cover them, the industry’s traditional method of protecting investors from low interest rates."

"Instead, as yields fall below expenses on the Vanguard Pennsylvania Municipal Money Market Fund, expenses of the fund are being temporarily reallocated to other funds within Vanguard, company spokesman Freddy Martino said via e-mail."

"Vanguard, the world’s largest mutual fund manager with some $6 trillion in assets, said in a securities filing late on Monday that it made the change to maintain a zero or positive yield for the fund."
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by Northern Flicker »

capran wrote: Sat Aug 29, 2020 10:13 am
pascalwager wrote: Sat Aug 29, 2020 5:40 am
Kevin M wrote: Fri Aug 28, 2020 11:25 am
capran wrote: Fri Aug 28, 2020 11:06 am <snip> we do have the ability to transfer money to our credit union via electronic process. When we are required to be switched from Prime to the new Admiral Share, will we lose that feature? <snip>
No, you will not lose your EFT/ACH capability. External banks (or credit unions) are linked to one or more accounts. You can transfer to or from any fund in the account from or to the linked bank or CU. Both investor shares and admiral shares versions of Prime MM are just another fund in the account. You can do the same transfers from stock or bond funds in the account as well.

Kevin
I have three Vanguard brokerage accounts and only the Federal MMF is linked, in each account, to my bank--not the stock or bond funds.
Did some checking with my CU. They suggested a wire transfer from Vanguard for large amounts, but noted they only allow 10k and under of on line out-going transfers and limit of six per month. At this point it is probably not worth the hassle to gain only 800 in annual interest after taxes. I know I should find a different bank, but that means going back to the attorney to change our trust, which would again cost substantially more than the net gain of any comparable account. sure seems like earning interest is more the anomaly since the 2008 crisis, as rates last year were the only time we earned anything. guess that comes with the territory of not subjecting myself to the risks of loss of principal in stocks.
For a higher balance, I think the treasury money fund is for all practical purposes about as safe as a govt-insured account. I mentioned some largely theoretical issues that could come up with treasury MMF, centering around covering costs or if there were significant liquidity problems with t-bills. But an insured account is also not 100% immune from problems-- in a time of widespread insolvency, there could be a significant drlay hntil you receive funds to be made whole if your institution failed. And I think most deposit account agreements still have language giving the institution the right to ask for 30-day's notice in writing to request a withdrawal.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by Kevin M »

capran wrote: Sun Aug 30, 2020 10:59 am
Kevin M wrote: Sat Aug 29, 2020 8:29 pm
capran wrote: Sat Aug 29, 2020 6:38 pm
jeffyscott wrote: Sat Aug 29, 2020 10:59 am
capran wrote: Sat Aug 29, 2020 10:13 am Did some checking with my CU. They suggested a wire transfer from Vanguard for large amounts, but noted they only allow 10k and under of on line out-going transfers and limit of six per month. At this point it is probably not worth the hassle to gain only 800 in annual interest after taxes. I know I should find a different bank, but that means going back to the attorney to change our trust, which would again cost substantially more than the net gain of any comparable account. sure seems like earning interest is more the anomaly since the 2008 crisis, as rates last year were the only time we earned anything. guess that comes with the territory of not subjecting myself to the risks of loss of principal in stocks.
<snip>
It is a brokerage account, so there is a settlement fund and a prime money market that was absorbed by the brokerage account when we set it up. it had been a stand alone Prime MMKT. That said, the issue really lies with the CU. They were aweful to deal with when transferring our roths to Vanguard and wanted to charge us 100 each for some signature guarantee form. Thankfully Vanguard accepted the transfer without the extra signature guarantee. My biggest issue now is the CU saying there are limits of 10k to transfer on line. With the rates so low everywhere, certainly not worth spending several thousand to revamp the trust to earn 800 extra interest. Live and learn. It will just allow us to convert that much more from IRA to Roth.
You are mixing up a bunch of things.

Transferring IRAs has nothing to do with what we're talking about here.

The $10K transfer limit only applies to transfers initiated at the CU. Initiate the transaction at Vanguard and this limit does not apply.

I don't understand at all the comment about revamping your trust. Why would you have to do that? Maybe you're thinking about the schedule that lists your assets. You don't have to pay a lawyer to update that.

