VMFXX yield

[andre4711]

I’m trying to understand what the yield on a money market fund such VMFXX would be. Do they invest in very short term treasury and are yielding close to the current treasuries or do they hold long term commitments and thus not being able to fully take advantage of the current raise in rates.
What is the Severn day sec yield? If I invest $1,000 now is that what I could expect?

I’m trying to find a short term investment for my business cash and most high yield savings or money markets for Inc.s have either bad terms or require a lock in such as a cd. Alternatively I could invest directly in short term treasuries but that’s a bit of work.

[catccc]

Looks like the yield is less than 1% YTD.  You'd be better off in an online high yield savings account.  What bad terms are you trying to avoid in a HYS?  IDK about short term treasuries in a rising rate environment.

If you are in for a bit of work, depending on how much you want to park, business bank account bonuses could be a good use of those funds.

[habanero]

I’m trying to understand what the yield on a money market fund such VMFXX would be.

The dividend distribution schedule and yields are at the bottom of the product description at vanguards website

https://investor.vanguard.com/investment-products/mutual-funds/profile/vmfxx#distributions

The reason why YTD this year is low is that interest rates have been low for most of the year. As you can see from the table in the link above the distributions have been increasing steadily as interest rates have gone up.

They aim to maintain a share price of 1.00 so you should expect almost capital gains, only distributions that would be around the short-term US interest rate. As far as money market funds go, VMFXX is about as conservative as it gets. The main alernative would be buying 1 month t-bills.



 

[EvenSteven]

Also, they keep a money weighted average duration of about 60 days, mostly US treasuries. So the average of short term US treasuries over the last couple months should give you a good idea of where the current interest rate is for the fund.

[Pootie22]

Is there any advantage to putting money into VMFXX instead of a high yield savings account with the same or better yield?

[EchoStache]

The most recent yield is right on the product info page.  Around 3.34%

[Mr. Green]

The most recent yield is right on the product info page.  Around 3.34%

Now up to 3.52%.

[habanero]

The most recent yield is right on the product info page.  Around 3.34%

Now up to 3.52%.

Which is very close to current yield on t-bills with same maturity

[Captain Cactus]

I put a substantial chunk into this a little over a month ago and enjoyed a nice little interest payment at beginning of November.

I have another substantial amount in a lame savings account.  I guess I’m a little scared to put all of my cash savings into VMFXX even though the underlying assets are primarily government notes (if that’s the right word for it).  And the aim is preserve the 1 share equals $1 standard.

Any reason why one shouldn’t put their emergency fund in here vs lame ol savings account?

[Captain Cactus]

Bumping this.  Any insight into my question above?

[habanero]

Bumping this.  Any insight into my question above?

If your savings is higher than the Federeal Deposit Insurance Sceme VMFXX is safer than a savings account at a bank. This is as safe and defensive as you can get. The only comparable alternative will be buying t-bills outright.

As for terminology for goverment securities:
Bills: Maturity 4,8,13,17,26 or 52 weeks
Notes: Maturity 2,3,5,7 or 10y
Bonds: Maturity 20y or 30y.

[Captain Cactus]

Bumping this.  Any insight into my question above?

If your savings is higher than the Federeal Deposit Insurance Sceme VMFXX is safer than a savings account at a bank. This is as safe and defensive as you can get. The only comparable alternative will be buying t-bills outright.

As for terminology for goverment securities:
Bills: Maturity 4,8,13,17,26 or 52 weeks
Notes: Maturity 2,3,5,7 or 10y
Bonds: Maturity 20y or 30y.

Ok great, thanks Hab, I appreciate the reply!  From my reading I had come to that conclusion on my own but I just had nightmare visions in my head about Vanguard “breaking the dollar” per share, resulting in a principal loss.