Libertarian666 wrote: ↑Mon Mar 16, 2020 4:23 pm
vnatale wrote: ↑Mon Mar 16, 2020 4:04 pm
Libertarian666 wrote: ↑Mon Mar 16, 2020 3:57 pm
stuper1 wrote: ↑Mon Mar 16, 2020 3:52 pm
Libertarian666 wrote: ↑Mon Mar 16, 2020 3:44 pm
Tortoise wrote: ↑Mon Mar 16, 2020 1:22 pm
A good chunk of my cash at Vanguard is in the Federal MMF as my settlement fund, and now I'm wondering if I should move it to the Treasury MMF.
Here are the current holdings of the Federal MMF (VMFXX). Looks like only 32.3% is in Treasuries and 18.7% is in the ailing repo market:
Code: Select all
Bankers Acceptances 0.0%
Certificates of Deposit 0.0%
Other 0.0%
Repurchase Agreements 18.7%
U.S. Commercial Paper 0.0%
U.S. Govt. Obligations 49.0%
U.S. Treasury Bills 32.3%
Yankee/Foreign 0.0%
Total 100.0%
Normally I think, "At least the Federal MMF is safer than the Prime MMF," but in light of all the repo market turmoil... maybe that's not quite good enough?
I would switch to as close to all-Treasurys as you can get.
We are in uncharted territory.
Would an ultra short term Treasury ETF count, say SHV? I can't get VUSXX because I don't have the $50k minimum in cash in any one account.
How about VFISX? That has a $3k minimum.
VFISX is what I've been invested in since January 2003 (from an initial investment then). But I'm not considering it ultra-safe. If you cannot get into VUSXX because of the minimum (and I could not in some of the eight retirement accounts I have with Vanguard) my next best choice and what I used today was: Vanguard Federal Money Market Fund;Investor Fund: VMFXX.
Now you are making me think what am I doing keeping that investment in VFSIX. I've always considered that part of my "fixed" investment and since I wrote earlier that I'm favoring safety over return why am I not then also exchanging that to VUSXX?
Vinny
What's wrong with VFISX? It says 97% Government obligations, IIRC. Do you know more about its composition than that?
Sorry, I'd confused it with this one, which I do own: Vanguard Short-Term Investment-Grade Fund;Investor
Fund: VFSTX. One letter different in their symbols.
I go here:
https://investor.vanguard.com/mutual-fu ... file/VFISX and see its description:
This fund invests in debt issued directly by the government in the form of Treasury bills. A key risk of the fund is the fact that changes in interest rates can eventually lead to a decrease in income for the fund. The fund has a reduced risk of default, since the bonds in the portfolio are backed by the full faith and credit of the U.S. government. Although short-term bond funds historically tend to have higher yields than money market funds, unlike money market funds, their share price fluctuates. Investors with short-term savings goals who are willing to accept some price movement may wish to consider this fund.
Compare it to VMFXX:
https://investor.vanguard.com/mutual-fu ... file/VMFXX with this description:
Vanguard Federal Money Market Fund, which invests in U.S. government securities, seeks to provide current income and preserve shareholders’ principal investment by maintaining a share price of $1. As such it is considered one of the most conservative investment options offered by Vanguard. Although the fund invests in short-term U.S. government securities, the amount of income that a shareholder may receive will be largely dependent on the current interest rate environment. Investors who have a short-term savings goal and are interested in a fund that invests in securities issued by U.S. government agencies may wish to consider this option.
Comparing them, VFISX is a mutual fund with varying prices while VMFXX is a money market fund maintaining the $1 price. Also, its expense ratio is nearly half of that of VFISX.
If one wants safe money market performance then it seems VMFXX is the better choice?
Vinny