Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Closing of VG Treasury Money Market
Old 01-27-2009, 03:04 PM   #1
Dryer sheet aficionado
 
Join Date: Aug 2007
Posts: 46
Closing of VG Treasury Money Market

I just got the notice from Vanguard that they are closing the Treasury Money Market fund to new investors. I'm self-employed and that's where I keep my emergency fund. My focus is on preservation of capital and keeping that money safe and sound vs. income right now. Do you think it's okay to leave the money in there or should I move it? If so, any suggestions where? Thanks.
__________________

__________________
Red Rover is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-27-2009, 03:51 PM   #2
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,117
I don't think it is a safety issue but an issue of essentially zero returns and Vanguard no longer willing to manage the fund at a loss.

http://www.marketwatch.com/news/story/low-yields-force-treasury-money/story
__________________

__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 01-27-2009, 03:58 PM   #3
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,044
I think that there is nothing to worry about. If your money is already in the Treasury MMF, leave it there. Of course, the reason they are closing it is because nowadays treasuries barely pay enough to cover the fund's operating expenses. So if you don't mind earning next to zero on your money, then it's OK to sit tight and do nothing. If you would like a chance to earn better yields, why not take a look at the Federal MMF. Not much more risk (100% government-backed debt) and a slightly better yield.
__________________
FIREd is offline   Reply With Quote
Old 01-27-2009, 03:58 PM   #4
Thinks s/he gets paid by the post
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 3,244
From a non-expert on such matters:

It's my understanding that most fund closings (especially by VG) are due to factors other than "problems" within the asset class or the fund itself. Usually, funds close (to new investors) when they become TOO popular. So much money comes in that perhaps the fund doesn't believe it can adequately manage it. Again, I'm not an expert. In most cases, if you are already in the fund, you can still contribute, but YMMV.

Now let the experts tell you the whole story.
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote
Old 01-27-2009, 04:56 PM   #5
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,905
Vanguard's e-mail about this says (in part)(emphasis mine),

Quote:
Vanguard has announced the closure of Vanguard Admiral™ Treasury Money Market Fund and Vanguard Treasury Money Market Fund to new accounts effective 4 p.m., Eastern time, on Monday, January 26, 2009. In light of the substantial decline in yields on short-term Treasury securities, this decision was made to protect the interests of current fund shareholders. Current shareholders of the two funds who invest directly through Vanguard may continue to invest up to an additional $50,000 per day, per fund account. Although we're taking this step, it is likely that the yields on Vanguard's Treasury money market funds will continue to decline to negligible levels if short-term interest rates remain as low as they are now.
My question is why would allowing new fund shareholders affect the interests of current fund shareholders? I don't get it. They're accepting a limited amount of new money from us old fund shareholders, so what's the difference? And by the way, why limit us to $50K/day?

Not that I'm going to be adding over $50K/day myself....
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is offline   Reply With Quote
Old 01-27-2009, 05:22 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,450
Quote:
Originally Posted by Want2retire View Post
Vanguard's e-mail about this says (in part)(emphasis mine),


My question is why would allowing new fund shareholders affect the interests of current fund shareholders? I don't get it. They're accepting a limited amount of new money from us old fund shareholders, so what's the difference? And by the way, why limit us to $50K/day?

Not that I'm going to be adding over $50K/day myself....
I am guessing the Vanguard is looking a head to the days when people aren't willing to loan their short-term to Uncle Sam for free. When that time comes the there is probably going to be a run for the exits on Treasury bills and Vanguard doesn't want to be in position of having to satisfy redemption request when the value of short-term TBill is dropping.

The nightmare scenario for Vanguard is having to break a buck on Treasury Money Market. (Although I am pretty sure Vanguard would lose money rather than doing that).
__________________
clifp is online now   Reply With Quote
Old 01-27-2009, 05:29 PM   #7
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,117
Quote:
Originally Posted by clifp View Post
(Although I am pretty sure Vanguard would lose money rather than doing that).
Along the same line, I'm thinking Vanguard is seeing the returns on this fund going from almost nothing to zero very soon. They don't want to manage this fund at a loss or continue to charge even a small management fee which would result in a negative return for the shareholders.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 01-27-2009, 06:28 PM   #8
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,905
Thanks, clifp and REWahoo. That gives me a little more understanding of it.

I retreated to the Admiral Treasury MM fund last July, but have been thinking of maybe moving half of what I have in there to Vanguard's Prime MM since I am getting almost nothing presently.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is offline   Reply With Quote
Vusxx
Old 01-31-2009, 10:50 PM   #9
Recycles dryer sheets
 
Join Date: Jun 2008
Posts: 184
Vusxx

Quote:
Originally Posted by clifp View Post
The nightmare scenario for Vanguard is having to break a buck on Treasury Money Market.
I am 100% VUSXX. Everything.

I have been thinking about moving to multiple FDIC insured accounts with local banks. I just don't want to have to deal with all the paperwork and extra fees.

Any thoughts on that?

Did anyone read that new prospectus they just sent out on VUSXX?

You all know what a worrywart I am.
__________________

__________________
Hal3 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Vanguard: Total Bond Market Index (VBMX) or Intermediate Term Treasury Fund (VFITX) ZMAN FIRE and Money 6 11-22-2008 10:01 AM
Hmm, stock market or Money Market/CD? Moneycoming Stock Picking and Market Strategy 4 08-14-2007 07:41 PM
Treasury Direct -- can't get my money out JB FIRE and Money 26 07-03-2006 03:27 PM
6.5-7% Money Market ferco FIRE and Money 7 05-16-2006 09:29 PM

 

 
All times are GMT -6. The time now is 05:38 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.