Kevin
I mentioned the IRA's in the context for some of the blocks established by my CU. For example transfer fees going out from the CU. And yes, on the Vanguard side they are accommodation, but on the CU side not so much. I certainly hope and envision a time when I would want to move the money back to Vanguard, and that is where the CU fails us. I double checked and they clearly say electronic transfers are limited to 10k and six per month.<snip>
The six per month limit is correct--that is due to a federal regulation that applies to all savings accounts, so not unique to your CU.

But once again, the $10K limit only applies to transfers initiated at the CU. If you have the CU linked as an external account at Vanguard, you can transfer much more than that from CU to Vanguard by buying shares of a fund at Vanguard (money market, stock or bond).

Many of us here have lots of experience with CUs that have low ACH transfer limits, I've personally done many transfers in and out of such CUs by initiating the transfer from Vanguard or from a bank with high ACH limits, like Ally (my limits are $500K per day and $1M per 30 days for inbound transfers, and $150K/$600K for outbound), and I've never seen a post that anyone has had a different experience.
capran wrote: Sun Aug 30, 2020 10:59 am <snip> which led to my comment about changing the trust IF I were to change banks. (we were led to believe when/if we make changes of banks or accounts listed in the trust we needed to go back in to modify the trust. although from what you are saying that may not be necessary and is likely a ploy by unethical lawyers who set up the trust.) <snip>
Yeah, there should be no need for a lawyer to modify the trust because you add or remove accounts from the trust. Typically there are one or more schedules that list assets, but from my perspective that's mainly to help the successor trustee identify all trust property. You can update those schedules yourself if you want, or arrange another way for the successor trustee to identify the property.

I've settled two trusts, and I did not rely on the schedules to identify the trust property (I was intimately aware of the financials of both grantors), and I never had to provide the schedules to any financial institution to take control of an account as successor trustee.
capran wrote: Sun Aug 30, 2020 10:59 am <snip> and we were sold a bill of goods about avoiding probate with a trust, which I doubt is possible when a possible letter of testamentary is needed for things like a wrap-around will to deal with vehicles or things not owned by the trust.
It's not a bill of goods. I was able to settle both trusts mentioned above without probate, although there were a couple of recalcitrant, out of state mutual fund companies that were not aware of the state (CA) probate code that took some extra communications to resolve.

In CA you can use a small estate affidavit to get control of up to $166,250 of non-trust assets, and that worked for me (although the limit was only $50K when I settled those trusts).

So check your state for something similar.

If you have more than the small estate limit outside of the trust, consider using payable/transfer on death titling if not convenient or possible to put the asset in the trust. For example, CA allows transfer on death registration of a vehicle. I often use POD accounts as an alternative to trust ownership.

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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by Electron »

Here is additional information on Vanguard fund expenses. I checked the Statement of Additional Information on several Vanguard funds and they state that each fund can pay up to 0.40% of net assets in expenses. It looks like all Vanguard funds including the Money Market funds are getting a bargain with expenses much lower than the 0.40% figure.

"Vanguard was established and operates under the Agreement. The Agreement provides that each Vanguard fund may be called upon to invest up to 0.40% of its net assets in Vanguard. The amounts that each fund has invested are adjusted from time to time in order to maintain the proportionate relationship between each fund’s relative net assets and its contribution to Vanguard’s capital."

Here are two more articles of interest.

https://money.usnews.com/investing/news ... arket-fund

"Vanguard is not currently reallocating expenses on other funds, Martino said via e-mail. He also said the reallocated expenses are insignificant in the scale of Vanguard's fund line. We therefore do not expect this change to increase expense ratios for any of our other funds, he said."

https://www.startribune.com/money-marke ... 571962392/

"Good news for investors: Some large firms such as Fidelity and Vanguard are waiving some fees on money market funds."

"Will bond funds be next for fee waivers? Vanguard’s Short-Term Treasury Fund (symbol: VFISX) has also seen its yield drop sharply. After fees, the fund’s yield actually fell to a negative yield, -0.01% last month."

"Roughly half of Wall Street firms are cutting fees temporarily, according to trade publication Ignites.com."

