Vanguard Municipal Money Market VMSXX [0.03%]

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anon_investor
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by anon_investor »

preach wrote: Fri Feb 10, 2023 1:26 pm
Startled Cat wrote: Fri Feb 10, 2023 8:45 am I check the one-day yields for FSPXX (Fidelity California Municipal Money Market Fund) occasionally, and did a double take today when I saw 2.93% (7 day yield is 1.92%). Is the next upswing here with a bang, or is this daily yield just an outlier?
Yep. Municipal MMF indexes are already closing in on 4% that were 1.8% just a few days ago. This swing upward is going to be even harder than the drop downward from a couple months ago.
Interesting, just exchanged SPRXX (Fidelity Prime Money Market Fund) for FTEXX (Fidelity Municipal Money Market Fund), as the 1 day yield as of yesterday shifted the tax equivalent yield in favor of the muni MMF.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Electron »

There has been some interest in any correlation between the Municipal Money Market fund yields and the SIFMA Municipal Swap Index.

Here is a chart that I put together this morning. The SIFMA Swap Index is updated every Wednesday which explains the step changes seen in the chart.

The Municipal Money Market fund yields track the index quite well in both directions.

The SIFMA Index rose to 3.98% yesterday suggesting that the Municipal Money Market fund yields should continue their trend higher.

Image
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by retiringwhen »

Electron wrote: Thu Feb 16, 2023 5:01 pm The SIFMA Swap Index is updated every Wednesday which explains the step changes seen in the chart.
Too bad, the SIFMA Swap Index is not updated daily.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Lyrrad »

retiringwhen wrote: Fri Feb 17, 2023 2:00 pm
Electron wrote: Thu Feb 16, 2023 5:01 pm The SIFMA Swap Index is updated every Wednesday which explains the step changes seen in the chart.
Too bad, the SIFMA Swap Index is not updated daily.
It’s not that big an issue. Many muni MM holdings appear to be floating rate and reset weekly to the rate. The large majority of this change is reflected in changes in 1 day yields between Tuesday and Thursday.

I’d rather look at the index once a week to decide on changes than looking at 7-day averages that take a few days to reflect changes.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by retiringwhen »

Lyrrad wrote: Fri Feb 17, 2023 2:27 pm It’s not that big an issue. Many muni MM holdings appear to be floating rate and reset weekly to the rate. The large majority of this change is reflected in changes in 1 day yields between Tuesday and Thursday.

I’d rather look at the index once a week to decide on changes than looking at 7-day averages that take a few days to reflect changes.
Ahh, I forgot the Floating Rate notes in the funds are actually pegged to the Index. So, yes, this is a very excellent signal!
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by retiringwhen »

Electron wrote: Thu Feb 16, 2023 5:01 pm Here is a chart that I put together this morning. The SIFMA Swap Index is updated every Wednesday which explains the step changes seen in the chart.
Is there a free (not Bloomberg) data source for this index data series?
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Lyrrad »

retiringwhen wrote: Fri Feb 17, 2023 2:39 pm
Electron wrote: Thu Feb 16, 2023 5:01 pm Here is a chart that I put together this morning. The SIFMA Swap Index is updated every Wednesday which explains the step changes seen in the chart.
Is there a free (not Bloomberg) data source for this index data series?
Yes.

SIFMA says it is available free of charge to interested parties.
https://www.sifma.org/resources/researc ... wap-index/ under “HOW CAN I GET THE INDEX?”.

https://www.sifma.org/resources/research/swap/ links to an Excel sheet with historical rates.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by retiringwhen »

Lyrrad wrote: Fri Feb 17, 2023 2:46 pm SIFMA says it is available free of charge to interested parties.
https://www.sifma.org/resources/researc ... wap-index/ under “HOW CAN I GET THE INDEX?”.

https://www.sifma.org/resources/research/swap/ links to an Excel sheet with historical rates.
All links end at Bloomberg :-( I ain't paying $399/year for access to that and Tyler Cowen's column.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Electron »

retiringwhen wrote: Fri Feb 17, 2023 2:39 pm Is there a free (not Bloomberg) data source for this index data series?
I downloaded the data from sifma.org.

https://www.sifma.org/resources/research/swap/

The VRDOs in the SIFMA index all have a weekly reset effective on Wednesday.

https://www.sifma.org/resources/researc ... wap-index/

In looking at the holdings in the annual reports, the majority of the VRDOs held by VMSXX appear to reset weekly.

