VMFXX at 2.08% now and keeps growing

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anon_investor
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Re: VMFXX at 2.08% now and keeps growing

Post by anon_investor »

longlife wrote: Thu Aug 04, 2022 2:06 pm
harikaried wrote: Thu Aug 04, 2022 1:54 pm
Droptoptop wrote: Thu Aug 04, 2022 1:35 pmSo basically if you want the highest yield you can just use all your cash to buy the prime mmmf and then cash management will automatically sell from that as your account has debits (checks written, transfers out, etc)?
For reference, the current Fidelity Cash Management Account core position yield is 1.2%.

So if you have incoming cash say $5k that you temporarily want to put into say FZDXX currently yielding 2.08%, it would earn $2.50 over 15 days as cash versus $4.25 in the money market fund. It's easy enough to place a buy order for the money market fund to get the additional ~$2 in yield as Fidelity will automatically pull from the money market fund when you have a debit of some sort. Or you could just say the core yield is good enough and only move the relatively untouched "savings" / emergency part of your cash to the money market fund.
FZDXX has a "minimum to invest" at $100000...
Just use the lower minimum prime mmf (SPRXX - 7 day SEC yield of 1.96% as of 8/3/2022). I believe that is the 2nd highest yielding mmf at Fidelity right now (FZDXX being the highest).
harikaried
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Re: VMFXX at 2.08% now and keeps growing

Post by harikaried »

longlife wrote: Thu Aug 04, 2022 2:06 pm
harikaried wrote: Thu Aug 04, 2022 1:54 pmFZDXX currently yielding 2.08%
FZDXX has a "minimum to invest" at $100000...
I used FZDXX / Fidelity® Money Market Fund Premium Class as an example as others have mentioned it already, but there's a very similar SPRXX / Fidelity® Money Market Fund with a pretty close 1.96% yield with no minimum to invest.

So my previous example with $5k temporarily available for 15 days in FZDXX yielding $4.25 would drop about a quarter to just above $4 with SPRXX.
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Re: VMFXX at 2.08% now and keeps growing

Post by jmch1990 »

I admit that I struggle to understand how this works. Can someone explain in layman's terms why the Vanguard Money Market Fund yield is significantly higher than most HYSA? What is the composition of the fund that allows for such a high rate relative to other similar options, and (while recognizing that we cannot tell the future) is there a reason to expect it will last?
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Re: VMFXX at 2.08% now and keeps growing

Post by harikaried »

anon_investor wrote: Thu Aug 04, 2022 2:35 pmI believe that is the 2nd highest yielding mmf at Fidelity right now (FZDXX being the highest)
For those fortunate to have access to the Institutional Class (perhaps as part of a 401k), one can get a little bit better yield with FNSXX 2.24% with $10M minimum or FMPXX 2.20% "Class I" with $1M minimum. But yes practically FZDXX 2.08% will be the highest I believe and SPRXX 1.96% for all is still pretty good too.
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anon_investor
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Re: VMFXX at 2.08% now and keeps growing

Post by anon_investor »

harikaried wrote: Thu Aug 04, 2022 2:42 pm
anon_investor wrote: Thu Aug 04, 2022 2:35 pmI believe that is the 2nd highest yielding mmf at Fidelity right now (FZDXX being the highest)
For those fortunate to have access to the Institutional Class (perhaps as part of a 401k), one can get a little bit better yield with FNSXX 2.24% with $10M minimum or FMPXX 2.20% "Class I" with $1M minimum. But yes practically FZDXX 2.08% will be the highest I believe and SPRXX 1.96% for all is still pretty good too.
I was assuming if someone couldn't access FZDXX, they weren't going to be able to access those even more exclusive ones. :beer

Surprisingly, with only $1k minimums, at Merrill Edge there are higher yielding government/treasury money market funds available. Only Vanguard has them beat with VMFXX.
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Re: VMFXX at 2.08% now and keeps growing

Post by Yesterdaysnews »

jmch1990 wrote: Thu Aug 04, 2022 2:38 pm I admit that I struggle to understand how this works. Can someone explain in layman's terms why the Vanguard Money Market Fund yield is significantly higher than most HYSA? What is the composition of the fund that allows for such a high rate relative to other similar options, and (while recognizing that we cannot tell the future) is there a reason to expect it will last?
I think Schwab and I assume Fido use these cash funds and the spread they can get on cash to generate a lot of their profits. Perhaps the mechanics underneath are also different but I’m not sure how that works.
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Re: VMFXX at 2.08% now and keeps growing

Post by anon_investor »

Yesterdaysnews wrote: Thu Aug 04, 2022 3:14 pm
jmch1990 wrote: Thu Aug 04, 2022 2:38 pm I admit that I struggle to understand how this works. Can someone explain in layman's terms why the Vanguard Money Market Fund yield is significantly higher than most HYSA? What is the composition of the fund that allows for such a high rate relative to other similar options, and (while recognizing that we cannot tell the future) is there a reason to expect it will last?
I think Schwab and I assume Fido use these cash funds and the spread they can get on cash to generate a lot of their profits. Perhaps the mechanics underneath are also different but I’m not sure how that works.
It's just banks trying to make a profit, though I think some FDIC insured HYSA are now paying over 2%. Fidelity has money market funds that offer higher yield than most HYSA now. Even for retail investors at Fidelity, the treasury money market fund core option (FZFXX) is around 1.75% now. If you go with the Fidelity prime money market fund (SPRXX) is at 1.96%.
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Re: VMFXX at 2.08% now and keeps growing

Post by BogleMelon »

anon_investor wrote: Thu Aug 04, 2022 3:31 pm
Yesterdaysnews wrote: Thu Aug 04, 2022 3:14 pm
jmch1990 wrote: Thu Aug 04, 2022 2:38 pm I admit that I struggle to understand how this works. Can someone explain in layman's terms why the Vanguard Money Market Fund yield is significantly higher than most HYSA? What is the composition of the fund that allows for such a high rate relative to other similar options, and (while recognizing that we cannot tell the future) is there a reason to expect it will last?
I think Schwab and I assume Fido use these cash funds and the spread they can get on cash to generate a lot of their profits. Perhaps the mechanics underneath are also different but I’m not sure how that works.
It's just banks trying to make a profit, though I think some FDIC insured HYSA are now paying over 2%. Fidelity has money market funds that offer higher yield than most HYSA now. Even for retail investors at Fidelity, the treasury money market fund core option (FZFXX) is around 1.75% now. If you go with the Fidelity prime money market fund (SPRXX) is at 1.96%.
Where do you see the SPRXX 1.96% rate? I am looking at it now and I see:

Code: Select all

7-Day Yield 4

1.68%
Also FZFXX is at:

Code: Select all

7-Day Yield 4

1.49%
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather
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Re: VMFXX at 2.08% now and keeps growing

Post by anon_investor »

