Vanguard Ultra-Short-Term Bond Fund now available

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by *3!4!/5! » Wed May 31, 2017 4:18 am

Now two years after this fund (and this thread) were started, it looks like these funds are starting to make sense compared to online savings accounts which are mostly at 1.05% now. Now we have

Vanguard Ultra-Short-Term Bond Fund Investor Shares (VUBFX)
https://personal.vanguard.com/us/funds/ ... IntExt=INT
SEC yield 1.38%

Vanguard Ultra-Short-Term Bond Fund Admiral Shares (VUSFX)
https://personal.vanguard.com/us/funds/ ... IntExt=INT
SEC yield 1.46%

and the Money Market Funds are catching up to online savings accounts

Vanguard Prime Money Market Fund (VMMXX)
https://personal.vanguard.com/us/funds/ ... IntExt=INT
SEC yield 0.97%

Vanguard Federal Money Market Fund (VMFXX) (typical sweep)
https://personal.vanguard.com/us/funds/ ... IntExt=INT
SEC yield 0.74%

It seems like these yields have risen rapidly while the online savings account yields, have barely budged, so these USBFs and MMFs are starting to make sense again for (almost) cash.

Thoughts?

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by *3!4!/5! » Wed May 31, 2017 12:55 pm

*3!4!/5! wrote:Now two years after this fund (and this thread) were started, it looks like these funds are starting to make sense compared to online savings accounts which are mostly at 1.05% now. Now we have

Vanguard Ultra-Short-Term Bond Fund Investor Shares (VUBFX)
https://personal.vanguard.com/us/funds/ ... IntExt=INT
SEC yield 1.38%

Vanguard Ultra-Short-Term Bond Fund Admiral Shares (VUSFX)
https://personal.vanguard.com/us/funds/ ... IntExt=INT
SEC yield 1.46%

and the Money Market Funds are catching up to online savings accounts

Vanguard Prime Money Market Fund (VMMXX)
https://personal.vanguard.com/us/funds/ ... IntExt=INT
SEC yield 0.97%

Vanguard Federal Money Market Fund (VMFXX) (typical sweep)
https://personal.vanguard.com/us/funds/ ... IntExt=INT
SEC yield 0.74%

It seems like these yields have risen rapidly while the online savings account yields, have barely budged, so these USBFs and MMFs are starting to make sense again for (almost) cash.

Thoughts?
Any thoughts on these funds? Anyone using them? It seems like they're starting to make sense compared to online savings accounts (since the USBFs and MMFs yields have risen rapidly while the online savings account yields have barely budged, and that could continue).

Also the NAVs of the USBFs are only very slightly volatile, a 0.5% range in NAVs in their 2+ years of existence, which is only about a third of SEC yield.

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by ANC » Wed May 31, 2017 1:58 pm

Another way to go is 1-year T-bills or 2-year T-notes. They have yields of 1.16 and 1.28 right now.

I don't have a Vanguard account, but others on this list say you can purchase them at auction for no fees, I believe.

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by lack_ey » Wed May 31, 2017 2:46 pm

By the way, for reference, compared to the popular ETFs in the space (all with more than $1 billion assets, $0.01 spreads, ultrashort investment grade bonds), two mutual funds, and Vanguard Prime Money Market:

Image
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
I started 1 month after fund inception as things can be weird then and Vanguard's fund had a dip to start that the others didn't.

Vanguard is cheapest but did not do particularly well or the most steadily. Note that the mutual funds look a little clunkier in terms of movement in part just because the share prices are lower (so $0.01 is a larger percentage). The others may have taken risks that were rewarded, where you didn't really see the downside, though.

In another financial crisis these would fall some for sure, much more than we see in this relatively stable history. Note that credit yields widened in 2015 and then narrowed in 2016, which along with the more recent rate hikes explain the kind of bend or "knee" around 2016 you see above.