Others have mentioned that Fidelity reports 1 day yields for their Money Market funds. If that data is available, it might give an earlier indication on cycle tops and bottoms.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Lyrrad »

retiringwhen wrote: Fri Feb 17, 2023 2:54 pm
Lyrrad wrote: Fri Feb 17, 2023 2:46 pm SIFMA says it is available free of charge to interested parties.
https://www.sifma.org/resources/researc ... wap-index/ under “HOW CAN I GET THE INDEX?”.

https://www.sifma.org/resources/research/swap/ links to an Excel sheet with historical rates.
All links end at Bloomberg :-( I ain't paying $399/year for access to that and Tyler Cowen's column.
The current quote at Bloomberg does not appear to require an account or subscription.
https://www.bloomberg.com/quote/MUNIPSA:IND

The Excel sheet should also be freely available and appears to be updated frequently. Direct link: https://www.sifma.org/wp-content/upload ... -Data.xlsx This link may break in the future.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by retiringwhen »

Lyrrad wrote: Fri Feb 17, 2023 3:06 pm
retiringwhen wrote: Fri Feb 17, 2023 2:54 pm
Lyrrad wrote: Fri Feb 17, 2023 2:46 pm SIFMA says it is available free of charge to interested parties.
https://www.sifma.org/resources/researc ... wap-index/ under “HOW CAN I GET THE INDEX?”.

https://www.sifma.org/resources/research/swap/ links to an Excel sheet with historical rates.
All links end at Bloomberg :-( I ain't paying $399/year for access to that and Tyler Cowen's column.
The current quote at Bloomberg does not appear to require an account or subscription.
https://www.bloomberg.com/quote/MUNIPSA:IND

The Excel sheet should also be freely available and appears to be updated frequently. Direct link: https://www.sifma.org/wp-content/upload ... -Data.xlsx This link may break in the future.
Now, the direct download link works! I don't get visibility to it when I browse the original link. The Bloomberg locks me out since I've used my monthly allotment.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Hacksawdave »

Thanks to those that educated me on the SIFMA swap index. This is fabulous to now understand the “what” is going on component. Ever since 2006 I had been trying to find out why after a rate increase, the yield in municipal MM funds would mysteriously drop and later resume higher.

Back in 2006-2007, I had chalked it up to the 25 bps increase every six weeks devaluing the short-term assets of the MM fund. I saw the same thing happen in 2016-2018 during periodic fed rate hikes and could not find an explanation. Now that I am retired and have time, I deep dived and still could not find why the rate drops after a fed increase.

I have started yet another route to pursue the “why” component. Thanks to all the wonderful resources I find here at Bogleheads, I am starting to chart municipal MM fund outflows after rate increases to see if these somehow correlate to the yield drop. My thinking is if the immediate higher yields in the non-municipal MM funds causes municipal MM fund owners to switch MM funds, does this cause the sale of the swaps in municipal MM funds thus driving the yield down?

Unfortunately, the outflow data for VCTXX that I own only goes back to August of last year, so this will be a work in progress to determine if sufficient correlation explains this is the reason why.

I would welcome other opinions. Thanks!

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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by anon_investor »

retiringwhen wrote: Fri Feb 17, 2023 2:00 pm
Electron wrote: Thu Feb 16, 2023 5:01 pm The SIFMA Swap Index is updated every Wednesday which explains the step changes seen in the chart.
Too bad, the SIFMA Swap Index is not updated daily.
You can look at 1 day yields for Fido, Blackrock or Federated Hermes muni MMFs and see the daily trends.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by retiringwhen »

anon_investor wrote: Fri Feb 17, 2023 5:33 pm
retiringwhen wrote: Fri Feb 17, 2023 2:00 pm
Electron wrote: Thu Feb 16, 2023 5:01 pm The SIFMA Swap Index is updated every Wednesday which explains the step changes seen in the chart.
Too bad, the SIFMA Swap Index is not updated daily.
You can look at 1 day yields for Fido, Blackrock or Federated Hermes muni MMFs and see the daily trends.
Yeah, I am busy doing a back test with manually retrieved data on the Fidelity Funds. Thanks.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by anon_investor »