"Fidelity in March began waiving fees on Fidelity Treasury Money Market Fund, Fidelity Government Money Market Fund and the FIMM Treasury Portfolio, due to falling interest rates."
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by Kevin M »

rkhusky wrote: Sat Aug 29, 2020 9:02 pm
pascalwager wrote: Sat Aug 29, 2020 5:40 am
Kevin M wrote: Fri Aug 28, 2020 11:25 am
capran wrote: Fri Aug 28, 2020 11:06 am <snip> we do have the ability to transfer money to our credit union via electronic process. When we are required to be switched from Prime to the new Admiral Share, will we lose that feature? <snip>
No, you will not lose your EFT/ACH capability. External banks (or credit unions) are linked to one or more accounts. You can transfer to or from any fund in the account from or to the linked bank or CU. Both investor shares and admiral shares versions of Prime MM are just another fund in the account. You can do the same transfers from stock or bond funds in the account as well.

Kevin
I have three Vanguard brokerage accounts and only the Federal MMF is linked, in each account, to my bank--not the stock or bond funds.
Only Prime MM in our brokerage account has a "bank transfer" link. I've never tried to send money from any of our other funds to our bank.
I've been wondering if pascalwager might have been confusing the lack of a "Transfer money" link with the lack of ability to transfer to an externally linked bank. The "Transfer money" link is only associated with the settlement fund, Federal money market, in all of the taxable Vanguard brokerage accounts that I manage, but in every one of those accounts I can use the "Sell" link to the right of any other fund, then specify the external bank in "Where's the money going".

I've set up many external banks at Vanguard, I don't recall ever seeing the option to choose individual funds to link--just accounts. Once the account is linked, I can transfer to or from any fund in the account, including funds that are added after the account is linked, from or to the external bank, and have done so numerous times over the years.

Kevin
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by Northern Flicker »

Electron wrote: Sun Aug 30, 2020 4:52 pm Here is additional information on Vanguard fund expenses. I checked the Statement of Additional Information on several Vanguard funds and they state that each fund can pay up to 0.40% of net assets in expenses. It looks like all Vanguard funds including the Money Market funds are getting a bargain with expenses much lower than the 0.40% figure.

"Vanguard was established and operates under the Agreement. The Agreement provides that each Vanguard fund may be called upon to invest up to 0.40% of its net assets in Vanguard. The amounts that each fund has invested are adjusted from time to time in order to maintain the proportionate relationship between each fund’s relative net assets and its contribution to Vanguard’s capital."

Here are two more articles of interest.

https://money.usnews.com/investing/news ... arket-fund

"Vanguard is not currently reallocating expenses on other funds, Martino said via e-mail. He also said the reallocated expenses are insignificant in the scale of Vanguard's fund line. We therefore do not expect this change to increase expense ratios for any of our other funds, he said."

https://www.startribune.com/money-marke ... 571962392/

"Good news for investors: Some large firms such as Fidelity and Vanguard are waiving some fees on money market funds."

"Will bond funds be next for fee waivers? Vanguard’s Short-Term Treasury Fund (symbol: VFISX) has also seen its yield drop sharply. After fees, the fund’s yield actually fell to a negative yield, -0.01% last month."

"Roughly half of Wall Street firms are cutting fees temporarily, according to trade publication Ignites.com."

"Fidelity in March began waiving fees on Fidelity Treasury Money Market Fund, Fidelity Government Money Market Fund and the FIMM Treasury Portfolio, due to falling interest rates."
It is really not good news. Consider SPAXX, which normally has an ER of .42%. With the waiver, it now has an SEC yield of .01%, but it is currently onky 42% treasuries. Vanguard Federal MM has a yield of .08% and is 66% treasuries. With SPAXX the more than the excess yield from holding more agency debt flows to the fund provider while the excess risk from holding more agency debt flows to the investors in the fund.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by rossington »

Northern Flicker wrote: Sun Aug 30, 2020 5:21 pm
Electron wrote: Sun Aug 30, 2020 4:52 pm Here is additional information on Vanguard fund expenses. I checked the Statement of Additional Information on several Vanguard funds and they state that each fund can pay up to 0.40% of net assets in expenses. It looks like all Vanguard funds including the Money Market funds are getting a bargain with expenses much lower than the 0.40% figure.