BogleMelon wrote: Thu Aug 04, 2022 3:34 pm
anon_investor wrote: Thu Aug 04, 2022 3:31 pm
Yesterdaysnews wrote: Thu Aug 04, 2022 3:14 pm
jmch1990 wrote: Thu Aug 04, 2022 2:38 pm I admit that I struggle to understand how this works. Can someone explain in layman's terms why the Vanguard Money Market Fund yield is significantly higher than most HYSA? What is the composition of the fund that allows for such a high rate relative to other similar options, and (while recognizing that we cannot tell the future) is there a reason to expect it will last?
I think Schwab and I assume Fido use these cash funds and the spread they can get on cash to generate a lot of their profits. Perhaps the mechanics underneath are also different but I’m not sure how that works.
It's just banks trying to make a profit, though I think some FDIC insured HYSA are now paying over 2%. Fidelity has money market funds that offer higher yield than most HYSA now. Even for retail investors at Fidelity, the treasury money market fund core option (FZFXX) is around 1.75% now. If you go with the Fidelity prime money market fund (SPRXX) is at 1.96%.
Where do you see the SPRXX 1.96% rate? I am looking at it now and I see:

Code: Select all

7-Day Yield 4

1.68%
Also FZFXX is at:

Code: Select all

7-Day Yield 4

1.49%
SPRXX:
https://fundresearch.fidelity.com/mutua ... /31617H201

The 7 day SEC yield for 8/3/2022 is 1.96%
The 7 day SEC yield for 7/31/2022 is 1.68%

3 days makes a BIG difference! :beer
dingusbojangles
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Re: VMFXX at 2.08% now and keeps growing

Post by dingusbojangles »

BogleMelon wrote: Thu Aug 04, 2022 3:34 pm
anon_investor wrote: Thu Aug 04, 2022 3:31 pm
Yesterdaysnews wrote: Thu Aug 04, 2022 3:14 pm
jmch1990 wrote: Thu Aug 04, 2022 2:38 pm I admit that I struggle to understand how this works. Can someone explain in layman's terms why the Vanguard Money Market Fund yield is significantly higher than most HYSA? What is the composition of the fund that allows for such a high rate relative to other similar options, and (while recognizing that we cannot tell the future) is there a reason to expect it will last?
I think Schwab and I assume Fido use these cash funds and the spread they can get on cash to generate a lot of their profits. Perhaps the mechanics underneath are also different but I’m not sure how that works.
It's just banks trying to make a profit, though I think some FDIC insured HYSA are now paying over 2%. Fidelity has money market funds that offer higher yield than most HYSA now. Even for retail investors at Fidelity, the treasury money market fund core option (FZFXX) is around 1.75% now. If you go with the Fidelity prime money market fund (SPRXX) is at 1.96%.
Where do you see the SPRXX 1.96% rate? I am looking at it now and I see:

Code: Select all

7-Day Yield 4

1.68%
Also FZFXX is at:

Code: Select all

7-Day Yield 4

1.49%
Partway down the page here (1.96%): https://fundresearch.fidelity.com/mutua ... /31617H201 and here (1.71%): https://fundresearch.fidelity.com/mutua ... /316341304
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Re: VMFXX at 2.08% now and keeps growing

Post by BogleMelon »

anon_investor wrote: Thu Aug 04, 2022 3:38 pm
BogleMelon wrote: Thu Aug 04, 2022 3:34 pm
anon_investor wrote: Thu Aug 04, 2022 3:31 pm
Yesterdaysnews wrote: Thu Aug 04, 2022 3:14 pm
jmch1990 wrote: Thu Aug 04, 2022 2:38 pm I admit that I struggle to understand how this works. Can someone explain in layman's terms why the Vanguard Money Market Fund yield is significantly higher than most HYSA? What is the composition of the fund that allows for such a high rate relative to other similar options, and (while recognizing that we cannot tell the future) is there a reason to expect it will last?
I think Schwab and I assume Fido use these cash funds and the spread they can get on cash to generate a lot of their profits. Perhaps the mechanics underneath are also different but I’m not sure how that works.
It's just banks trying to make a profit, though I think some FDIC insured HYSA are now paying over 2%. Fidelity has money market funds that offer higher yield than most HYSA now. Even for retail investors at Fidelity, the treasury money market fund core option (FZFXX) is around 1.75% now. If you go with the Fidelity prime money market fund (SPRXX) is at 1.96%.
Where do you see the SPRXX 1.96% rate? I am looking at it now and I see:

Code: Select all

7-Day Yield 4

1.68%
Also FZFXX is at:

Code: Select all

7-Day Yield 4

1.49%
SPRXX:
https://fundresearch.fidelity.com/mutua ... /31617H201

The 7 day SEC yield for 8/3/2022 is 1.96%
The 7 day SEC yield for 7/31/2022 is 1.68%

3 days makes a BIG difference! :beer
Thanks!
I have my main saving in Ally, but I have Fidelity brokerage as well, was wondering which fund would be as safe as Ally (FDIC) yet yielding better returns?
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather
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Re: VMFXX at 2.08% now and keeps growing

Post by anon_investor »

BogleMelon wrote: Thu Aug 04, 2022 3:41 pm
anon_investor wrote: Thu Aug 04, 2022 3:38 pm
BogleMelon wrote: Thu Aug 04, 2022 3:34 pm
anon_investor wrote: Thu Aug 04, 2022 3:31 pm
Yesterdaysnews wrote: Thu Aug 04, 2022 3:14 pm

I think Schwab and I assume Fido use these cash funds and the spread they can get on cash to generate a lot of their profits. Perhaps the mechanics underneath are also different but I’m not sure how that works.
It's just banks trying to make a profit, though I think some FDIC insured HYSA are now paying over 2%. Fidelity has money market funds that offer higher yield than most HYSA now. Even for retail investors at Fidelity, the treasury money market fund core option (FZFXX) is around 1.75% now. If you go with the Fidelity prime money market fund (SPRXX) is at 1.96%.
Where do you see the SPRXX 1.96% rate? I am looking at it now and I see:

Code: Select all

7-Day Yield 4

1.68%
Also FZFXX is at:

Code: Select all

7-Day Yield 4

1.49%
SPRXX:
https://fundresearch.fidelity.com/mutua ... /31617H201

The 7 day SEC yield for 8/3/2022 is 1.96%
The 7 day SEC yield for 7/31/2022 is 1.68%

3 days makes a BIG difference! :beer
Thanks!
I have my main saving in Ally, but I have Fidelity brokerage as well, was wondering which fund would be as safe as Ally (FDIC) yet yielding better returns?
Probably FZFXX, since it is a government/treasury money market fund and not subject to liqudity gates (it is also a core fund option). Though I have no reservations and personally invest in SPRXX (prime money market fund).
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Re: VMFXX at 2.08% now and keeps growing

Post by welderwannabe »

anon_investor wrote: Thu Aug 04, 2022 3:47 pm Probably FZFXX, since it is a government/treasury money market fund and not subject to liqudity gates (it is also a core fund option). Though I have no reservations and personally invest in SPRXX (prime money market fund).
From a safety standpoint, FDLXX Fidelity® Treasury Only Money Market Fund would be the safest. Its only treasurys. FZFXX is around 70% repos, which while backed by treasurys still exposes one to counterparty risk.