Code: Select all

Ticker Fund Name                                              ER %  SEC yld %
VUSFX  Vanguard Ultra-Short-Term Bond Fund Admiral Shares     0.12    1.45
NEAR   iShares Short Maturity Bond ETF                        0.25    1.43
MINT   PIMCO Enhanced Short Maturity Active ETF               0.35    1.42
GSY    Guggenheim Enhanced Short Duration ETF                 0.28    1.40
BUBIX  Baird Ultra Short Bond Institutional                   0.15    1.24 [end of March]
PAIDX  PIMCO Short Asset Investment [not PIMCO Short Term]    0.24    1.40
VMMXX  Vanguard Prime Money Market Fund Investor Shares       0.16    0.97
ANC wrote:Another way to go is 1-year T-bills or 2-year T-notes. They have yields of 1.16 and 1.28 right now.

I don't have a Vanguard account, but others on this list say you can purchase them at auction for no fees, I believe.
Or off the secondary market works fine. You may actually be able to get a few bp extra that way anyway, getting whatever issue off the run that for whatever reason is trading slightly lower than others of similar maturity.

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by sport » Wed May 31, 2017 4:04 pm

I do not want to take my RMD until later in the year. So, since the time period is short, I moved the money into Vanguard Ultra-Short Term Fund. I still get some yield, and I am not concerned about any large drop in value.

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by *3!4!/5! » Wed May 31, 2017 4:05 pm

^^^ Thanks. Those comparisons are interesting.

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by Doc » Wed May 31, 2017 4:11 pm

lack_ey's chart with price instead of growth (total return):

Imagefree image host
(Use Lack_ey's link and change "Growth" to "Price" with the pull down menu at the upper left of the chart.)

Ask yourselves are you looking for making a lot of money with an ultra short fund or do you want a stable price with a little more return than a MM fund?
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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by *3!4!/5! » Wed May 31, 2017 7:00 pm

^^^ The others look more volatile. That dip in early 2016 looks like a bit of credit risk showing up.

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by BanditKing » Wed May 31, 2017 11:18 pm

I'm embarrassed to say I did not know this fund existed. I'm rethinking keeping the cash portions of my EF here instead of at Ally (most of the rest of it is in VWIUX). A few bucks is a few bucks, after all :)

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by lack_ey » Thu Jun 01, 2017 12:31 am

BanditKing wrote:I'm embarrassed to say I did not know this fund existed. I'm rethinking keeping the cash portions of my EF here instead of at Ally (most of the rest of it is in VWIUX). A few bucks is a few bucks, after all :)
It's not really a cash substitute. Ally savings account rate still beats the risk-free rate. You only get more by taking credit risk and if that ends up being additive over your holding period, which is far from guaranteed. Which may be okay, but you could just as well take more term risk or something else instead (or rather, a mix of things).

Perhaps later in the year it could be a better bet, as I imagine that even 4-week T-bills may start exceeding the Ally savings rate.

You may want to just manage duration by shifting between Vanguard municipal bond funds (and perhaps the municipal money market fund), if you're already using the intermediate-term tax exempt. Replace the cash and part of the intermediate-term fund with some short-term funds as necessary to target the duration and yield curve exposure you want.

All this is unlikely to matter all that much but if you want to think through it and attempt to optimize a little, maybe it's worth a look.

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by Electron » Thu Jun 01, 2017 1:11 pm

The monthly dividends paid by this fund have varied quite a bit. Also note that no distribution yield is provided.

https://personal.vanguard.com/us/funds/ ... =INT#tab=4

The investment portfolio appears to include significant use of derivatives. See pages 33-46 in the Annual Report dated 1-31-17. The same is true for Vanguard Short Term Investment Grade. The dividends vary quite a bit in that fund as well and I believe derivatives are a factor.
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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by *3!4!/5! » Thu Jun 01, 2017 1:51 pm

Electron wrote:The monthly dividends paid by this fund have varied quite a bit. Also note that no distribution yield is provided.

https://personal.vanguard.com/us/funds/ ... =INT#tab=4

The investment portfolio appears to include significant use of derivatives. See pages 33-46 in the Annual Report dated 1-31-17. The same is true for Vanguard Short Term Investment Grade. The dividends vary quite a bit in that fund as well and I believe derivatives are a factor.
For reference, here was a discussion of that fund.