"Vanguard was established and operates under the Agreement. The Agreement provides that each Vanguard fund may be called upon to invest up to 0.40% of its net assets in Vanguard. The amounts that each fund has invested are adjusted from time to time in order to maintain the proportionate relationship between each fund’s relative net assets and its contribution to Vanguard’s capital."

Here are two more articles of interest.

https://money.usnews.com/investing/news ... arket-fund

"Vanguard is not currently reallocating expenses on other funds, Martino said via e-mail. He also said the reallocated expenses are insignificant in the scale of Vanguard's fund line. We therefore do not expect this change to increase expense ratios for any of our other funds, he said."

https://www.startribune.com/money-marke ... 571962392/

"Good news for investors: Some large firms such as Fidelity and Vanguard are waiving some fees on money market funds."

"Will bond funds be next for fee waivers? Vanguard’s Short-Term Treasury Fund (symbol: VFISX) has also seen its yield drop sharply. After fees, the fund’s yield actually fell to a negative yield, -0.01% last month."

"Roughly half of Wall Street firms are cutting fees temporarily, according to trade publication Ignites.com."

"Fidelity in March began waiving fees on Fidelity Treasury Money Market Fund, Fidelity Government Money Market Fund and the FIMM Treasury Portfolio, due to falling interest rates."
It is really not good news. Consider SPAXX, which normally has an ER of .42%. With the waiver, it now has an SEC yield of .01%, but it is currently onky 42% treasuries. Vanguard Federal MM has a yield of .08% and is 66% treasuries. With SPAXX the more than the excess yield from holding more agency debt flows to the fund provider while the excess risk from holding more agency debt flows to the investors in the fund.
The ER is currently .42%. Was it higher prior to March?
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retiringwhen
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by retiringwhen »

Northern Flicker wrote: Sun Aug 30, 2020 5:21 pm It is really not good news. Consider SPAXX, which normally has an ER of .42%. With the waiver, it now has an SEC yield of .01%, but it is currently onky 42% treasuries. Vanguard Federal MM has a yield of .08% and is 66% treasuries. With SPAXX the more than the excess yield from holding more agency debt flows to the fund provider while the excess risk from holding more agency debt flows to the investors in the fund.
The lesson here is that this is exhibit 86 of the Cost-matters Hypothesis. Vanguard's lowest cost (lower then any other fund company) Money Markets put more interest in the investor's pockets at lower risk simply because their expense ratios are almost always at least half of their competitors.

Vanguard was humble-bragging in the press release, but it is true. Prime Money Market was producing best in class returns at a risk level that was not much different than a Federal Fund.

In times when these funds were paying 2% yields (like 4 mos. ago :!: ), the difference was just as great, folks just didn't notice.

As an aside, SPAXX ER of 0.42% is a good exhibit of no free lunch. That is what pays for all the other fee waivers and Zero funds at Fidelity.

I read last year that Schwab was making 50% of their revenue on low rate deposits in Schwab FDIC cash accounts. It will be interesting to see just how bad this hurts their bottom line. I wouldn't want to be a Schwab shareholder right now.
pascalwager
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by pascalwager »

Kevin M wrote: Sun Aug 30, 2020 4:57 pm
rkhusky wrote: Sat Aug 29, 2020 9:02 pm
pascalwager wrote: Sat Aug 29, 2020 5:40 am
Kevin M wrote: Fri Aug 28, 2020 11:25 am
capran wrote: Fri Aug 28, 2020 11:06 am <snip> we do have the ability to transfer money to our credit union via electronic process. When we are required to be switched from Prime to the new Admiral Share, will we lose that feature? <snip>
No, you will not lose your EFT/ACH capability. External banks (or credit unions) are linked to one or more accounts. You can transfer to or from any fund in the account from or to the linked bank or CU. Both investor shares and admiral shares versions of Prime MM are just another fund in the account. You can do the same transfers from stock or bond funds in the account as well.

