Gyroscopic Investing

In the midst of doing my 2020 tax planning today I just stumbled over the below. The minimum was reduced from $50,000 to $3,000 for the Vanguard Treasury Money Market fund!

Somehow that news eluded me until this afternoon. I do not recall receiving anything in the mail from Vanguard regarding it. I'm assuming no else here knew about it otherwise you have informed the rest of us?

Unfortunately, it is still not 100% Treasury Bills in spite of its name. But not that far off.

In March I'd converted whenever I could from the Federal fund to this one. Now this week I can convert the others that I could not because they could not meet the $50,000 minimum.

Vinny

This afternoon spent 41 minutes on the telephone with Vanguard to move to the Treasury Fund all the money to from what had been in the Federal Fund. I have so many retirement accounts with Vanguard it took all that time.

I moved even the ones that only had $7.89 and $13.39 in them.

Part of my campaign to have less investments overall with Vanguard.

Vinny

That's great news Vinny - thanks for the catch!

I do have 50K+ in VUSXX but it's been a real PITA to have to always have that much in the fund. It's .09%ER is by far the lowest I've found for any Treasury MM fund.

Kevin K. wrote: ↑Mon Dec 21, 2020 4:24 pm That's great news Vinny - thanks for the catch!

I do have 50K+ in VUSXX but it's been a real PITA to have to always have that much in the fund. It's .09%ER is by far the lowest I've found for any Treasury MM fund.

I did ask if we'd been notified and I was told we had. I remember getting a lot of Vanguard materials recently and all I did was take them out of the envelopes and put them in a pile. I will have to check if that notification is in that pile.

Vinny

yankees60 wrote: ↑Mon Dec 21, 2020 4:11 pm This afternoon spent 41 minutes on the telephone with Vanguard to move to the Treasury Fund all the money to from what had been in the Federal Fund. I have so many retirement accounts with Vanguard it took all that time.

I moved even the ones that only had $7.89 and $13.39 in them.

Part of my campaign to have less investments overall with Vanguard.

Vinny

Thanks for the heads up. I'll need to look at moving from Federal MM fund when time allows.

Dieter wrote: ↑Mon Dec 21, 2020 5:54 pm

yankees60 wrote: ↑Mon Dec 21, 2020 4:11 pm This afternoon spent 41 minutes on the telephone with Vanguard to move to the Treasury Fund all the money to from what had been in the Federal Fund. I have so many retirement accounts with Vanguard it took all that time.

I moved even the ones that only had $7.89 and $13.39 in them.

Part of my campaign to have less investments overall with Vanguard.

Vinny

Thanks for the heads up. I'll need to look at moving from Federal MM fund when time allows.

If you know what you are doing it takes all of one or two minutes once you are logged in.

Vinny

Kevin K. wrote: ↑Mon Dec 21, 2020 4:24 pm That's great news Vinny - thanks for the catch!

I do have 50K+ in VUSXX but it's been a real PITA to have to always have that much in the fund. It's .09%ER is by far the lowest I've found for any Treasury MM fund.

The initial minimum is 50K but you can continue to hold even if the balance falls below that amount.

Imagine a scenario where a stock fund with 50K minimum falls 30%. Would VG liquidate your holdings for falling under the minimum? Hell no.

buddtholomew wrote: ↑Tue Dec 22, 2020 12:54 pm

Kevin K. wrote: ↑Mon Dec 21, 2020 4:24 pm That's great news Vinny - thanks for the catch!

I do have 50K+ in VUSXX but it's been a real PITA to have to always have that much in the fund. It's .09%ER is by far the lowest I've found for any Treasury MM fund.

The initial minimum is 50K but you can continue to hold even if the balance falls below that amount.

Imagine a scenario where a stock fund with 50K minimum falls 30%. Would VG liquidate your holdings for falling under the minimum? Hell no.

That is what it USED to be. If you go back to my original post you will see the image of the prospectus page which states the minimum has been reduced to $3,000, effective December 10, 2020.

Vinny

yankees60 wrote: ↑Tue Dec 22, 2020 3:44 pm

buddtholomew wrote: ↑Tue Dec 22, 2020 12:54 pm

Kevin K. wrote: ↑Mon Dec 21, 2020 4:24 pm That's great news Vinny - thanks for the catch!

I do have 50K+ in VUSXX but it's been a real PITA to have to always have that much in the fund. It's .09%ER is by far the lowest I've found for any Treasury MM fund.

The initial minimum is 50K but you can continue to hold even if the balance falls below that amount.

Imagine a scenario where a stock fund with 50K minimum falls 30%. Would VG liquidate your holdings for falling under the minimum? Hell no.

That is what it USED to be. If you go back to my original post you will see the image of the prospectus page which states the minimum has been reduced to $3,000, effective December 10, 2020.

Vinny

I caught that Vinny; just commenting on other funds with varying minimum balances for entry. Not sure what transpires if you withdraw $ and fall below the minimum versus breaching the threshold as a result of market declines. Perhaps that is why Kevin had to maintain the 50K given the low yield.

yankees60 wrote: ↑Mon Dec 21, 2020 6:15 pm

Dieter wrote: ↑Mon Dec 21, 2020 5:54 pm

yankees60 wrote: ↑Mon Dec 21, 2020 4:11 pm This afternoon spent 41 minutes on the telephone with Vanguard to move to the Treasury Fund all the money to from what had been in the Federal Fund. I have so many retirement accounts with Vanguard it took all that time.

I moved even the ones that only had $7.89 and $13.39 in them.

Part of my campaign to have less investments overall with Vanguard.

Vinny

Thanks for the heads up. I'll need to look at moving from Federal MM fund when time allows.