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by Doc » Thu Jun 01, 2017 2:17 pm

Electron wrote:The investment portfolio appears to include significant use of derivatives. See pages 33-46 in the Annual Report dated 1-31-17. The same is true for Vanguard Short Term Investment Grade. The dividends vary quite a bit in that fund as well and I believe derivatives are a factor.
Derivatives sometimes shift the "type" of the income but not the dollar value perse. As an example a fund lends our securities to a short seller. If the security has a dividend during the period of the contract the lender is reimbursed but it is in the form of ordinary income not dividends. Of course this example shouldn't apply to a bond fund but maybe there is some similar factor involved (interest rate swaps maybe?).
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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by FelixTheCat » Thu Jun 01, 2017 2:44 pm

The fund has to pay >= inflation.
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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by Doc » Thu Jun 01, 2017 2:51 pm

FelixTheCat wrote:The fund has to pay >= inflation.
Why?
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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by FelixTheCat » Fri Jun 02, 2017 2:56 pm

Doc wrote:
FelixTheCat wrote:The fund has to pay >= inflation.
Why?
What's the point of losing money? Savings accounts pay 1%. Inflation is 2%. Your buying power loses over the long term.
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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by jrbdmb » Fri Jun 02, 2017 3:49 pm

nisiprius wrote:I don't see how the interest rate can turn out to be high enough to care much about. It will still be true that almost any bank account will beat it -- and without even the smallest of fluctuations.
In fact, the vast majority of bank accounts are currently paying far less than what this fund will probably pay. For example, as of June 01 bankrate.com states that the average money market interest rate is 0.12%.

I suspect that Bogleheads who are always shopping around for those 1% or 2% savings deals are a tiny minority of the banking public. :D

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by Theoretical » Fri Jun 02, 2017 5:10 pm

FelixTheCat wrote:
Doc wrote:
FelixTheCat wrote:The fund has to pay >= inflation.
Why?
What's the point of losing money? Savings accounts pay 1%. Inflation is 2%. Your buying power loses over the long term.
Except that ultra-low duration cash as part of a portfolio doesn't work that way as a piece of the puzzle. In the stagflation, both stocks and bonds stunk up the joint and the humble t-bill largely kept up with a little delay to inflation. In addition, t-bills also do very well in times of flattened and inverted yield curves.

If I have a diversified portfolio, I expect something to be stinking up the joint from time to time.

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by Doc » Fri Jun 02, 2017 6:52 pm

FelixTheCat wrote:
Doc wrote:
FelixTheCat wrote:The fund has to pay >= inflation.
Why?
What's the point of losing money? Savings accounts pay 1%. Inflation is 2%. Your buying power loses over the long term.
Ok but you said that the fund HAS to pay not that we all want it to pay more than inflation. I agree with your concept just was questioning the "must".

If you want to keep up with inflation only you buy 4 week Treasuries.
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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by Electron » Sat Jun 03, 2017 1:59 pm

Doc wrote:Of course this example shouldn't apply to a bond fund but maybe there is some similar factor involved (interest rate swaps maybe?).
The notes in the Annual Report on pages 37-46 provide information on the various derivatives. The derivatives include Futures Contracts, Options on Futures Contracts, Swap Contracts, and Forward Currency Contracts.

Futures Contracts: The fund uses futures contracts to invest in fixed income asset classes with greater efficiency and lower cost than is possible through direct investment, to add value when these instruments are attractively priced, or to adjust sensitivity to changes in interest rates.

Forward Currency Contracts: The fund enters into forward currency contracts to protect the value of securities and related receivables and payables against changes in future foreign exchange rates.

Swap Contracts: The fund invests in credit default swaps to adjust the overall credit risk of the fund or to actively overweight or underweight credit risk to a specific issuer or group of issuers.