Kevin
I have three Vanguard brokerage accounts and only the Federal MMF is linked, in each account, to my bank--not the stock or bond funds.
Only Prime MM in our brokerage account has a "bank transfer" link. I've never tried to send money from any of our other funds to our bank.
I've been wondering if pascalwager might have been confusing the lack of a "Transfer money" link with the lack of ability to transfer to an externally linked bank. The "Transfer money" link is only associated with the settlement fund, Federal money market, in all of the taxable Vanguard brokerage accounts that I manage, but in every one of those accounts I can use the "Sell" link to the right of any other fund, then specify the external bank in "Where's the money going".

I've set up many external banks at Vanguard, I don't recall ever seeing the option to choose individual funds to link--just accounts. Once the account is linked, I can transfer to or from any fund in the account, including funds that are added after the account is linked, from or to the external bank, and have done so numerous times over the years.

Kevin
I did some experimenting and I now see that the external bank is indeed linked to each mutual fund in my taxable, Rollover IRA, and Roth IRA accounts.

For ETFs, I guess I would need to first sell to the Settlement Fund which is then linked to my bank, but I didn't confirm this.

In the past, using the old investing platform, I had always understood that money could only be moved from a Vanguard MMF to your bank, but even that may have been wrong.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by sycamore »

pascalwager wrote: Mon Aug 31, 2020 2:07 am I did some experimenting and I now see that the external bank is indeed linked to each mutual fund in my taxable, Rollover IRA, and Roth IRA accounts.

For ETFs, I guess I would need to first sell to the Settlement Fund which is then linked to my bank, but I didn't confirm this.

In the past, using the old investing platform, I had always understood that money could only be moved from a Vanguard MMF to your bank, but even that may have been wrong.
As you guessed, for ETFs (or individual stocks) a sell order puts the proceeds in the settlement fund and once there you can transfer it to your bank.

With the old platform, you can use buy a mutual fund using money from an externally-linked bank. It can be for a money market fund or any mutual fund. And you can sell a mutual fund with proceeds going directly to the bank.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by galawdawg »

Electron wrote: Sun Aug 30, 2020 3:00 pm
sycamore wrote: Sun Aug 30, 2020 2:51 pmElectron, would you expand on that last thought? I'm not sure what you mean it's not possible for Vanguard to reduce their profits...
Here is the information from my earlier post. Vanguard is client owned and does not operate for profit....
That is an oft-repeated fallacy here on Bogleheads. Vanguard most certainly operates for profit. In 2019, Vanguard modified its SEC filings accordingly. From an article in the Philadelphia Inquirer about these changes by Joseph DiStefano (who often writes about Vanguard):
In the new filing and other current Vanguard statements to the SEC and investors, there is:
  • No more claim that Vanguard is a “mutual mutual," a legal status not recognized under federal securities laws. Insurance companies, savings banks, farm cooperatives, credit unions and individual mutual funds can be organized as enterprises where customers are owners and have specific rights, but there aren’t similar laws for investment companies or fund groups. “Mutual mutual” is “meaningless,” Ritholtz said.
  • No more claim that Vanguard’s way offers a “no profit" contrast to the “profit component” that other companies pack into their management fees. Indeed, company officials acknowledge it is a private, for-profit company that earns profits and pays income taxes. “They are not a non-profit,” said Daniel Wiener, chairman of Adviser Investments, a New York company that also sells Vanguard funds. “How else could the board of directors determine a “dividend” on the profit-sharing plan that pays bonuses larger than salaries to Vanguard’s senior people annually?
  • No more claim that Vanguard operates “on an at-cost basis,” as if the funds charge the affiliated management company only what it costs for fund services, without the usual business overhead and profit margins.
Unlike U.S. public companies, Vanguard doesn’t report executive compensation, nor does it disclose marketing spending. Vanguard, which now owns about 8 percent of U.S. companies and a growing percentage of foreign stocks, does insist on transparent governance practices for the companies it buys with investor money.

https://www.inquirer.com/columnists/joh ... 90207.html
And another article by DiStefano from July 13, 2020 on partnership profits reports:
The low-cost mutual fund provider Vanguard is immensely profitable.