retiringwhen wrote: Fri Feb 17, 2023 10:18 pm
anon_investor wrote: Fri Feb 17, 2023 5:33 pm
retiringwhen wrote: Fri Feb 17, 2023 2:00 pm
Electron wrote: Thu Feb 16, 2023 5:01 pm The SIFMA Swap Index is updated every Wednesday which explains the step changes seen in the chart.
Too bad, the SIFMA Swap Index is not updated daily.
You can look at 1 day yields for Fido, Blackrock or Federated Hermes muni MMFs and see the daily trends.
Yeah, I am busy doing a back test with manually retrieved data on the Fidelity Funds. Thanks.
I am holding FZEXX at Fidelity. Close to VMSXX.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Lyrrad »

The SIFMA Swap index jumped to 4.35 yesterday, even higher than February. If you’re comfortable with munis MM funds, it probably is time to switch back.

Edit: FZEXX jumped to 4.00% today. Since VMSXX's 7 day yield jumped 0.22% to 3.03%, and FZEXX's 7-day yield jumped a similar amount, I expect that VMSXX's current yield is about 4.15%.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Electron »

The SIFMA Swap index jumped to 4.35 yesterday, even higher than February. If you’re comfortable with munis MM funds, it probably is time to switch back.
The large increase in the SIFMA Municipal Index was definitely a nice surprise.

I intend to keep an eye on the 1 day SEC yields on the Fidelity website. FZEXX does look like the best fund to watch for those monitoring VMSXX. The 1 day yield should be a good indicator.

Here are two links that provide information on the Fidelity Money Market funds. The second link provides Historical Prices, Distributions & Yields.

The 1 day SEC yield on FZEXX jumped a full percentage point the day after the Fed meeting. :happy

https://institutional.fidelity.com/app/ ... usDay=true

https://institutional.fidelity.com/app/funds/hpdy
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by anon_investor »

Electron wrote: Sat Mar 25, 2023 6:35 pm
The SIFMA Swap index jumped to 4.35 yesterday, even higher than February. If you’re comfortable with munis MM funds, it probably is time to switch back.
The large increase in the SIFMA Municipal Index was definitely a nice surprise.

I intend to keep an eye on the 1 day SEC yields on the Fidelity website. FZEXX does look like the best fund to watch for those monitoring VMSXX. The 1 day yield should be a good indicator.

Here are two links that provide information on the Fidelity Money Market funds. The second link provides Historical Prices, Distributions & Yields.

The 1 day SEC yield on FZEXX jumped a full percentage point the day after the Fed meeting. :happy

https://institutional.fidelity.com/app/ ... usDay=true

https://institutional.fidelity.com/app/funds/hpdy
I moved some money from FDLXX to FZEXX yesterday. Will monitor the yield next week, may move more but will need to be prepared to move back in a hurry.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Electron »

anon_investor wrote: Sat Mar 25, 2023 8:09 pmI moved some money from FDLXX to FZEXX yesterday. Will monitor the yield next week, may move more but will need to be prepared to move back in a hurry.
I processed an exchange today from VUSXX to VMSXX. Later this week I have a T-Bill maturing and may invest the proceeds in VMSXX as well.

With April 15 and tax payments coming up, let's hope that the higher yield is maintained for a little longer in this cycle.

With the higher percentage of repurchase agreements in VUSXX, we don't know the status of any state tax exemption. However, I am staying optimistic and estimating the tax exemption at 70% for now. That figure may change in the coming months.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Kevin M »

Electron wrote: Mon Mar 27, 2023 4:05 pm
anon_investor wrote: Sat Mar 25, 2023 8:09 pmI moved some money from FDLXX to FZEXX yesterday. Will monitor the yield next week, may move more but will need to be prepared to move back in a hurry.
I processed an exchange today from VUSXX to VMSXX. Later this week I have a T-Bill maturing and may invest the proceeds in VMSXX as well.

