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Old 05-25-2016, 09:25 AM   #21
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Originally Posted by audreyh1 View Post
I'm a little confused by your post. The MM funds referred to by the OP and Debinov are mutual fund money market funds, not accounts held in a bank. Different rules, no FDIC protection for brokerage MM funds. Nothing to do with bank liquidity.

Some banks do call their checking or savings account money market accounts (not funds). Different beast, although the terminology can be confusing.

I did detail the new regulations required by the SEC for mutual fund MM funds in the first part of my post. My point was I would not switch money from Vanguard's MM fund to a bank account out of fear of losing money in these funds due to the new regulations. The fees and gates to be possibly enacted would only mean losing money if you panic and try to withdraw funds. Sure, even in addition to these new restrictions, you could lose money, but I think the risk is very, very low.

Also Vanguard's seven retail funds are available only to individual investors. These are the funds Vanguard will seek to maintain a stable $1 share price. It is the institutional investors or those registered as endowments, foundations, etc. that will be stuck with the floating NAV.

Plus, if markets collapse I actually think you would see a inflow of money into mutual MM funds and as people exceeded their bank accounts with FDIC amounts capped at $250,000 those that panic would seek "safer" investments. And Vanguard is no Lehman Brothers. It's comparing apples to oranges. LEhman was wrapped up in the subprime mortgage fiasco. Not so with Vanguard.

I just think it is not something that would cause me to switch out to FDIC bank accounts.
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Old 05-25-2016, 10:40 AM   #22
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Originally Posted by MrLoco View Post

Also Vanguard's seven retail funds are available only to individual investors. These are the funds Vanguard will seek to maintain a stable $1 share price. It is the institutional investors or those registered as endowments, foundations, etc. that will be stuck with the floating NAV.
The Prime MM fund will float all the time. It is now required to. Individual investor MM funds will float unless they are Federal govt MM funds.
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Old 05-26-2016, 06:21 AM   #23
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Originally Posted by audreyh1 View Post
The Prime MM fund will float all the time. It is now required to. Individual investor MM funds will float unless they are Federal govt MM funds.
Not according to Vanguard, Fidelity, and the SEC. Only the liquidity fees and redemption gates apply.

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The rules require institutional prime and municipal money market funds to move from a stable $1.00 price per share to a floating net asset value. Money market funds sold to individual investors maintain the fixed $1.00 share price.

Prime and municipal/tax-exempt money market funds whose investors are institutions are required to move from a fixed $1.00 share price to a floating NAV. U.S. government money market funds will be permitted to retain the stable $1.00 per share NAV and may be offered to institutional investors.

All retail money market funds will also maintain a stable $1.00 share price. In order to be considered a retail fund, the fund must have policies and procedures reasonably designed to limit beneficial ownership to natural persons (for example, accounts associated with social security numbers), including individual beneficiaries of certain trusts and participants in certain tax-deferred accounts, such as defined contribution plans.

Businesses, defined benefit plans, endowments, and other accounts that are not beneficially owned by natural persons will have access only to institutional money market funds.
Reference: https://personal.vanguard.com/pdf/VGMMR.pdf

Quote:
Specifically, institutional prime and institutional municipal money market mutual funds will have a floating NAV, and price and transact shares to four decimal places (i.e., $1.0000). U.S. Treasury, government, retail prime and retail municipal money market mutual funds will be eligible to transact shares to two decimal places (i.e., $1.00), which is known as a stable NAV.

Under the new rules, the SEC defined a retail fund as one that has policies and procedures reasonably designed to limit all beneficial owners to natural persons, which are individuals, or human beings. An institutional money market mutual fund is any fund that does not meet the retail fund definition. Institutional fund ownership can include small businesses, large corporations, and pension plans. Natural persons also will be able to purchase institutional funds.
Reference: https://www.fidelity.com/bin-public/...oating-nav.pdf

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Retail Money Market Funds Ė Government and retail money market funds would be allowed to continue to seek to maintain a stable share price. A retail money market fund would be defined as a money market fund that has policies and procedures reasonably designed to limit all beneficial owners of the money market fund to natural persons. A municipal (or tax-exempt) fund would be required to transact at a floating NAV unless the fund meets the definition of a retail money market fund.
Reference: https://www.sec.gov/News/PressReleas.../1370542347679
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