The private, for-profit company earns millions of dollars in fees each year and pays income taxes. And for senior executives and others at Vanguard, there’s a closely watched compensation program called “Partnership Plan” paid out every year.

https://www.inquirer.com/business/vangu ... 00713.html
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by jeffyscott »

galawdawg wrote: Mon Aug 31, 2020 6:39 am
Electron wrote: Sun Aug 30, 2020 3:00 pm
sycamore wrote: Sun Aug 30, 2020 2:51 pmElectron, would you expand on that last thought? I'm not sure what you mean it's not possible for Vanguard to reduce their profits...
Here is the information from my earlier post. Vanguard is client owned and does not operate for profit....
That is an oft-repeated fallacy here on Bogleheads. Vanguard most certainly operates for profit. In 2019, Vanguard modified its SEC filings accordingly. From an article in the Philadelphia Inquirer about these changes by Joseph DiStefano (who often writes about Vanguard):
In the new filing and other current Vanguard statements to the SEC and investors, there is:
  • No more claim that Vanguard is a “mutual mutual," a legal status not recognized under federal securities laws. Insurance companies, savings banks, farm cooperatives, credit unions and individual mutual funds can be organized as enterprises where customers are owners and have specific rights, but there aren’t similar laws for investment companies or fund groups. “Mutual mutual” is “meaningless,” Ritholtz said.
  • No more claim that Vanguard’s way offers a “no profit" contrast to the “profit component” that other companies pack into their management fees. Indeed, company officials acknowledge it is a private, for-profit company that earns profits and pays income taxes. “They are not a non-profit,” said Daniel Wiener, chairman of Adviser Investments, a New York company that also sells Vanguard funds. “How else could the board of directors determine a “dividend” on the profit-sharing plan that pays bonuses larger than salaries to Vanguard’s senior people annually?
  • No more claim that Vanguard operates “on an at-cost basis,” as if the funds charge the affiliated management company only what it costs for fund services, without the usual business overhead and profit margins.
Unlike U.S. public companies, Vanguard doesn’t report executive compensation, nor does it disclose marketing spending. Vanguard, which now owns about 8 percent of U.S. companies and a growing percentage of foreign stocks, does insist on transparent governance practices for the companies it buys with investor money.

https://www.inquirer.com/columnists/joh ... 90207.html
And another article by DiStefano from July 13, 2020 on partnership profits reports:
The low-cost mutual fund provider Vanguard is immensely profitable.

The private, for-profit company earns millions of dollars in fees each year and pays income taxes. And for senior executives and others at Vanguard, there’s a closely watched compensation program called “Partnership Plan” paid out every year.

https://www.inquirer.com/business/vangu ... 00713.html
So instead of Vanguard covering it, they are choosing to force investors in all other funds to subsidize a few, likely very wealthy, Pennsylvanians that invest in that state muni fund and they can hide the subsidy due to rounding in reported ERs. This sort of thing should at least be structured as a sort of loan, where that muni fund would pay back the expenses that were diverted at some time in the future when yields are higher.

They had done something similar several years ago with the Treasury money market, where it's ER magically went down as low as, I think, 0.04% in order to maintain a positive yield. They also had mutual fund investors subsidize the launch of their ETFs, so they could sell them with a low ER.
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Electron
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by Electron »

galawdawg wrote: Mon Aug 31, 2020 6:39 amVanguard most certainly operates for profit. In 2019, Vanguard modified its SEC filings accordingly.
Thanks for the correction and the links. Maybe we should just state that Vanguard is structured differently in comparison with other large mutual fund companies.

In regards to the reallocation of fund expenses, Vanguard California Municipal Money Market fund is now showing an SEC yield of 0.01% along with Pennsylvania Municipal Money Market. The most recent dividend payments were $0.00007 for the California fund and $0.00005 for the Pennsylvania fund. We may know soon if other funds join the list.

Vanguard Short Term Treasury fund (VFISX) is currently showing an SEC yield of -0.22%. The July dividend was $0.00008 down from $0.02028 a year earlier.