With April 15 and tax payments coming up, let's hope that the higher yield is maintained for a little longer in this cycle.

With the higher percentage of repurchase agreements in VUSXX, we don't know the status of any state tax exemption. However, I am staying optimistic and estimating the tax exemption at 70% for now. That figure may change in the coming months.
I would call 70% pessimistic, as it's been running at 75-80%, so I would call 80% optimistic and 70% pessimistic. I just changed my TEY calcs to use 75% USGO as an estimate for 2023.

Assuming 75% USGO, VUSXX TEY for me at 22% and 9.3% marginal rates is 5.16%, while VMSXX TEY is 5.08%.

Image

Given that these are 7-day yields, it wouldn't be surprising for VMSXX TEY to be higher than VUSXX currently (for me), but not enough to bother switching.

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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by retiringwhen »

Kevin M wrote: Mon Mar 27, 2023 7:18 pm I would call 70% pessimistic, as it's been running at 75-80%, so I would call 80% optimistic and 70% pessimistic. I just changed my TEY calcs to use 75% USGO as an estimate for 2023.
I concur. I switched to 75% after the FEB report on VUSXX. I am using 40% for VMFXX and VMRXX as well base upon their recent reports.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by UpperNwGuy »

retiringwhen wrote: Mon Mar 27, 2023 7:28 pm
Kevin M wrote: Mon Mar 27, 2023 7:18 pm I would call 70% pessimistic, as it's been running at 75-80%, so I would call 80% optimistic and 70% pessimistic. I just changed my TEY calcs to use 75% USGO as an estimate for 2023.
I concur. I switched to 75% after the FEB report on VUSXX. I am using 40% for VMFXX and VMRXX as well base upon their recent reports.
Why are folk sticking with VUSXX now that it is no longer 100% USGO? Don't Fidelity and Schwab have 100% USGO money market funds?
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by anon_investor »

UpperNwGuy wrote: Mon Mar 27, 2023 7:37 pm
retiringwhen wrote: Mon Mar 27, 2023 7:28 pm
Kevin M wrote: Mon Mar 27, 2023 7:18 pm I would call 70% pessimistic, as it's been running at 75-80%, so I would call 80% optimistic and 70% pessimistic. I just changed my TEY calcs to use 75% USGO as an estimate for 2023.
I concur. I switched to 75% after the FEB report on VUSXX. I am using 40% for VMFXX and VMRXX as well base upon their recent reports.
Why are folk sticking with VUSXX now that it is no longer 100% USGO? Don't Fidelity and Schwab have 100% USGO money market funds?
Fidelity offers a 93% USGO money market fund (FDLXX). I hold this.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Kevin M »

retiringwhen wrote: Mon Mar 27, 2023 7:28 pm
Kevin M wrote: Mon Mar 27, 2023 7:18 pm I would call 70% pessimistic, as it's been running at 75-80%, so I would call 80% optimistic and 70% pessimistic. I just changed my TEY calcs to use 75% USGO as an estimate for 2023.
I concur. I switched to 75% after the FEB report on VUSXX. I am using 40% for VMFXX and VMRXX as well base upon their recent reports.
40% = 0% if you live in CA, CT or NY. :annoyed
If I make a calculation error, #Cruncher probably will let me know.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by retiringwhen »

Kevin M wrote: Mon Mar 27, 2023 7:43 pm
retiringwhen wrote: Mon Mar 27, 2023 7:28 pm
Kevin M wrote: Mon Mar 27, 2023 7:18 pm I would call 70% pessimistic, as it's been running at 75-80%, so I would call 80% optimistic and 70% pessimistic. I just changed my TEY calcs to use 75% USGO as an estimate for 2023.
I concur. I switched to 75% after the FEB report on VUSXX. I am using 40% for VMFXX and VMRXX as well base upon their recent reports.
40% = 0% if you live in CA, CT or NY. :annoyed
Oh yes, not nice. :oops:
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by mouth »