Problem is FDLXX only has a yield of 1.38%. It responds slower to interest rates moves.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.
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Re: VMFXX at 2.08% now and keeps growing

Post by retiringwhen »

jmch1990 wrote: Thu Aug 04, 2022 2:38 pm I admit that I struggle to understand how this works. Can someone explain in layman's terms why the Vanguard Money Market Fund yield is significantly higher than most HYSA? What is the composition of the fund that allows for such a high rate relative to other similar options, and (while recognizing that we cannot tell the future) is there a reason to expect it will last?
The difference is almost 100% explained by different Expense Ratios. When you compare like funds to like funds (e.g, Treasury to Treasury, Federal MM to Federal MM, etc.) you will see the difference is almost exactly that difference in ER.

Now sometimes the yield on the Fidelity will be slightly higher than the ER difference, but in the past my analysis has shown there is a marginally higher risk taken in the fund to reach a bit more yield, especially Prime funds. The risk profiles are very slight and not of any serious concern, but that is the only leverage they have. BTW, these days Vanguards Federal and Cash Reserve funds outpace all Prime Funds from Fidelity or Schwab simply due to the lower ER, thus the investor gets a demonstrably safer investment with a higher yield.

This is one corner of the industry where Vanguard's competitors CANNOT match their cost model. Doing it would literally put Schwab out of business. Schwab makes over 100% of their profits from low interest rates cash holdings by their customers. That means the rest of their entire business has been losing money for several years!

This is somewhat true for Fidelity as well, but not the same extreme.
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Re: VMFXX at 2.08% now and keeps growing

Post by BogleMelon »

welderwannabe wrote: Thu Aug 04, 2022 4:06 pm
anon_investor wrote: Thu Aug 04, 2022 3:47 pm Probably FZFXX, since it is a government/treasury money market fund and not subject to liqudity gates (it is also a core fund option). Though I have no reservations and personally invest in SPRXX (prime money market fund).
From a safety standpoint, FDLXX Fidelity® Treasury Only Money Market Fund would be the safest. Its only treasurys. FZFXX is around 70% repos, which while backed by treasurys still exposes one to counterparty risk.

Problem is FDLXX only has a yield of 1.38%. It responds slower to interest rates moves.
What are repos?
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Re: VMFXX at 2.08% now and keeps growing

Post by retiringwhen »

welderwannabe wrote: Thu Aug 04, 2022 4:06 pm
anon_investor wrote: Thu Aug 04, 2022 3:47 pm Probably FZFXX, since it is a government/treasury money market fund and not subject to liqudity gates (it is also a core fund option). Though I have no reservations and personally invest in SPRXX (prime money market fund).
From a safety standpoint, FDLXX Fidelity® Treasury Only Money Market Fund would be the safest. Its only treasurys. FZFXX is around 70% repos, which while backed by treasurys still exposes one to counterparty risk.

Problem is FDLXX only has a yield of 1.38%. It responds slower to interest rates moves.
Repos in non-Prime funds are just as safe as Treasuries since they are actually leverage trades of Treasuries with the Federal Reserve in almost 100% of time. The Repo market is a tool used by the Fed to influence rates on the extreme short-end and they are fully backed by the Fed and collateralized by Treasuries.

In fast rising environments, the Treasury funds will lag, in the dropping rates, they may temporarily do better.

For a long time, I didn't see why Vanguard simplified their MM fund offerings, but it is making more sense now. The Prime market is not provided much added safe yield, and the Treasury funds are not as nimble as the Federal funds. In stable environments, Treasuries may be better for high state tax investors though.
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Re: VMFXX at 2.08% now and keeps growing

Post by BogleMelon »

retiringwhen wrote: Thu Aug 04, 2022 4:18 pm In stable environments, Treasuries may be better for high state tax investors though.
So would FZFXX returns be more state tax efficient than HYSA?
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Re: VMFXX at 2.08% now and keeps growing

Post by anon_investor »

welderwannabe wrote: Thu Aug 04, 2022 4:06 pm
anon_investor wrote: Thu Aug 04, 2022 3:47 pm Probably FZFXX, since it is a government/treasury money market fund and not subject to liqudity gates (it is also a core fund option). Though I have no reservations and personally invest in SPRXX (prime money market fund).
From a safety standpoint, FDLXX Fidelity® Treasury Only Money Market Fund would be the safest. Its only treasurys. FZFXX is around 70% repos, which while backed by treasurys still exposes one to counterparty risk.

Problem is FDLXX only has a yield of 1.38%. It responds slower to interest rates moves.
I would not worry too much about counter party risk for the repurchase agreements held by FZFXX, since they are collateralized by US Treasuries or cash. Prime money market funds can offer more yield because they are "riskier" because they invest in commerical paper which is not collateralized by US treasuries or cash.
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Re: VMFXX at 2.08% now and keeps growing

Post by Stinky »

retiringwhen wrote: Thu Aug 04, 2022 4:13 pm
jmch1990 wrote: Thu Aug 04, 2022 2:38 pm I admit that I struggle to understand how this works. Can someone explain in layman's terms why the Vanguard Money Market Fund yield is significantly higher than most HYSA?
The difference is almost 100% explained by different Expense Ratios. When you compare like funds to like funds (e.g, Treasury to Treasury, Federal MM to Federal MM, etc.) you will see the difference is almost exactly that difference in ER.

[snip]

This is one corner of the industry where Vanguard's competitors CANNOT match their cost model. Doing it would literally put Schwab out of business. Schwab makes over 100% of their profits from low interest rates cash holdings by their customers. That means the rest of their entire business has been losing money for several years!

This is somewhat true for Fidelity as well, but not the same extreme.
This is a really, really interesting post.

So Vanguard passes along all of the “juice” on its money market funds its owners/customers, while Schwab and Fidelity keep some of the “juice” for their shareholders.

I’ve just been reading “The Bogle Effect” by Eric Balchunas. One of the main points is that Vanguard’s unique ownership structure creates real value for its customers, since there is no “owner” that is amassing $ billions of wealth from its customers.

For all the complaints posted on this Forum about Vanguard, I really like the fact that its customers are its owners, and effectively share in the wealth created by the firm.
Retired life insurance company financial officer who sincerely believes that ”It’s a GREAT day to be alive!”
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Re: VMFXX at 2.08% now and keeps growing

Post by retiringwhen »

BogleMelon wrote: Thu Aug 04, 2022 4:18 pm What are repos?
This is a reasonable definition:
https://www.investopedia.com/terms/r/repurchaseagreement.asp#:~:text=A%20repurchase%20agreement%20(repo)%20is,at%20a%20slightly%20higher%20price. wrote:What Is a Repurchase Agreement?