The August dividends available tomorrow should be very interesting. Let's hope that short term interest rates do not fall any further.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by Kevin M »

jeffyscott wrote: Mon Aug 31, 2020 8:14 am <snip>
They had done something similar several years ago with the Treasury money market, where it's ER magically went down as low as, I think, 0.04% in order to maintain a positive yield. <snip>
This was not unique to Treasury MM. There was a period of years after the 2008 financial crisis during which yields of all Vanguard MM funds (at least the ones I've looked at) were in low single digits, much of the time at 0.01%. We are heading in that direction again. Clearly Vanguard's policy is to not let MM yields fall below 0.01%, which means that almost certainly they are shifting expenses for these funds.

CA muni MM is at 0.01%.

Kevin
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KlingKlang
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by KlingKlang »

If you converted from Prime Money Market Investor to Admiral recently you might want to check your "Balances and holdings" screen today. We have all of our mutual fund dividends sent to our Prime Money Market accounts. I converted yesterday, so effective on 09/01/2020, and some of my bond fund dividends ended up in the old Investor accounts and some in the new Admiral accounts.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by rkhusky »

KlingKlang wrote: Tue Sep 01, 2020 9:08 am If you converted from Prime Money Market Investor to Admiral recently you might want to check your "Balances and holdings" screen today. We have all of our mutual fund dividends sent to our Prime Money Market accounts. I converted yesterday, so effective on 09/01/2020, and some of my bond fund dividends ended up in the old Investor accounts and some in the new Admiral accounts.
My dividend preferences transferred over fine. But thanks for reminding me to check. I also switched yesterday, but my only funds that send dividends to Prime are stock funds. My bond funds are set to reinvest.

It probably depends on when your dividends posted and when the transition from Investor to Admiral occurred. Probably would have been better to do the switch on a day other than the same day that dividends are posted. Vanguard does its transactions sequentially and you are not guaranteed that they do them in any particular order. I once assumed that transactions that I entered first would transact at Vanguard first, but that's not necessarily the case.
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by BolderBoy »

Kevin M wrote: Sun Aug 30, 2020 3:50 pmThe six per month limit is correct--that is due to a federal regulation that applies to all savings accounts, so not unique to your CU.
This federal regulation was repealed in July I think. Now any limits are left up to the entities themselves.
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nasrullah
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Vanguard Taxable Money Market Funds

Post by nasrullah »

[Thread merged into here, see below (next page) --admin LadyGeek]

Hello,

Vanguard is adjusting their Taxable Money Market Funds (https://investornews.vanguard/changes-t ... nd-lineup/) this month:
Vanguard Prime Money Market Fund will change its investment approach and be renamed Vanguard Cash Reserves Federal Money Market Fund. When this change goes into effect in late September 2020, the fund will invest almost exclusively in cash, U.S. government securities, and/or repurchase agreements that are collateralized solely by U.S. government securities or cash.
Vanguard Treasury Money Market Fund (VUSXX) has reopened to new investors, also effective today. The fund was closed in April, during a period of heightened volatility and increased interest in U.S. Treasury investments, to protect existing investors from an accelerated reduction in the fund’s yield.
I'm curious if anyone is using (or will use these) instead of the Vanguard Federal Money Market Fund (VMFXX). Other than reduced risk/returns what am I missing with these?

Thanks!
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retiringwhen
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Re: [Vanguard Prime Money Market changes, gets new name. Treasury Money Market reopened]

Post by retiringwhen »

BolderBoy wrote: Tue Sep 01, 2020 10:45 am
Kevin M wrote: Sun Aug 30, 2020 3:50 pmThe six per month limit is correct--that is due to a federal regulation that applies to all savings accounts, so not unique to your CU.
This federal regulation was repealed in July I think. Now any limits are left up to the entities themselves.
Interesting, here is what Ally has to say about their online savings account. They imply limiting is allowed, but not required (I haven't read Regulation D). They are suspending the fee if you go over 6 for now at least.
https://www.ally.com/bank/online-savings-account/ wrote: You can make six withdrawals and transfers per statement cycle from your Online Savings Account.

Federal law permits limiting certain types of withdrawals and transfers from savings accounts. There’s a $10 excessive transaction fee for each transaction that exceeds this limit. However, we’re temporarily refunding this fee to help those of you impacted by COVID-19.
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CABob
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Re: Vanguard Taxable Money Market Funds

Post by CABob »

Just FYI there is a fairly lengthy thread on this issue at viewtopic.php?p=5464522#p5464522
Bob
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