vanguard money market

vanguard money market

Welcome to ourBlog — your comprehensive vanguard money market resource. Our mission is to give you the facts you need about vanguard money market — fast — so you can get on the road to taking action right away`.

Vanguard is an investment firm that offers money market funds for various uses. Vanguard money market funds are used for stable interest income, convenient money access (there are no terms with money markets), short-term savings, and of course to park cash while awaiting other investment opportunities with Vanguard funds or any other investment bank.

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1. safety of vanguard money market funds
   
2. Vanguard money market mutual funds - Vanguard to meld two money market mutual funds
   
3. vanguard money market rates
   
4. stability of vanguard money market funds

vanguard money market

Vanguard money market mutual funds - Vanguard to meld two money market mutual funds

vanguard money market mutual funds

The Vanguard Group Inc. has announced plans to merge two of its money market mutual funds and close a third fund to new investors.

The Malvern, Pa.-based fund firm will merge the $6.7 billion Vanguard Treasury Money Market Fund (VMPXX) into the lower-cost $21.8 billion Vanguard Admiral Treasury Money Market Fund (VUSXX).

The Treasury Money Market Fund has an expense ratio of 0.28%m and the Admiral Treasury Money Market Fund has an expense ratio of 0.15%.

The firm will also close the $12 billion Vanguard Federal Money Market Fund (VMFXX) to new accounts and to additional purchases from current institutional accounts, and there will be a $10,000 daily investment limit for current retail accounts.

“We've taken these actions in response to declining yields on short-term government-backed securities,” said Vanguard spokeswoman Rebecca Cohen.

“A flight to quality in the bond market has pushed Treasury and agency bond yields to historic lows, and money market funds' yields have fallen in turn.”

When new cash comes in, managers have to buy securities at current yields, which are low. As a result, new-cash flow would dilute the existing yield of the funds, Ms. Cohen said.

In addition, with the fund merger would mean lower cost for shareholders, she said. “Fund expenses are deducted from the fund’s yield,” Ms. Cohen said.

“The lower the cost for the fund, the higher the yield.”

The merger also means that the Treasury Money Market Fund, which previously had a minimum investment of $3,000, will be merged into a fund with a $50,000 minimum.

Both funds were closed to new investors in February.

“If the fund reopens, we would expect that the board would set an appropriate minimum investment at that time that would be lower than $50,000,” Ms. Cohen said.

The fund merger is planned for early August.

No plans have been made to reopen the funds to new investors.

“The board will watch the markets to see if yields recover from their current historic lows, and make a decision at that time,” Ms. Cohen said.

Vanguard had $1.1 trillion in assets under management as of March 31.

vanguard money market mutual funds

safety of vanguard money market funds

Vanguard offers nine money market funds. Five of them invest in the short-term obligations of the state governments of California, New Jersey, New York, Ohio, and Pennsylvania. The other four funds invest in the short-term obligations of the U.S. Treasury, and in agency or high-quality bank and corporate paper such as CDs, banker's acceptances and commercial paper.

History

The Vanguard Group of Investment Companies launched in 1974 as a reorganization of one of the oldest mutual funds, the Wellington Fund, which dates back to 1929. The Wellington Fund was known for its conservative approach to investing and for its having survived the financial crash and Great Depression. The Vanguard Group is still known for its conservative approach to investing its $520 billion under management in its mutual funds.

Function

U.S. securities law requires money market funds to invest only in low-risk securities because the funds are meant to provide a relatively safe, highly liquid investment option. All Vanguard money market mutual funds comply with this requirement. Though money market mutual funds are not backed by FDIC insurance or government guarantees, they often invest in securities that are, and Vanguard funds always have done so.

Types

There are several types of money market funds: Tax-free funds invest in short-term municipal debt securities while taxable funds invest in corporate short-term debt such as commercial paper and bank paper. Funds that invest only in short-term obligations of the U.S. Treasury and agencies such as Treasury bills and notes (Vanguard's Admiral Treasury Money Market and Federal Money Market). Balanced money market funds invest in a mix of all security types (Vanguard's Prime Money Market Fund).

Significance

The returns on investment in money market funds are low because they carry low risk. From 1999 to 2009, the Vanguard Funds paid average annual returns of 2.08 percent to 3.07 percent. During 2008-2009 financial crisis the returns ranged from 0.25 percent to 0.53 percent, in keeping with the experience of all money market funds.

Benefits

The Vanguard Funds have one of the lowest expense ratios of all the major mutual funds. Vanguard also is one of the largest money market mutual funds. That enables it to make up most losses its money market funds might unexpectedly take. So investors gain a measure of protection.

Considerations

During the financial crisis of 2008, Vanguard's money market funds had no exposure to Lehman Bros., Merrill Lynch, Morgan Stanley, Goldman Sachs, Washington Mutual, or AIG commercial paper. Not all money market funds can boast this record, but it is not an indication of Vanguard's future performance.

vanguard money market rates

vanguard money market rates

Vanguard money market rates are definitely worth looking into, especially if you’re an investor with Vanguard funds already and need a way to hold your money until the next opportunity comes along. We at Money Market Rates 101 thought we’d look them over and see what they have to offer right now.

As mentioned in the last post, Vanguard money market accounts aren’t like normal money market savings accounts and are not FDIC insured as they are considered investment accounts. Be aware of that as you move forward. That said, however, Vanguard money market rates are very good and are a relatively safe way to store money until it’s reinvested into the market.

Currently, most Vanguard money market funds are invested in Treasuries, US Agency funds, and high quality commercial paper. They are trading for $1 with a minimum investment of $3,000 and are currently giving a yield of 0.76% (compounded). This is higher than the typical savings account.

Vanguard rates are variable with the market, of course, but Vanguard money market rates are relatively steady due to their low-risk investment hedges. Of course, Vanguard money market rates will change over time and quickly, so check the current Vanguard rates before investing.

We definitely think that, for the investor, Vanguard money market funds are definitely worth looking into.

vanguard money market rates