A repurchase agreement (repo) is a form of short-term borrowing for dealers in government securities. In the case of a repo, a dealer sells government securities to investors, usually on an overnight basis, and buys them back the following day at a slightly higher price. That small difference in price is the implicit overnight interest rate. Repos are typically used to raise short-term capital. They are also a common tool of central bank open market operations.

For the party selling the security and agreeing to repurchase it in the future, it is a repo; for the party on the other end of the transaction, buying the security and agreeing to sell in the future, it is a reverse repurchase agreement.
Here is a link to the Federal Reserve Market Dashboard to get an idea of the size and scope of the market.
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Re: VMFXX at 2.08% now and keeps growing

Post by anon_investor »

BogleMelon wrote: Thu Aug 04, 2022 4:26 pm
retiringwhen wrote: Thu Aug 04, 2022 4:18 pm In stable environments, Treasuries may be better for high state tax investors though.
So would FZFXX returns be more state tax efficient than HYSA?
Not for CA, CT or NY, since it is likely that less than 50% of the yield will come from US treasuries (a requirement in those states to be exempt from state/local taxes). However, for other states with income tax, the portion of the yield that comes from US treasuries will be exempt from state/local tax (but it is uncertain what %).
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Re: VMFXX at 2.08% now and keeps growing

Post by anon_investor »

Stinky wrote: Thu Aug 04, 2022 4:29 pm
retiringwhen wrote: Thu Aug 04, 2022 4:13 pm
jmch1990 wrote: Thu Aug 04, 2022 2:38 pm I admit that I struggle to understand how this works. Can someone explain in layman's terms why the Vanguard Money Market Fund yield is significantly higher than most HYSA?
The difference is almost 100% explained by different Expense Ratios. When you compare like funds to like funds (e.g, Treasury to Treasury, Federal MM to Federal MM, etc.) you will see the difference is almost exactly that difference in ER.

[snip]

This is one corner of the industry where Vanguard's competitors CANNOT match their cost model. Doing it would literally put Schwab out of business. Schwab makes over 100% of their profits from low interest rates cash holdings by their customers. That means the rest of their entire business has been losing money for several years!

This is somewhat true for Fidelity as well, but not the same extreme.
This is a really, really interesting post.

So Vanguard passes along all of the “juice” on its money market funds its owners/customers, while Schwab and Fidelity keep some of the “juice” for their shareholders.

I’ve just been reading “The Bogle Effect” by Eric Balchunas. One of the main points is that Vanguard’s unique ownership structure creates real value for its customers, since there is no “owner” that is amassing $ billions of wealth from its customers.

For all the complaints posted on this Forum about Vanguard, I really like the fact that its customers are its owners, and effectively share in the wealth created by the firm.
That is pretty much it, this is why Vanguard's federal money market fund is safer and yields the same or better than prime money market funds at Fidelity.
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Re: VMFXX at 2.08% now and keeps growing

Post by Droptoptop »

To add to the previous post, the current reverse repo rate the Fed is paying money market funds and banks is 2.3% as you can see here: https://www.newyorkfed.org/markets/data-hub
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Re: VMFXX at 2.08% now and keeps growing

Post by retiringwhen »

Stinky wrote: Thu Aug 04, 2022 4:29 pm I’ve just been reading “The Bogle Effect” by Eric Balchunas. One of the main points is that Vanguard’s unique ownership structure creates real value for its customers, since there is no “owner” that is amassing $ billions of wealth from its customers.

For all the complaints posted on this Forum about Vanguard, I really like the fact that its customers are its owners, and effectively share in the wealth created by the firm.
This is generally true, but due to competitive pressures Vanguard has, for all intents and purposes, lost the low-cost crown in index funds. The rest of the industry is willing to run them (for now at least) with little or no profit and in some cases at a loss (Zero funds anyone?).

Active funds, many bond funds and money markets are clear places were Vanguard is still the clear cost winner though as the rest of the industry can go only so far before their owners balk.

Since BH is all about a small number of index mutual funds or ETFs, the advantages are often forgotten.
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Re: VMFXX at 2.08% now and keeps growing

Post by billaster »

Stinky wrote: Thu Aug 04, 2022 4:29 pm
retiringwhen wrote: Thu Aug 04, 2022 4:13 pm
jmch1990 wrote: Thu Aug 04, 2022 2:38 pm I admit that I struggle to understand how this works. Can someone explain in layman's terms why the Vanguard Money Market Fund yield is significantly higher than most HYSA?
The difference is almost 100% explained by different Expense Ratios. When you compare like funds to like funds (e.g, Treasury to Treasury, Federal MM to Federal MM, etc.) you will see the difference is almost exactly that difference in ER.

[snip]

This is one corner of the industry where Vanguard's competitors CANNOT match their cost model. Doing it would literally put Schwab out of business. Schwab makes over 100% of their profits from low interest rates cash holdings by their customers. That means the rest of their entire business has been losing money for several years!

This is somewhat true for Fidelity as well, but not the same extreme.
This is a really, really interesting post.

So Vanguard passes along all of the “juice” on its money market funds its owners/customers, while Schwab and Fidelity keep some of the “juice” for their shareholders.
Well, 100% is a bit of exaggeration. It's more like 60% of Schwab's income is from the juice on its cash accounts, but it's certainly a lot. I call Schwab a cash management company with a side gig as a brokerage.
I’ve just been reading “The Bogle Effect” by Eric Balchunas. One of the main points is that Vanguard’s unique ownership structure creates real value for its customers, since there is no “owner” that is amassing $ billions of wealth from its customers.

For all the complaints posted on this Forum about Vanguard, I really like the fact that its customers are its owners, and effectively share in the wealth created by the firm.
Unfortunately, Vanguard is losing this war. Schwab and Fidelity are able to push their mutual fund fees to the bottom because they can make it up on their cash accounts. To compete, Vanguard must match the low mutual fund fees, but by their charter are not allowed to make it up on their cash accounts like Fidelity and Schwab. This leaves Vanguard squeezed on both sides for revenue which limits the amount they can spend on customer service.
Onlineid3089
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Re: VMFXX at 1.92% now and keeps growing

Post by Onlineid3089 »

Droptoptop wrote: Thu Aug 04, 2022 1:33 pm
Onlineid3089 wrote: Thu Aug 04, 2022 1:24 pm
anon_investor wrote: Thu Aug 04, 2022 6:38 am
z3r0c00l wrote: Thu Aug 04, 2022 5:38 am
Stinky wrote: Thu Aug 04, 2022 5:26 am

Just checked again. Rate has risen by 0.08% in one day.