UpperNwGuy wrote: Mon Mar 27, 2023 7:37 pm
retiringwhen wrote: Mon Mar 27, 2023 7:28 pm
Kevin M wrote: Mon Mar 27, 2023 7:18 pm I would call 70% pessimistic, as it's been running at 75-80%, so I would call 80% optimistic and 70% pessimistic. I just changed my TEY calcs to use 75% USGO as an estimate for 2023.
I concur. I switched to 75% after the FEB report on VUSXX. I am using 40% for VMFXX and VMRXX as well base upon their recent reports.
Why are folk sticking with VUSXX now that it is no longer 100% USGO? Don't Fidelity and Schwab have 100% USGO money market funds?
Because I don't have accounts at either of those and it isn't worth the hassle of getting one and shifting money between; not to mention my employer's reporting requirements for another brokerage [bangs head]. Or can I buy those funds through Vanguard?

ETA: though I just switched all over to VMSXX anyway, but once the cycle flips I'll likely be back into VUSXX
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Electron »

I would call 70% pessimistic, as it's been running at 75-80%, so I would call 80% optimistic and 70% pessimistic. I just changed my TEY calcs to use 75% USGO as an estimate for 2023.
The 70% figure that I mentioned allowed for higher Repurchase Agreement percentages in the coming months.

We only have data for January and February and the trend seems to be higher. In addition, the post below from another thread makes some very pertinent points.

viewtopic.php?p=7182280#p7182280

Cash inflow to the fund has been very high and the current 4.80% repo rate at the Federal Reserve Bank of New York is high relative to recent T-Bill yields.

We will likely be updating our estimates in the coming months. On the positive side, the fund may invest new cash temporarily in overnight repos and then buy T-Bills in the following days.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Electron »

The Vanguard Prospectus states that you generally begin earning dividends on the business day following the trade date when purchasing shares. When redeeming shares, you generally continue earning dividends until the first business day following your trade date.

I recently exchanged shares from VUSXX to VMSXX and earning dividends appears to be working differently. The trade date was 3/27/23 as shown below.

The accrued dividends on VMSXX increased on the trade date reflecting the purchase. VUSXX did not accrue dividends on the trade date for the amount of the exchange.

Are others seeing the same thing in their Vanguard accounts? I wonder if share exchanges are treated differently than ACH purchases from a bank.

I would prefer that it work this way especially for exchanges that might take place on a Friday.

Code: Select all

Accrued Dividends - VUSXX and VMSXX

Exchange     Date      VUSXX     Increase   VMSXX    Increase	
								
             3/24/23   $454.02              $26.08		
             3/25/23   $475.47   $21.45     $27.79   $1.71	
             3/26/23   $496.92   $21.45     $29.51   $1.72	
$126K        3/27/23   $502.07   $5.15      $45.60   $16.09
             3/28/23   $507.20   $5.13      $61.65   $16.05
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Lyrrad »

Electron wrote: Wed Mar 29, 2023 2:14 pm The accrued dividends on VMSXX increased on the trade date reflecting the purchase. VUSXX did not accrue dividends on the trade date for the amount of the exchange.

Are others seeing the same thing in their Vanguard accounts? I wonder if share exchanges are treated differently than ACH purchases from a bank.
I see the same thing after an exchange last week in a Vanguard brokerage account. Reviewing a purchase I made earlier this year funded by ACH, it seems to be the same behavior when I make a purchase, with interest being credited for the day of the transaction. I just made a test purchase funded by ACH, but I expect to see the same behavior. If I see anything different, I’ll edit this post tomorrow.

I think I lose a day (or three if on Friday) of interest when I withdraw to an external account, which makes up for the extra day (or three if on Friday) of interest when I deposit.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Electron »

Lyrrad wrote: Wed Mar 29, 2023 2:51 pm I see the same thing after an exchange last week in a Vanguard brokerage account. Reviewing a purchase I made earlier this year funded by ACH, it seems to be the same behavior when I make a purchase, with interest being credited for the day of the transaction.
Thanks for the confirmation. If the accrued dividends are correct for each date, then the information in the prospectus would appear to be incorrect at least for some cases. Mutual Fund Accounts and other types of purchases and redemptions could be other variables.

