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Vanguard now charging for money market?
Old 12-14-2015, 06:05 PM   #1
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Vanguard now charging for money market?

Ok,

So just noticed a message that as of today there is a fee on the money market.. is there other options? Did I miss a memo? I'm not looking to pay money just to leave money sit somewhere until they can cut me a check.
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Old 12-14-2015, 06:14 PM   #2
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I didn't see the message, but Vanguard money market funds have historically had a postive expense ratio. The expense ratio might have gone to 0.00% when yields were so low that Vanguard subsidized the yield to get it to 0.01%. Now that yields are higher, Vanguard can go back to having a non-zero expense ratio.

Or are you talking about something different from the expense ratio?

In any event, the published yield is AFTER taking into account the expense ratio. That is not the case of the money market fund in my spouse's 401(k) plan which loses money because the expense ratio is about 1%.
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Old 12-14-2015, 06:14 PM   #3
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I moved all my cash from VMMXX to Ally quite a while ago, but where did you see the message?
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Old 12-14-2015, 06:22 PM   #4
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It was under my settlement account, a tiny note that was "collapsed" in one account but expanded in the other so I noticed it.

As of 12/14/2015, the expense ratio on your Vanguard Prime Money Market Fund has changed from 0.00% to 0.16%. The problem is as far as I know, that account is still only paying .15% .. ie so my math says that I would now pay them to keep my money.. NOT happening.

I did a little more digging and it appears there is a Federal Prime Money Market Fund that may be where they are pushing everyone to VMFXX which use to be closed and they now re-opened. From what I can tell that would at least still be +.02% after expenses which would be fine...as long as Im' not paying them.
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Old 12-14-2015, 06:34 PM   #5
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Could it be Vanguard is anticipating a FED rate hike this week?

If so the SEC yield should be greater than the current 0.15%.
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Old 12-14-2015, 07:01 PM   #6
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I noticed this on my accounts today. I will call tomorrow and see if I can get an explanation.
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Old 12-14-2015, 09:10 PM   #7
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I just checked my account and the message I see says the expense ratio is going from .17% to .16%.

I have not transitioned my account to the brokerage structure. I'm not sure if that makes a difference.
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Old 12-14-2015, 09:26 PM   #8
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There have been some SEC changes that are changing the money market funds. SEC set new rules in the summer of 2014 that have to be implemented by October 2016. Many brokerages houses are implementing part of it this month (Fido and Vanguard at least).

These changes are not just a vanguard thing.
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Old 12-15-2015, 08:39 AM   #9
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Quote:
Originally Posted by karen1972 View Post
It was under my settlement account, a tiny note that was "collapsed" in one account but expanded in the other so I noticed it.

As of 12/14/2015, the expense ratio on your Vanguard Prime Money Market Fund has changed from 0.00% to 0.16%. The problem is as far as I know, that account is still only paying .15% .. ie so my math says that I would now pay them to keep my money.. NOT happening.

I did a little more digging and it appears there is a Federal Prime Money Market Fund that may be where they are pushing everyone to VMFXX which use to be closed and they now re-opened. From what I can tell that would at least still be +.02% after expenses which would be fine...as long as Im' not paying them.
You're totally misinterpreting the situation... the net yield would never be negative and is actually a small positive even after the 0.16% ER.
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Old 12-15-2015, 08:46 AM   #10
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Originally Posted by pb4uski View Post
You're totally misinterpreting the situation... the net yield would never be negative and is actually a small positive even after the 0.16% ER.
You'll have to explain to me how that is.. expense = .16% Yield = .15%, what am I missing?
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Old 12-15-2015, 08:59 AM   #11
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The yield is AFTER deducting the 0.16% in expenses.

Also see what LOL! said in post #2:

Quote:
....In any event, the published yield is AFTER taking into account the expense ratio. ....
What is interesting is that the distribution yield has increased dramatically from 0.01% and creeping up to 0.10% in December 2015.
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Old 12-15-2015, 09:18 AM   #12
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Vanguard Prime Money Market Fund holds six months of the money I've earmarked as emergency funds. I think of it as completely separate from "investments" and won't change in the near future. I've been happy with it.
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Old 12-15-2015, 09:20 AM   #13
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Originally Posted by pb4uski View Post
The yield is AFTER deducting the 0.16% in expenses.

Also see what LOL! said in post #2:



What is interesting is that the distribution yield has increased dramatically from 0.01% and creeping up to 0.10% in December 2015.
Yes that is interesting.. however I had made the assumption that they hadn't "fixed" their SEC yield they are showing yet so it was still showing based on 0% fees.. as I would have assumed if you increased the fee it should have shown a marked decrease in Yield until the next rate increase.
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