Now 2.08% as of 8/3/22
Gets me wondering why use my ally 1.4% account at all right now.
I started moving my money at Ally to T-Bills and money market funds. Only going to keep what I need for 2 months of bills in my Ally savings+checking.
I moved about half the cash we keep in Ally over to Vanguard on Tuesday. Kept half that in the settlement fund and used the other half to buy 1 month treasuries, mostly just to see how that process worked in case I want to buy some longer ones in the future.
You can buy Treasuries through the Vanguard website? No commission? What annualized yield?
I saw this article yesterday, probably linked somewhere here though I was googling around a bit as well so may have randomly come across it. The menus in vanguard look a little different for me, but following this made it easy enough to find and buy the treasuries while they were available at auction.
No commission. Yield is whatever it ends up being for that particular auction. Vanguards estimate was a basis point or two high on the yield for what I bought yesterday. There are 3 month treasuries available at auction right now and Vanguard is currently estimating 2.412. Several longer duration options available as well.
https://thefinancebuff.com/treasury-bil ... c-vanguard
jmch1990
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Re: VMFXX at 2.08% now and keeps growing

Post by jmch1990 »

retiringwhen wrote: Thu Aug 04, 2022 4:13 pm
jmch1990 wrote: Thu Aug 04, 2022 2:38 pm I admit that I struggle to understand how this works. Can someone explain in layman's terms why the Vanguard Money Market Fund yield is significantly higher than most HYSA? What is the composition of the fund that allows for such a high rate relative to other similar options, and (while recognizing that we cannot tell the future) is there a reason to expect it will last?
The difference is almost 100% explained by different Expense Ratios. When you compare like funds to like funds (e.g, Treasury to Treasury, Federal MM to Federal MM, etc.) you will see the difference is almost exactly that difference in ER.

Now sometimes the yield on the Fidelity will be slightly higher than the ER difference, but in the past my analysis has shown there is a marginally higher risk taken in the fund to reach a bit more yield, especially Prime funds. The risk profiles are very slight and not of any serious concern, but that is the only leverage they have. BTW, these days Vanguards Federal and Cash Reserve funds outpace all Prime Funds from Fidelity or Schwab simply due to the lower ER, thus the investor gets a demonstrably safer investment with a higher yield.

This is one corner of the industry where Vanguard's competitors CANNOT match their cost model. Doing it would literally put Schwab out of business. Schwab makes over 100% of their profits from low interest rates cash holdings by their customers. That means the rest of their entire business has been losing money for several years!

This is somewhat true for Fidelity as well, but not the same extreme.
Thank you for this information. As a follow-up question, how does this then compare to, say, a regular High Yield SA? I just do not feel I have a clear picture of why VMFXX has a 2%+ yield and a HYSA such Ally has a 1.6%. Are these two numbers correlated at all? VMFXX was 0.01 not too long ago, so I feel that cannot be the case. But I have struggled to understand the difference in cash like instruments.
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Re: VMFXX at 2.08% now and keeps growing

Post by retiringwhen »

jmch1990 wrote: Thu Aug 04, 2022 8:51 pm Thank you for this information. As a follow-up question, how does this then compare to, say, a regular High Yield SA? I just do not feel I have a clear picture of why VMFXX has a 2%+ yield and a HYSA such Ally has a 1.6%. Are these two numbers correlated at all? VMFXX was 0.01 not too long ago, so I feel that cannot be the case. But I have struggled to understand the difference in cash like instruments.
It is simply a business decision by the various banks to decide how high/low they can set their rates to keep and attract deposits.

They clearly feel the competitive pressure of Treasury Bills and Money Market Funds in the current environment. The question is just how high do they need to go to keep the reserves at the right level? That is really it.

Ally for example seems to think they can be 0.25% to 0.5% behind MM rates and keep customers right now, so they keep raising rates but never catch up to Vanguard or Fidelity rates.

Others make very different decisions. My credit union has a teaser account with a 3.5% rate but a very small max balance, the rest of the deposits are mostly around 0.5% They must not be trying to keep deposits!
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Re: VMFXX at 1.92% now and keeps growing

Post by Mel Lindauer »

Droptoptop wrote: Thu Aug 04, 2022 1:33 pm
Onlineid3089 wrote: Thu Aug 04, 2022 1:24 pm
anon_investor wrote: Thu Aug 04, 2022 6:38 am
z3r0c00l wrote: Thu Aug 04, 2022 5:38 am
Stinky wrote: Thu Aug 04, 2022 5:26 am

Just checked again. Rate has risen by 0.08% in one day.

Now 2.08% as of 8/3/22
Gets me wondering why use my ally 1.4% account at all right now.
I started moving my money at Ally to T-Bills and money market funds. Only going to keep what I need for 2 months of bills in my Ally savings+checking.
I moved about half the cash we keep in Ally over to Vanguard on Tuesday. Kept half that in the settlement fund and used the other half to buy 1 month treasuries, mostly just to see how that process worked in case I want to buy some longer ones in the future.
You can buy Treasuries through the Vanguard website? No commission? What annualized yield?
Yes, and it's very easy to do and it's commission-free. The yield depends on the current rate for the length to maturity you choose to purchase (lots of options for various time periods from one month to 30 years).
Best Regards - Mel | | Semper Fi
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beyou
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Re: VMFXX at 2.08% now and keeps growing

Post by beyou »

Why buy tbills, when a combo of funds can get you the ongoing exposure with ease at minimal fees. VMFXX, VGSH and VTIP can get you short term US gov exposure, same credit quality and ease of liquidity.
Kenneth Almquist
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Re: VMFXX at 2.08% now and keeps growing

Post by Kenneth Almquist »

retiringwhen wrote: Thu Aug 04, 2022 9:08 pm
jmch1990 wrote: Thu Aug 04, 2022 8:51 pm Thank you for this information. As a follow-up question, how does this then compare to, say, a regular High Yield SA? I just do not feel I have a clear picture of why VMFXX has a 2%+ yield and a HYSA such Ally has a 1.6%. Are these two numbers correlated at all? VMFXX was 0.01 not too long ago, so I feel that cannot be the case. But I have struggled to understand the difference in cash like instruments.
It is simply a business decision by the various banks to decide how high/low they can set their rates to keep and attract deposits.

They clearly feel the competitive pressure of Treasury Bills and Money Market Funds in the current environment. The question is just how high do they need to go to keep the reserves at the right level? That is really it.

Ally for example seems to think they can be 0.25% to 0.5% behind MM rates and keep customers right now, so they keep raising rates but never catch up to Vanguard or Fidelity rates.

Others make very different decisions. My credit union has a teaser account with a 3.5% rate but a very small max balance, the rest of the deposits are mostly around 0.5% They must not be trying to keep deposits!
Rising interest rates tend to squeeze bank margins. For example, if a bank holds a bunch of adjustable rate mortgages whose rates reset once a year, the rates on the mortgages will (on average) reflect where interest rates were six months ago. So the bank will try to thread the needle between keeping interest rates low enough that they are still profitable yet high enough to avoid losing massive amounts of deposits. As the amount of money deposited in the bank decreases, the bank will make up for this by selling (or not rolling over) financial assets.