I'm happy to see it working this way especially with a T-Bill maturing tomorrow.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by zonto »

I'm seeing 4.15% 7-day SEC yield for this fund today. Tax equivalent yield for higher federal tax brackets is approaching 7%. Can't last long, right? But I moved money from the settlement fund here all the same.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by mouth »

zonto wrote: Thu Mar 30, 2023 2:26 pm I'm seeing 4.15% 7-day SEC yield for this fund today. Tax equivalent yield for higher federal tax brackets is approaching 7%. Can't last long, right? But I moved money from the settlement fund here all the same.
7.06% TEY for those of us in 38.8%/5.75% fed/state brackets :shock: :beer :moneybag
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by retiringwhen »

mouth wrote: Thu Mar 30, 2023 3:06 pm
zonto wrote: Thu Mar 30, 2023 2:26 pm I'm seeing 4.15% 7-day SEC yield for this fund today. Tax equivalent yield for higher federal tax brackets is approaching 7%. Can't last long, right? But I moved money from the settlement fund here all the same.
7.06% TEY for those of us in 38.8%/5.75% fed/state brackets :shock: :beer :moneybag
what is strange to me is that tons of money is flowing INTO money markets right now on the retails side, who is selling so many short-term bonds that the prices are dropping. This cyclical thing just doesn't make sense to me even with the quarterly coupon payment flow ideas thrown out before in articles.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by mouth »

haha yeah it does seem crazy, even given my limited grepping of the concepts about the coupons etc.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Electron »

I'm seeing 4.15% 7-day SEC yield for this fund today. Tax equivalent yield for higher federal tax brackets is approaching 7%. Can't last long, right? But I moved money from the settlement fund here all the same.
The last two cycles were relatively short. Checks written on Tax-Exempt Money Market Funds for April tax payments are apparently one factor in driving up short term VRDO yields. As a result, this cycle could last a little longer. We should know in a week or two.

I just estimated the 1 day yield on VMSXX for the last several days using the accrued dividend information provided in my account. The 1 day yields appear reasonable and consistent with changes seen for FZEXX.

The formula used was 365 times [daily increase in accrued dividends] / [value of the account].

3/27/23 4.17%
3/28/23 4.16%
3/29/23 4.03%
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by mouth »

Electron wrote: Thu Mar 30, 2023 3:58 pm [snip]

3/27/23 4.17%
3/28/23 4.16%
3/29/23 4.03%
Woot! That tracks my math too :)
LSLover
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by LSLover »

Does anyone know with certainty whether the exchange between funds (VUSXX and VMSXX) on FRIDAYS will NOT result in losing dividend accrual over the weekend?
Leesbro63
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Leesbro63 »

I currently own VUSB (7 day SEC 4.99% taxable yield). What are the downsides, if any, of moving to VMSXX (4.10% 7 day SEC tax free yield)? My VUSB has a tiny capital gain so making the switch will be basically capital-gain tax free.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by retiringwhen »

Leesbro63 wrote: Fri Mar 31, 2023 6:31 am I currently own VUSB (7 day SEC 4.99% taxable yield). What are the downsides, if any, of moving to VMSXX (4.10% 7 day SEC tax free yield)? My VUSB has a tiny capital gain so making the switch will be basically capital-gain tax free.
The yield of VMSXX will be much lower than VUSB in about 5 days.

I would ask why you own VUSB? Do you have a 1 year duration need or were you just chasing yields? If so, you may want to stick around in VUSB. If rates are about to drop, you may get a small capital gain, if they stay the same or go up, maybe a bit more yield if you hold them for at least a year.

Second question, VUSB does not generally make sense for folks in high tax brackets, but VMSXX does, what are you trying to optimize?
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anon_investor
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by anon_investor »

Electron wrote: Thu Mar 30, 2023 3:58 pm
I'm seeing 4.15% 7-day SEC yield for this fund today. Tax equivalent yield for higher federal tax brackets is approaching 7%. Can't last long, right? But I moved money from the settlement fund here all the same.
The last two cycles were relatively short. Checks written on Tax-Exempt Money Market Funds for April tax payments are apparently one factor in driving up short term VRDO yields. As a result, this cycle could last a little longer. We should know in a week or two.

I just estimated the 1 day yield on VMSXX for the last several days using the accrued dividend information provided in my account. The 1 day yields appear reasonable and consistent with changes seen for FZEXX.

