this is the e-mail I received from Vanguard the other day:
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Important changes to Vanguard Prime Money Market Fund
At Vanguard, we continuously assess our investment lineup—keeping your best interests in mind with every decision we make. Because you own Vanguard Prime Money Market Fund Investor Shares, we want to make you aware of some important changes to our taxable money market lineup that are being made to better support your needs for principal preservation, competitive yields, and low costs.
What's changing?
Vanguard Prime Money Market Fund (Investor Shares: VMMXX; Admiral™ Shares: VMRXX) will change its investment strategy and be renamed Vanguard Cash Reserves Federal Money Market Fund. When this change goes into effect in late September 2020, the fund will invest almost exclusively in cash, U.S. government securities, and/or repurchase agreements that are collateralized solely by U.S. government securities or cash. The fund has historically been managed more conservatively than its peer group. For example, Vanguard Prime Money Market Fund maintained a 33% allocation to government securities—in contrast to the industry average of less than 3%*—leading into the sharp volatility of March 2020. The change in investment strategy further lowers its risk.
Our decades of experience, deep investment expertise, and low costs have enabled Vanguard's taxable money market funds to deliver highly competitive yields without taking undue risks. This approach has allowed Vanguard Prime Money Market Fund Admiral Shares to outperform 97% of the competition over the past 2 decades.** However, Vanguard Prime Money Market Fund Investor Shares has only slightly outperformed Vanguard Federal Money Market Fund Investor Shares over the same time period (note that Admiral Shares aren't available for Vanguard Federal Money Market Fund).*** We've observed and navigated 2 market crises in 12 years. With that as a backdrop, we believe it's better to provide clients with a highly competitive yield by expanding access to lower expenses on a secure government portfolio rather than incurring risk in the prime market.
Vanguard's government money market funds have outperformed their peer-group averages and are ranked within the top decile of peers over the 1-, 3-, 5-, and 10-year periods ended June 30, 2020. Vanguard's government money market funds have also delivered strong returns relative to prime money market funds, and at lower levels of risk.† We seek to continue to deliver competitive yields through low costs, deep expertise in managing portfolios of government securities, and decades of experience across different market cycles.
Effective today, the minimum initial investment for the fund's Admiral Shares is being lowered from $5 million to $3,000, making a broader range of shareholders eligible for reduced expenses (0.10% for Admiral Shares compared with 0.16% for Investor Shares).
You can convert to Admiral Shares immediately and take advantage of the lower expense ratio. Or you can wait for us to convert your shares sometime between late 2020 through 2021. Note: Our checkwriting service isn't available for the fund's Admiral share class. Checkwriting is available for Vanguard Federal Money Market Fund and other Vanguard money market funds.
With the change in investment strategy and broader access to lower expenses, Vanguard seeks to continue to deliver a money market fund with yields that are highly competitive to those of prime money market funds, while providing the safety and security of a portfolio of government securities. Our formula is as simple as it has been successful: prudent management and low costs.
Vanguard Treasury Money Market Fund (VUSXX) has reopened to new investors, also effective today. The fund was closed in April, during a period of heightened volatility and increased interest in U.S. Treasury investments, to protect existing investors from an accelerated reduction in the fund's yield. Because of changes in the market environment, Vanguard believes it's now in the best interests of shareholders to reopen the fund.
Additional Details
https://investornews.vanguard/changes-to-our-taxable-money-market-fund-lineup/
. Jokes aside I'm glad Vanguard is erring on the safe side.