A year after interest rates stop rising, the adjustable rate mortgages will be paying significantly more than any asset that a money market fund is allowed to buy, and the bank will be able to lure depositors back by offering rates higher than money market funds are paying.
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Re: VMFXX at 2.08% now and keeps growing

Post by moneyflowin »

billaster wrote: Thu Aug 04, 2022 4:52 pm
Stinky wrote: Thu Aug 04, 2022 4:29 pm
retiringwhen wrote: Thu Aug 04, 2022 4:13 pm
jmch1990 wrote: Thu Aug 04, 2022 2:38 pm I admit that I struggle to understand how this works. Can someone explain in layman's terms why the Vanguard Money Market Fund yield is significantly higher than most HYSA?
The difference is almost 100% explained by different Expense Ratios. When you compare like funds to like funds (e.g, Treasury to Treasury, Federal MM to Federal MM, etc.) you will see the difference is almost exactly that difference in ER.

[snip]

This is one corner of the industry where Vanguard's competitors CANNOT match their cost model. Doing it would literally put Schwab out of business. Schwab makes over 100% of their profits from low interest rates cash holdings by their customers. That means the rest of their entire business has been losing money for several years!

This is somewhat true for Fidelity as well, but not the same extreme.
This is a really, really interesting post.

So Vanguard passes along all of the “juice” on its money market funds its owners/customers, while Schwab and Fidelity keep some of the “juice” for their shareholders.
Well, 100% is a bit of exaggeration. It's more like 60% of Schwab's income is from the juice on its cash accounts, but it's certainly a lot. I call Schwab a cash management company with a side gig as a brokerage.
That's probably why TD Ameritrade doesn't allow clients to buy money market mutual funds except Schwab MMFs. And Schwab's MMFs have terrible yields (the highest is 1.3%). That leaves ETFs or T-bills as options, but TD Ameritrade takes a 0.1-0.2% cut from T-bill yields as their hidden commission on secondary market offerings
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Re: VMFXX at 2.08% now and keeps growing

Post by anon_investor »

moneyflowin wrote: Fri Aug 05, 2022 8:50 pm
billaster wrote: Thu Aug 04, 2022 4:52 pm
Stinky wrote: Thu Aug 04, 2022 4:29 pm
retiringwhen wrote: Thu Aug 04, 2022 4:13 pm
jmch1990 wrote: Thu Aug 04, 2022 2:38 pm I admit that I struggle to understand how this works. Can someone explain in layman's terms why the Vanguard Money Market Fund yield is significantly higher than most HYSA?
The difference is almost 100% explained by different Expense Ratios. When you compare like funds to like funds (e.g, Treasury to Treasury, Federal MM to Federal MM, etc.) you will see the difference is almost exactly that difference in ER.

[snip]

This is one corner of the industry where Vanguard's competitors CANNOT match their cost model. Doing it would literally put Schwab out of business. Schwab makes over 100% of their profits from low interest rates cash holdings by their customers. That means the rest of their entire business has been losing money for several years!

This is somewhat true for Fidelity as well, but not the same extreme.
This is a really, really interesting post.

So Vanguard passes along all of the “juice” on its money market funds its owners/customers, while Schwab and Fidelity keep some of the “juice” for their shareholders.
Well, 100% is a bit of exaggeration. It's more like 60% of Schwab's income is from the juice on its cash accounts, but it's certainly a lot. I call Schwab a cash management company with a side gig as a brokerage.
That's probably why TD Ameritrade doesn't allow clients to buy money market mutual funds except Schwab MMFs. And Schwab's MMFs have terrible yields (the highest is 1.3%). That leaves ETFs or T-bills as options, but TD Ameritrade takes a 0.1-0.2% cut from T-bill yields as their hidden commission on secondary market offerings
Yuck. I was surprised that Merrill Edge offered some decent NTF MMFs with only a $1k minimum.
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Re: VMFXX at 2.08% now and keeps growing

Post by Zizou »

" I was surprised that Merrill Edge offered some decent NTF MMFs with only a $1k minimum."

Am having a hard time finding any on Merrill Edge. Do you have a list of MMFs?
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Re: VMFXX at 2.08% now and keeps growing

Post by anon_investor »

Zizou wrote: Sat Aug 06, 2022 12:17 pm " I was surprised that Merrill Edge offered some decent NTF MMFs with only a $1k minimum."

Am having a hard time finding any on Merrill Edge. Do you have a list of MMFs?
https://olui2.fs.ml.com/publish/content ... esheet.pdf

I went with TOIXX.
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Re: VMFXX at 2.08% now and keeps growing

Post by Zizou »

Thanks. Very helpful.

When you sell, do you know how long do you have to wait before cash is available in your account?
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Re: VMFXX at 2.08% now and keeps growing

Post by anon_investor »

Zizou wrote: Sat Aug 06, 2022 12:31 pm Thanks. Very helpful.

When you sell, do you know how long do you have to wait before cash is available in your account?
Since it is a mutual fund it should be available next business day. Someone reported as such for another MMF at ME on that list in another thread:

viewtopic.php?p=6805509#p6805509
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Re: VMFXX at 2.08% now and keeps growing

Post by Droptoptop »

It seems that Vanguard is slow to invest cash into the settlement fund. I just opened a Vanguard account and wired cash to Vanguard which showed as arrived in the Vanguard web portal under "total pending debits and credits" just before 3pm EST on a Weds. It still took until Friday morning around 3am EST to show as having transferred from "total pending debits and credits" to the settlement fund. I wonder if to get an extra day's of interest, it would make sense to manually buy VMFXX the day the cash arrives?
Last edited by Droptoptop on Sat Aug 06, 2022 7:29 pm, edited 1 time in total.
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Re: VMFXX at 2.08% now and keeps growing

Post by tomsense76 »

Droptoptop wrote: Sat Aug 06, 2022 6:20 pm It seems that Vanguard is slow to invest cash into the settlement fund. I just opened a Vanguard account and wired cash to Vanguard which showed as arrived in the Vanguard web portal under "total pending debits and credits" just before 3pm EST on a Weds. It still took until Friday morning around 3am EST to show as having transferred from "total pending debits and credits" to the settlement fund. I wonder if it get an extra day's of interest, it would make sense to manually buy VMFXX the day the cash arrives?
Think they would count it as "in" Thursday. AIUI the delay is due to ACH itself taking time. They need to keep things as pending in the event one tries to transfer money in excess of what they have available and Vanguard then needs to roll the transaction back.
"Anyone who claims to understand quantum theory is either lying or crazy" -- Richard Feynman
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Re: VMFXX at 2.08% now and keeps growing