The formula used was 365 times [daily increase in accrued dividends] / [value of the account].

3/27/23 4.17%
3/28/23 4.16%
3/29/23 4.03%
Yields are about to drop more, maybe time to swap out over the weekend, here are the 1 day yield trends for similar muni money market funds:

FFTXX
3/27/23 4.14%
3/28/23 4.11%
3/29/23 4.04%
3/29/23 3.75%
https://www.federatedinvestors.com/prod ... rust/is.do

FZEXX
3/27/23 4.00%
3/28/23 3.99%
3/29/23 3.88%
3/29/23 3.63%
https://institutional.fidelity.com/app/ ... 59119.html

Based on the accellerating yield drop, muni money market funds may lose their advantage over the weekend.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Leesbro63 »

retiringwhen wrote: Fri Mar 31, 2023 8:52 am
Leesbro63 wrote: Fri Mar 31, 2023 6:31 am I currently own VUSB (7 day SEC 4.99% taxable yield). What are the downsides, if any, of moving to VMSXX (4.10% 7 day SEC tax free yield)? My VUSB has a tiny capital gain so making the switch will be basically capital-gain tax free.
The yield of VMSXX will be much lower than VUSB in about 5 days.

I would ask why you own VUSB? Do you have a 1 year duration need or were you just chasing yields? If so, you may want to stick around in VUSB. If rates are about to drop, you may get a small capital gain, if they stay the same or go up, maybe a bit more yield if you hold them for at least a year.

Second question, VUSB does not generally make sense for folks in high tax brackets, but VMSXX does, what are you trying to optimize?
Trying to optimize after tax yield over the long term. When I bought VUSB, the after tax yield was better than the yield from short term tax free fixed income options.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by tallhair »

I’m looking to see if moving $200K from VFMXX to VMSXX is advisable.

Today’s rates seem to be VFMXX - 4.76 and VMSXX 4.10.

I’m in the 12% tax bracket and my desire is to minimize federal taxes in taxable brokerage to preserve/maximize room for Roth IRA rollovers and stay in the 12% bracket.

My calculations show the difference in gains from the move would only net me about $200 less after taxes annually, and preserve about $9K room for rollovers. I’m not positive on that math though.

Also I don’t know if the two funds will track together with similar +/- adjustments going forward.

Any advice or additional info needed?
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by anon_investor »

tallhair wrote: Fri Mar 31, 2023 6:20 pm I’m looking to see if moving $200K from VFMXX to VMSXX is advisable.

Today’s rates seem to be VFMXX - ~4.71 , VMSXX 4.10.

I’m in the 12% tax bracket and my desire is to minimize federal taxes in taxable brokerage to preserve/maximize room for Roth IRA rollovers and stay in the 12% bracket.

My calculations show the difference in gains from the move would only net me about $200 less annually, and preserve about $9K for rollovers. I’m not positive on that math though.

Also I don’t know if the two funds will track together with similar +/- adjustments going forward.

Any advice or additional info needed?
No, VMSXX's yield is trending down. It is likely going to be well under 4% by Monday.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by tallhair »

anon_investor wrote: Fri Mar 31, 2023 6:23 pm
tallhair wrote: Fri Mar 31, 2023 6:20 pm I’m looking to see if moving $200K from VFMXX to VMSXX is advisable.

Today’s rates seem to be VFMXX - ~4.71 , VMSXX 4.10.

I’m in the 12% tax bracket and my desire is to minimize federal taxes in taxable brokerage to preserve/maximize room for Roth IRA rollovers and stay in the 12% bracket.

My calculations show the difference in gains from the move would only net me about $200 less annually, and preserve about $9K for rollovers. I’m not positive on that math though.

Also I don’t know if the two funds will track together with similar +/- adjustments going forward.

Any advice or additional info needed?
No, VMSXX's yield is trending down. It is likely going to be well under 4% by Monday.
Thank you very much for that quick reply and heads up. That’s why I came here to ask. I couldn’t find any where to track the 7 day SEC yield change on a daily or weekly basis.