Swaptions: The fund enters into swaptions to adjust the fund’s sensitivity to interest rates.

The notes mention daily calculation of variation margin and pledged collateral and settlement within one or two business days. It's possible that derivative related losses in a given month are taken out of the dividend. On the other hand, gains might increase the dividend. That could help explain the sometimes large variation seen in the dividend. I recall seeing significant losses in futures contracts in the July 31 Semiannual Report for the Short Term Investment Grade fund. The futures contracts were set to expire in September 2016.
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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by heartwood » Mon Jun 05, 2017 9:08 am

Resurrecting a 2 yr old thread ...

Vanguard Ultra Short Term Bond (VUBFX) is mentioned in the June 5, 2017 WSJ. It's a short sentence or two that's unclear to me.

"Vanguard Group, for example, advises investors in its Ultra-Short-Term Bond Fund (VUBFX) to hold off on tactical moves as a way to manage some of this (credit) risk. “We discourage people from entering and exiting before the bonds reach maturity,”"

The june 6 2017 SEC yield was 1.38 with a 1 year duration.

Over the last several years I've used Vanguard limited term tax exempt (SEC 1.20 with 2.4 yr duration) as a parking spot for funds in our LLC. As an artifact of the price when we've bought/sold its been a loser for us for all that time. It lost $22 in value last month after reinvesting the dividend. Similarly over the roughly 3 yrs we've held it, despite Vanguard showing positive total returns for 1 and 3 years.

I'm considering moving all the funds in limited term to the Federal MM settlement account in the LLC, but wonder whether VUBFX might work as well. We're not talking a lot of assets, roughly $20k in/out on an annual basis. Perhaps just keep it simple in the MM?

I'm interested in any comments on VUBFX in general as well.

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by Electron » Mon Jun 05, 2017 2:34 pm

heartwood wrote:Vanguard Ultra Short Term Bond (VUBFX) is mentioned in the June 5, 2017 WSJ. It's a short sentence or two that's unclear to me.

"Vanguard Group, for example, advises investors in its Ultra-Short-Term Bond Fund (VUBFX) to hold off on tactical moves as a way to manage some of this (credit) risk. “We discourage people from entering and exiting before the bonds reach maturity,”"
I think they are saying that the expected returns would be seen after holding the fund for a reasonable period of time rather than trading in and out on a shorter term basis. It's probably best to hold for at least the duration of the fund. NAV will experience some movement up and down.

On the Limited Term Tax Exempt fund, Vanguard and Morningstar both show positive total returns over 1 year and 3 years. Make sure you are calculating true total return with dividends reinvested. NAV performance will be less.

As a note of interest, I looked at the NAV of Ultra-Short-Term Bond around the time of the last three rate hikes by the Federal Reserve (12-16-15, 12-14-16, 3-15-17). It looks as though NAV was impacted to a small degree in anticipation of a hike in the Fed Funds Rate. The good news is that the income generated by the fund would rise after those rate hikes and increase total return over time.

The NAV of the Ultra-Short-Term Bond fund has traded in a pretty narrow range since inception. In the case of the Admiral Shares, the range has been 19.94 to 20.06.
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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by lazyday » Sat Sep 16, 2017 4:38 am

Considering Admiral shares:

In a taxable account, I'd choose the Ally no penalty CD for 1.5% with $25,000 minimum. Ultra-short has SEC yield 1.56% with more risk.

Ally doesn't offer that CD in an IRA, and it's a pain to move IRAs around. So I'm considering options at Vanguard while waiting for a good CD.

Ultra-short has duration 1 year, and before expenses SEC yield would be 1.68%, a 38 bps spread over a 1 year T bill. The expense ratio cuts that down to 26 bps. Is that enough compensation for the added risk?

Maybe it's better to barbell a longer term fund with a Treasury bill.

ST Investment Grade would have an SEC yield of 2.11% if ER was 0. A spread over a 3 year Treasury of 58 bps, or 48 bps after expenses. Morningstar rates both funds A for credit risk, but I don't know if it's valid to compare credit ratings for funds of different duration.

