My settlement account -- Vanguard Federal Money Market (VMFXX) average annual return YTD is 1.1%. The Account's 30 Day SEC is 4.77%.
I would have thought the return and the yield would be much more aligned
I am obviously missing something here -- appreciate your help
Thanks in advance
Vanguard Federal Money Mkt Acct Return
Re: Vanguard Federal Money Mkt Acct Return
1.1% is YTD (3 months)Gatewood wrote: ↑Sat Apr 01, 2023 9:28 am My settlement account -- Vanguard Federal Money Market (VMFXX) average annual return YTD is 1.1%. The Account's 30 Day SEC is 4.77%.
I would have thought the return and the yield would be much more aligned
I am obviously missing something here -- appreciate your help
Thanks in advance
4.77% is annualized
Re: Vanguard Federal Money Mkt Acct Return
Also, money markets are very short-term accounts, and the interest rate is not fixed, especially not for an entire year.
Interest rates could rise or fall (perhaps quickly as it did last year) resulting in a very different annualized return than what the yield was at purchase.
Interest rates could rise or fall (perhaps quickly as it did last year) resulting in a very different annualized return than what the yield was at purchase.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
Re: Vanguard Federal Money Mkt Acct Return
The money market's SEC yield isn't for 30 days but for 7 days. It is showing the very latest returns.
I'm not sure what you mean when you write "average annual return YTD". There can be a YTD return (that is, since Jan.1 2023) and an average annual return averaged over some period (usually longer than a year).
I'm not sure what you mean when you write "average annual return YTD". There can be a YTD return (that is, since Jan.1 2023) and an average annual return averaged over some period (usually longer than a year).
- ruralavalon
- Posts: 26351
- Joined: Sat Feb 02, 2008 9:29 am
- Location: Illinois
Re: Vanguard Federal Money Mkt Acct Return
YTD returns of 1.1% is the actual past return so far this year (90 days).Gatewood wrote: ↑Sat Apr 01, 2023 9:28 am My settlement account -- Vanguard Federal Money Market (VMFXX) average annual return YTD is 1.1%. The Account's 30 Day SEC is 4.77%.
I would have thought the return and the yield would be much more aligned
I am obviously missing something here -- appreciate your help
Thanks in advance
The 7 day SEC yield of 4.77% is "AVERAGE ANNUALIZED INCOME DIVIDEND OVER THE PAST 7 DAYS".
The yield changes rapidly with the rate changes from the Federal Reserve.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: Vanguard Federal Money Mkt Acct Return
You can see the monthly distributions here: https://investor.vanguard.com/investmen ... tributions
Scroll down to "Dividend income and capital gains". The fund paid $0.003901/share for March, a distribution yield of 4.59% (annual rate).
Scroll down to "Dividend income and capital gains". The fund paid $0.003901/share for March, a distribution yield of 4.59% (annual rate).