Does anyone have a suggestion to achieve my goal without giving up too much in gains? I want to stay reasonably liquid but minimize taxable fed and if possible Illinois income.
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by trirunner »

Curious, how much more credit risk is VMSXX compared to VMFXX
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by trirunner »

anon_investor wrote: Fri Mar 31, 2023 6:23 pm
tallhair wrote: Fri Mar 31, 2023 6:20 pm I’m looking to see if moving $200K from VFMXX to VMSXX is advisable.

Today’s rates seem to be VFMXX - ~4.71 , VMSXX 4.10.

I’m in the 12% tax bracket and my desire is to minimize federal taxes in taxable brokerage to preserve/maximize room for Roth IRA rollovers and stay in the 12% bracket.

My calculations show the difference in gains from the move would only net me about $200 less annually, and preserve about $9K for rollovers. I’m not positive on that math though.

Also I don’t know if the two funds will track together with similar +/- adjustments going forward.

Any advice or additional info needed?
No, VMSXX's yield is trending down. It is likely going to be well under 4% by Monday.
How much lower would you estimate in April. Would you say it's still a better deal for high tax bracket, 32/35%
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Electron
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Electron »

tallhair wrote: Fri Mar 31, 2023 6:31 pm That’s why I came here to ask. I couldn’t find any where to track the 7 day SEC yield change on a daily or weekly basis.

Does anyone have a suggestion to achieve my goal without giving up too much in gains? I want to stay reasonably liquid but minimize taxable fed and if possible Illinois income.
There are quite a few threads in the forum discussing Money Market funds including the cyclical nature of the Municipal Money Market funds. Here is one example. You can learn a lot monitoring the various threads.

viewtopic.php?p=7192705#p7192705

One option for your case would be to buy a T-Bill maturing next year. That would defer income and taxes to 2024. The 52 week T-Bill is auctioned by the Treasury every month. You could buy one in the secondary market with a maturity in early 2024.
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Electron
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Electron »

Lyrrad wrote: Wed Mar 29, 2023 2:51 pm I see the same thing after an exchange last week in a Vanguard brokerage account. Reviewing a purchase I made earlier this year funded by ACH, it seems to be the same behavior when I make a purchase, with interest being credited for the day of the transaction.
I have some new information on when a share purchase begins earning dividends. Here is my earlier post for reference.

viewtopic.php?p=7194456#p7194456

I was tracking the daily increase in accrued dividends last week. The difference between the accrued dividends on March 30 and the dividend paid out on March 31 was not what I had expected. VMSXX only showed a very small increase, and VUSXX showed a much larger than expected increase.

It would be surprising if the Vanguard Prospectus is wrong. It could be that the accrued dividends following a purchase or exchange are incorrect. The dividends that were paid out appear to have reversed incorrect amounts shown on the date of the exchange.

If anyone has any additional information on this subject please pass it along.

The Vanguard Prospectus states that you generally begin earning dividends on the business day following the trade date when purchasing shares. When redeeming shares, you generally continue earning dividends until the first business day following your trade date.

The accrued dividends for April 1 are now available on the site. Those amounts all look correct.
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Lyrrad
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by Lyrrad »

Electron wrote: Sun Apr 02, 2023 3:27 pm I have some new information on when a share purchase begins earning dividends. Here is my earlier post for reference.

viewtopic.php?p=7194456#p7194456

I was tracking the daily increase in accrued dividends last week. The difference between the accrued dividends on March 30 and the dividend paid out on March 31 was not what I had expected. VMSXX only showed a very small increase, and VUSXX showed a much larger than expected increase.

It would be surprising if the Vanguard Prospectus is wrong. It could be that the accrued dividends following a purchase or exchange are incorrect. The dividends that were paid out appear to have reversed incorrect amounts shown on the date of the exchange.
I also see some discrepancies of a few cents.

I will do a test transaction later this month, purchasing a new MM fund on a Friday, and selling it on Monday. Next month it should be apparent how the interest accrual works
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Re: Vanguard Municipal Money Market VMSXX [0.03%]

Post by zero_coupon »

trirunner wrote: Sat Apr 01, 2023 9:20 am Curious, how much more credit risk is VMSXX compared to VMFXX
I asked a similar question about Fidelity's muni MM fund FZEXX here:

viewtopic.php?t=401712
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