If we use 53% 6 mo T bills and 47% ST IG, our yield is 1.56%, the same as the SEC yield of Ultra-short. Duration rises from 1 to about 1.5 years, but credit quality increases and ER is lower.

Or we could use 63% 12 mo T bills and 37% ST IG for the same yield, with duration about 1.6 years, very good credit quality, and ER under 4 bps instead of 12 with the Ultra-short fund. Spread maybe 20 bps over a T of same duration, with relatively little added risk.

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by Doc » Sat Sep 16, 2017 7:23 am

lazyday wrote:
Sat Sep 16, 2017 4:38 am
Morningstar rates both funds A for credit risk, but I don't know if it's valid to compare credit ratings for funds of different duration.
It's the bonds themselves that are rated by the rating agencies not M*. M* uses a weighted average of the bonds to get the fund rating. The weight is the probability of default. I would assume that the duration effect is already included in the individual bond rating.
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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by BlueEars » Sat Sep 16, 2017 9:30 am

Some years back there was good long term data presented on sort term IG bonds. I think the poster had a good background in DFA type investing. Anyway the basic idea was that ST IG had a good track record. Sorry I am out of town right now or would hunt that up.

My current approach is to keep a modest portfolio position in ST IG semi permanently as the nearest to cash step. If maintained over maybe 2x the duration, I think there is little risk.

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by tj » Thu Sep 13, 2018 2:58 pm

Is there a point where the Ultra Short Term bond Fund makes sense to put the bulk of Savings in?

Right now the variance is 2.5% vs 1.8% in a savings account. Maybe there are some 1 year CD's that get a simiilar rate, but the Ultra Short fund is more easily accessible. The NAV seems like it has been more or less stable since inception.

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by Thesaints » Thu Sep 13, 2018 3:03 pm

tj wrote:
Thu Sep 13, 2018 2:58 pm
Is there a point where the Ultra Short Term bond Fund makes sense to put the bulk of Savings in?

Right now the variance is 2.5% vs 1.8% in a savings account. Maybe there are some 1 year CD's that get a simiilar rate, but the Ultra Short fund is more easily accessible. The NAV seems like it has been more or less stable since inception.
Extra return is 0.7%. Duration is 1.5 years. You don't get FDIC protection, but credit quality is very high; I wouldn't consider it in my decision.
You come out ahead for instantaneous interest rate increases below 0.5%.

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by restingonmylaurels » Fri Sep 14, 2018 12:33 am

A few years ago I invested in both USB and TBM. Since then USB has done well while TBM has not. YTD, for example, USB is up 1.24% and has an SEC yield of 2.53%. TBM is down 1.46% YTD and has an SEC yield of 3.16%.

To me, I have been happy to have invested twice as much in USB as TBM during this time of rising rates.

More than three years ago, stlutz made the following comment on this fund:
stlutz wrote:
Wed Feb 11, 2015 1:01 am
When this fund would be attractive is at a time when the yield curve is very flat or inverted. For those who want to follow a variable maturity strategy, this type of fund would make sense then over the other options in that case.

I put this in the same bucket as the int't bond fund--have no interest now but I'm glad it's around should it make sense for me in the future.
I am curious is he now believes, given the 0.21% differential between the 2 and 10-year Treasury note rates, whether the yield curve is sufficiently flat to invest in this fund?

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by stlutz » Sat Sep 15, 2018 8:30 pm

I am curious is he now believes, given the 0.21% differential between the 2 and 10-year Treasury note rates, whether the yield curve is sufficiently flat to invest in this fund?
Since I made that post I've become less enamored of "variable maturity" strategies. A closer look at the backtesting around them revealed to me that the results of them are very dependent upon one specific market cycle (the 70s and 80s). I've concluded that the bond market is not as dumb as some think it is. A flatter yield curve now is an indication that the bond market doesn't see a lot of long-term inflation out there and it sees a pretty good chance of a recession in the next several years. Both seem like very reasonable conclusions to me.