Post by Droptoptop »

tomsense76 wrote: Sat Aug 06, 2022 7:15 pm
Droptoptop wrote: Sat Aug 06, 2022 6:20 pm It seems that Vanguard is slow to invest cash into the settlement fund. I just opened a Vanguard account and wired cash to Vanguard which showed as arrived in the Vanguard web portal under "total pending debits and credits" just before 3pm EST on a Weds. It still took until Friday morning around 3am EST to show as having transferred from "total pending debits and credits" to the settlement fund. I wonder if it get an extra day's of interest, it would make sense to manually buy VMFXX the day the cash arrives?
Think they would count it as "in" Thursday. AIUI the delay is due to ACH itself taking time. They need to keep things as pending in the event one tries to transfer money in excess of what they have available and Vanguard then needs to roll the transaction back.
No this wasn't an ACH transfer. It was a wire.
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Re: VMFXX at 2.08% now and keeps growing

Post by retiringwhen »

Droptoptop wrote: Sat Aug 06, 2022 7:28 pm
tomsense76 wrote: Sat Aug 06, 2022 7:15 pm
Droptoptop wrote: Sat Aug 06, 2022 6:20 pm It seems that Vanguard is slow to invest cash into the settlement fund. I just opened a Vanguard account and wired cash to Vanguard which showed as arrived in the Vanguard web portal under "total pending debits and credits" just before 3pm EST on a Weds. It still took until Friday morning around 3am EST to show as having transferred from "total pending debits and credits" to the settlement fund. I wonder if it get an extra day's of interest, it would make sense to manually buy VMFXX the day the cash arrives?
Think they would count it as "in" Thursday. AIUI the delay is due to ACH itself taking time. They need to keep things as pending in the event one tries to transfer money in excess of what they have available and Vanguard then needs to roll the transaction back.
No this wasn't an ACH transfer. It was a wire.
The 3am friday is just an artifact of when they update the page with the latest balances (it happens overnight). I would expect that if you look at the transaction log, the settlement date is Thursday.
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Re: VMFXX at 2.08% now and keeps growing

Post by Droptoptop »

retiringwhen wrote: Sat Aug 06, 2022 10:32 pm
Droptoptop wrote: Sat Aug 06, 2022 7:28 pm
tomsense76 wrote: Sat Aug 06, 2022 7:15 pm
Droptoptop wrote: Sat Aug 06, 2022 6:20 pm It seems that Vanguard is slow to invest cash into the settlement fund. I just opened a Vanguard account and wired cash to Vanguard which showed as arrived in the Vanguard web portal under "total pending debits and credits" just before 3pm EST on a Weds. It still took until Friday morning around 3am EST to show as having transferred from "total pending debits and credits" to the settlement fund. I wonder if it get an extra day's of interest, it would make sense to manually buy VMFXX the day the cash arrives?
Think they would count it as "in" Thursday. AIUI the delay is due to ACH itself taking time. They need to keep things as pending in the event one tries to transfer money in excess of what they have available and Vanguard then needs to roll the transaction back.
No this wasn't an ACH transfer. It was a wire.
The 3am friday is just an artifact of when they update the page with the latest balances (it happens overnight). I would expect that if you look at the transaction log, the settlement date is Thursday.
Thanks. So is interest earned on the settlement date or starting the day after settlement? I know this isn't a big deal either way, but just curious.
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Re: VMFXX at 2.08% now and keeps growing

Post by retiringwhen »

Droptoptop wrote: Sat Aug 06, 2022 10:53 pm Thanks. So is interest earned on the settlement date or starting the day after settlement? I know this isn't a big deal either way, but just curious.
You can use the Balance By Date report on the vanguard site (old type screens) to find out what dividends have accrued by a specific date. That will tell you the answer. I never worried about it, so never checked close enough.

screen is at Balances and Holdings -> Balances by Date

BTW, on this page, there is balance call "Trade Date Balance" with a comment: "The net dollar amount in your account that has not swept to or from your settlement fund."

This implies to me that those funds do not accrue interest UNTIL they have been swept into the settlement fund. OTOH, you may get interest on the day of the trade BEFORE funds are swept out to pay for a trade. That seems to a reasonable assumption. For deposits, you will have to watch these numbers by day and get an idea how they are posted to figure out the flow.
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Re: VMFXX at 2.08% now and keeps growing

Post by Wrench »

Put together this table for me and thought I would share, Fidelity vs Schwab vs Vanguard as of 8/7/2022:

Code: Select all

Fund	Provider	Net Exp Ratio	SEC 7-day yield	Repurchase Agreements	U.S. Gov't Obligatiois	U.S. Treasury Bills	Commercial Paper	Other	Notes

Code: Select all

VMFXX	Vanguard	0.11%	2.10%	64.60%	32.10%	12.20%	0.00%	0.00%	
SNVXX	Schwab   	0.34%	1.82%	75%	11.50%	12.60%	0.60%	0.00%	
SNOXX	Schwab   	0.34%	1.12%	80.70%	0	19.30%	0	0.00%	
SPAXX	Fidelity 	0.10%	1.42%	66.23%	11.76%	9.35%	2.15%	0.00%	gross ER=0.42%
SPRXX	Fidelity 	0.18%	2.00%	32.57%	0.00%	0.00%	26.49%	40.94%	gross ER=0.42%
Wrench
Last edited by Wrench on Sun Aug 07, 2022 5:59 pm, edited 1 time in total.
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Re: VMFXX at 2.08% now and keeps growing

Post by Stinky »

Wrench wrote: Sun Aug 07, 2022 4:57 pm Put together this table for me and thought I would share, Fidelity vs Schwab vs Vanguard as of 8/7/2022:

Code: Select all

Fund	Provider	Net Exp Ratio	SEC 7-day yield	Repurchase Agreements	U.S. Gov't Obligatiois	U.S. Treasury Bills	Commercial Paper	Other	Notes

Code: Select all

VMFXX	Vanguard	0.11%	2.10%	64.60%	32.10%	12.20%	0.00%	0.00%	
SNVXX	Schwab   	0.34%	1.82%	75%	11.50%	12.60%	0.60%	0.00%	
SNOXX	Schwab   	0.34%	1.12%	80.70%	0	19.30%	0	0.00%	
SPAXX	Fidelity 	0.10%	1.42%	66.23%	11.76%	9.35%	2.15%	0.00%	gross ER=0.42%
SPRXX	Fidelity 	0.18%	1.68%	32.57%	0.00%	0.00%	26.49%	40.94%	gross ER=0.42%
Wrench
What’s your conclusion from this table?