If you know what you are doing it takes all of one or two minutes once you are logged in.

Vinny

Well, if you send time trying to set it up as your sweep account, it takes longer....

(as far as I can tell, can't use it for your sweep account).

I'll have to move funds over later.

Dieter wrote: ↑Tue Dec 22, 2020 4:19 pm

yankees60 wrote: ↑Mon Dec 21, 2020 6:15 pm

Dieter wrote: ↑Mon Dec 21, 2020 5:54 pm

yankees60 wrote: ↑Mon Dec 21, 2020 4:11 pm This afternoon spent 41 minutes on the telephone with Vanguard to move to the Treasury Fund all the money to from what had been in the Federal Fund. I have so many retirement accounts with Vanguard it took all that time.

I moved even the ones that only had $7.89 and $13.39 in them.

Part of my campaign to have less investments overall with Vanguard.

Vinny

Thanks for the heads up. I'll need to look at moving from Federal MM fund when time allows.

If you know what you are doing it takes all of one or two minutes once you are logged in.

Vinny

Well, if you send time trying to set it up as your sweep account, it takes longer....

(as far as I can tell, can't use it for your sweep account).

I'll have to move funds over later.

You are correct. You cannot use it as your sweep account. I believe that the representative told me yesterday that only the Federal Money Market Fund can be used as the settlement fund.

Vinny

The reduction of treasuries to 88% is a bit worrying though, if you're using it as a convenient alternative to T bills.

Fidelity's Treasury MM (FDLXX) remains 100% Treasuries, but it's now closed to new investors. Glad I have it. The 0.42% ER is still listed, but the 7 day yield is still 0.01%. with Fidelity's subsidy. It would be -0.29% without the subsidy.

sophie wrote: ↑Wed Dec 23, 2020 11:31 am The reduction of treasuries to 88% is a bit worrying though, if you're using it as a convenient alternative to T bills.

Fidelity's Treasury MM (FDLXX) remains 100% Treasuries, but it's now closed to new investors. Glad I have it. The 0.42% ER is still listed, but the 7 day yield is still 0.01%. with Fidelity's subsidy. It would be -0.29% without the subsidy.

Totally agree! I wish it were 100%.

When I looked the other day I was surprised to see that the yield was 0.47% (I think). I was expecting 0.01%.

Vinny

I often held 10K in the Treasury mm fund at Vanguard after holding 50K for a short while.
Nowadays, I have most of my cash in there anyway because I stopped buying notes and t-bills.

Yep, the Federal mm is the only sweep ("settlement") account. No more Prime aka Cash Reserves and no Treasury mm.

dualstow wrote: ↑Wed Dec 23, 2020 12:10 pm I often held 10K in the Treasury mm fund at Vanguard after holding 50K for a short while.
Nowadays, I have most of my cash in there anyway because I stopped buying notes and t-bills.

Yep, the Federal mm is the only sweep ("settlement") account. No more Prime aka Cash Reserves and no Treasury mm.

Plus if you have a Vanguard SIMPLE IRA you not allowed to engage in brokerage and buy Treasury Bills. That leaves the Treasury Money Market Fund as your best option.

Vinny

Interesting. I have a Roth at Vanguard.

dualstow wrote: ↑Wed Dec 23, 2020 12:20 pm Interesting. I have a Roth at Vanguard.

As do I. They are allowed to also have brokerage accounts.

Vinny

sophie wrote: ↑Wed Dec 23, 2020 11:31 am The reduction of treasuries to 88% is a bit worrying though, if you're using it as a convenient alternative to T bills.

Fidelity's Treasury MM (FDLXX) remains 100% Treasuries, but it's now closed to new investors. Glad I have it. The 0.42% ER is still listed, but the 7 day yield is still 0.01%. with Fidelity's subsidy. It would be -0.29% without the subsidy.

VUSXX has never held 100% Treasuries but I don't see anything particularly worrisome about its stated investment parameters:

"This fund at a minimum invests 80% of the assets in debt issued directly by the government in the form of Treasury bills and may invest in other securities including, but not limited to debt issued by federal agencies that are sponsored, guaranteed, or owned by the federal government. As a government money market fund, this fund is required to invest at least 99.5% of its total assets in cash, U.S. government securities, and/or repurchase agreements that are collateralized solely by U.S. government securities or cash (collectively, government securities)."

I much prefer its .09%ER to the exponentially higher expenses at Fidelity and Schwab that are heavily (and perhaps temporarily?) subsidized by these firms to avoid negative nominal rates. Not worth a whole lot of shopping around though; heck I can get .05% at Schwab just by moving cash from my sweep account to savings @ Schwab Bank, with FDIC insurance.

MangoMan wrote: ↑Wed Dec 23, 2020 2:05 pm

yankees60 wrote: ↑Wed Dec 23, 2020 11:38 am

sophie wrote: ↑Wed Dec 23, 2020 11:31 am The reduction of treasuries to 88% is a bit worrying though, if you're using it as a convenient alternative to T bills.

Fidelity's Treasury MM (FDLXX) remains 100% Treasuries, but it's now closed to new investors. Glad I have it. The 0.42% ER is still listed, but the 7 day yield is still 0.01%. with Fidelity's subsidy. It would be -0.29% without the subsidy.

Totally agree! I wish it were 100%.

When I looked the other day I was surprised to see that the yield was 0.47% (I think). I was expecting 0.01%.

Vinny

The current yield is 0.04%. The number you posted is the YTD return. Not the same. Basically the same yield as Fidelity's TMMF

That makes total sense. I was just saw it in passing and was not really looking for it.

Vinny