In short, I'm more a fan of deciding on a maturity profile as a strategic decision as opposed to a tactical one.

So, I'm still not using the fund, but for different reasons. :D

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by tennisplyr » Sun Sep 16, 2018 6:16 pm

Like my insured Ally savings @1.85% :happy
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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by SeeMoe » Mon Sep 17, 2018 10:01 am

john94549 wrote:
Tue Feb 10, 2015 8:31 pm
It might be a viable alternative to VMMXX, but, then, anything is a viable alternative to VMMXX.
What is a “ VMMXX?” Myself , I think I’ll continue holding short term monies in the Vanguard Prime Money Market fund. It’s stable and trustworthy and has low expenses ...
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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by jeffyscott » Mon Sep 17, 2018 10:44 am

Thesaints wrote:
Thu Sep 13, 2018 3:03 pm
tj wrote:
Thu Sep 13, 2018 2:58 pm
Is there a point where the Ultra Short Term bond Fund makes sense to put the bulk of Savings in?

Right now the variance is 2.5% vs 1.8% in a savings account. Maybe there are some 1 year CD's that get a simiilar rate, but the Ultra Short fund is more easily accessible. The NAV seems like it has been more or less stable since inception.
Extra return is 0.7%. Duration is 1.5 years. You don't get FDIC protection, but credit quality is very high; I wouldn't consider it in my decision.
You come out ahead for instantaneous interest rate increases below 0.5%.
Duration is actually 1 year, not 1.5: https://investor.vanguard.com/mutual-fu ... olio/vusfx

This is one of those funds that makes me wonder what the SEC yield really is. My understanding is that it is supposed to be essentially the net yield to maturity, but this fund has YTM of 2.9% and ER of 0.1%, which would imply net YTM of 2.8% vs. SEC yield of 2.54%.
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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by Doc » Mon Sep 17, 2018 11:11 am

jeffyscott wrote:
Mon Sep 17, 2018 10:44 am
This is one of those funds that makes me wonder what the SEC yield really is. My understanding is that it is supposed to be essentially the net yield to maturity, but this fund has YTM of 2.9% and ER of 0.1%, which would imply net YTM of 2.8% vs. SEC yield of 2.54%.
Let me try.

The SEC yield is based on the distributions and price change over the last 30 days. The average YTM of a fund is based on the weighted average of the YTM of the funds holdings. The time frame is maturity not last 30 days. Most funds do not hold bonds to maturity hence there is some difference and this difference is greater the shorter term the holdings are. (Just arithmetic.)

In addition with something like this fund there are a lot of derivatives in the portfolio which may be based say on a two year note but which expire in 30 days. This really messes up the YTM/SEC comparison.

For something like I like to use a 3 month rolling return chart.

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Re: Vanguard Ultra-Short-Term Bond Fund now available

Post by jeffyscott » Mon Sep 17, 2018 12:29 pm

Doc wrote:
Mon Sep 17, 2018 11:11 am
For something like I like to use a 3 month rolling return chart.
That gave me the idea to look at the current 3 month return. For the 3 months ended yesterday, there was nearly no price change and the total return was about 0.63% (2.53% annualized), implying the SEC yield was the better predictor...or maybe that was just coincidence?

The YTM of 2.8% (net) implies to me that should be the expected return over the next year or so, if the fund did nothing and nothing else (interest rates, etc.) changed, that is what the fund would earn. With 1 year treasury at 2.56%, the 2.8% figure would seem to make more sense, as the expected return, than the SEC yield. Vanguard shows 1 year corporate bond yields at about 2.5-3%, which also implies the fund should be expected to return something closer the net YTM than the SEC yield, based on the ratings for the bonds in the fund.

I did notice that the YTM is as of 7/31/18 (so just about 3 months ago). But there was also not much of a price change since then, just 2 cents, so it probably has not changed much.
press on, regardless - John C. Bogle

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