(Beyond the fact that Vanguard’s current 7 day yield beats the pants off Fidelity and Schwab)
Retired life insurance company financial officer who sincerely believes that ”It’s a GREAT day to be alive!”
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Re: VMFXX at 2.08% now and keeps growing

Post by anon_investor »

Stinky wrote: Sun Aug 07, 2022 5:05 pm
Wrench wrote: Sun Aug 07, 2022 4:57 pm Put together this table for me and thought I would share, Fidelity vs Schwab vs Vanguard as of 8/7/2022:

Code: Select all

Fund	Provider	Net Exp Ratio	SEC 7-day yield	Repurchase Agreements	U.S. Gov't Obligatiois	U.S. Treasury Bills	Commercial Paper	Other	Notes

Code: Select all

VMFXX	Vanguard	0.11%	2.10%	64.60%	32.10%	12.20%	0.00%	0.00%	
SNVXX	Schwab   	0.34%	1.82%	75%	11.50%	12.60%	0.60%	0.00%	
SNOXX	Schwab   	0.34%	1.12%	80.70%	0	19.30%	0	0.00%	
SPAXX	Fidelity 	0.10%	1.42%	66.23%	11.76%	9.35%	2.15%	0.00%	gross ER=0.42%
SPRXX	Fidelity 	0.18%	1.68%	32.57%	0.00%	0.00%	26.49%	40.94%	gross ER=0.42%
Wrench
What’s your conclusion from this table?

(Beyond the fact that Vanguard’s current 7 day yield beats the pants off Fidelity and Schwab)
The table is wrong. SPRXX has a 7 day SEC yield of 2.00% as of 8/5/2022. But VMFXX is still better.
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Re: VMFXX at 2.08% now and keeps growing

Post by Wrench »

anon_investor wrote: Sun Aug 07, 2022 5:25 pm
Stinky wrote: Sun Aug 07, 2022 5:05 pm
Wrench wrote: Sun Aug 07, 2022 4:57 pm Put together this table for me and thought I would share, Fidelity vs Schwab vs Vanguard as of 8/7/2022:

Code: Select all

Fund	Provider	Net Exp Ratio	SEC 7-day yield	Repurchase Agreements	U.S. Gov't Obligatiois	U.S. Treasury Bills	Commercial Paper	Other	Notes

Code: Select all

VMFXX	Vanguard	0.11%	2.10%	64.60%	32.10%	12.20%	0.00%	0.00%	
SNVXX	Schwab   	0.34%	1.82%	75%	11.50%	12.60%	0.60%	0.00%	
SNOXX	Schwab   	0.34%	1.12%	80.70%	0	19.30%	0	0.00%	
SPAXX	Fidelity 	0.10%	1.42%	66.23%	11.76%	9.35%	2.15%	0.00%	gross ER=0.42%
SPRXX	Fidelity 	0.18%	2.00%	32.57%	0.00%	0.00%	26.49%	40.94%	gross ER=0.42%
Wrench
What’s your conclusion from this table?

(Beyond the fact that Vanguard’s current 7 day yield beats the pants off Fidelity and Schwab)
The table is wrong. SPRXX has a 7 day SEC yield of 2.00% as of 8/5/2022. But VMFXX is still better.
Apologies - the original table was wrong as Stinky correctly noted. I edited the original post to show correct value. (I used the monthly fact sheet that had an older yield rather than the web site that lists today's value).

My conclusions - the two most comparable funds for composition are VMFXX and SNVXX. Vanguard has a higher yield by roughly the difference in expense ratios. The other funds have different compositions so perhaps are not completely comparable. If one is willing to live with the slight increase in risk with commercial paper, SPRXX is a reasonable alternative to VMFXX at Fidelity. There are also higher yields at Fidelity for investments >$1M but I chose not to include those.

Wrench
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Re: VMFXX at 2.08% now and keeps growing

Post by anon_investor »

Wrench wrote: Sun Aug 07, 2022 6:09 pm
anon_investor wrote: Sun Aug 07, 2022 5:25 pm
Stinky wrote: Sun Aug 07, 2022 5:05 pm
Wrench wrote: Sun Aug 07, 2022 4:57 pm Put together this table for me and thought I would share, Fidelity vs Schwab vs Vanguard as of 8/7/2022:

Code: Select all

Fund	Provider	Net Exp Ratio	SEC 7-day yield	Repurchase Agreements	U.S. Gov't Obligatiois	U.S. Treasury Bills	Commercial Paper	Other	Notes

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VMFXX	Vanguard	0.11%	2.10%	64.60%	32.10%	12.20%	0.00%	0.00%	
SNVXX	Schwab   	0.34%	1.82%	75%	11.50%	12.60%	0.60%	0.00%	
SNOXX	Schwab   	0.34%	1.12%	80.70%	0	19.30%	0	0.00%	
SPAXX	Fidelity 	0.10%	1.42%	66.23%	11.76%	9.35%	2.15%	0.00%	gross ER=0.42%
SPRXX	Fidelity 	0.18%	2.00%	32.57%	0.00%	0.00%	26.49%	40.94%	gross ER=0.42%
Wrench
What’s your conclusion from this table?

(Beyond the fact that Vanguard’s current 7 day yield beats the pants off Fidelity and Schwab)
The table is wrong. SPRXX has a 7 day SEC yield of 2.00% as of 8/5/2022. But VMFXX is still better.
Apologies - the original table was wrong as Stinky correctly noted. I edited the original post to show correct value. (I used the monthly fact sheet that had an older yield rather than the web site that lists today's value).

My conclusions - the two most comparable funds for composition are VMFXX and SNVXX. Vanguard has a higher yield by roughly the difference in expense ratios. The other funds have different compositions so perhaps are not completely comparable. If one is willing to live with the slight increase in risk with commercial paper, SPRXX is a reasonable alternative to VMFXX at Fidelity. There are also higher yields at Fidelity for investments >$1M but I chose not to include those.

Wrench
At Merrill Edge you can buy with NTF TOIXX which is a treasury money market fund (arguably safer than VMFXX since it has no agency debt) with a 7 day SEC yield of 2.07% (as of 8/5/2022).

But yes, Fidelity and Schwab likely make some $ off their money market funds.
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goodenyou
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Re: VMFXX at 2.08% now and keeps growing

Post by goodenyou »

I’m seeing VMFXX@ 2.10% as of 8/5/22.
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MikeG62
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Re: VMFXX at 2.08% now and keeps growing

Post by MikeG62 »

Wrench wrote: Sun Aug 07, 2022 6:09 pm
My conclusions - the two most comparable funds for composition are VMFXX and SNVXX. Vanguard has a higher yield by roughly the difference in expense ratios. The other funds have different compositions so perhaps are not completely comparable. If one is willing to live with the slight increase in risk with commercial paper, SPRXX is a reasonable alternative to VMFXX at Fidelity. There are also higher yields at Fidelity for investments >$1M but I chose not to include those.

Wrench
FZDXX has a higher yield than SPRXX and minimum is $100,000 and not $1.0 million. Current 7-day yield on FZDXX is 2.17%. Also, don't need to keep $100,000 in the fund to remain an investor. Just need to hit that threshold on initial investment. I know not everyone can swing that amount of cash, but that doesn't mean we should not bring up that fund as an option (for those who can).
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