Non instituitonal versions of treasury funds

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Topic Author
regfman
Posts: 49
Joined: Fri Jul 29, 2016 4:42 pm

Non instituitonal versions of treasury funds

Post by regfman »

I have a portfolio manager. He has done well for me over the last 14 years. At least he did better than I would considering how reluctant I've always been to be invested in the equities or bond markets. That is to say that I trust him. He works through Wells with a 1% AUM.
I moved some money, that I inherited, into a new account that he set up to buy short term treasuries, since I told him I want to lower risk and want some fixed income for now, and do not want this money in the equities or long term bond market. He says that this new account is not being charged fees.

With that he bought:
FTOXX Goldman Sachs SQ Treas I
WOTXX Allspring 100% Treas Ins
FRSXX Fidelity Treas Instl

I also have my own schwab accounts. I am selling a home and want to put that considerable amount of money into the schwab account just to not have all my eggs in one institution. I also want those funds accessible for a home purchase in the next six months.
I thought I'd mimic the choices he made. But I am now learning that those above funds he bought are "institutional", requiring $10M purchases.

Questions:
1) what are some equivalent funds that I can buy? Probably very standard stuff.
2) while my portfolio manager says he is not taking the 1% on those funds I assume that he probably collected some commission somewhere along the line to buy those funds. I don't see it but I guess it has to be there somewhere. How does that work? Should I expect to see a better return buying equivalent funds myself?
3) alternatively I could buy treasuries myself through schwab, assuming that there is no added risk other than poorly managing timing of the ladders. I am not trying to squeeze the most return from the investments as much as I am trying to make sure the money is safe. Should I just do that?
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jeffyscott
Posts: 13484
Joined: Tue Feb 27, 2007 8:12 am

Re: Non instituitonal versions of treasury funds

Post by jeffyscott »

regfman wrote: Fri Jun 09, 2023 7:28 am 1) what are some equivalent funds that I can buy? Probably very standard stuff.
It looks like all three of those are treasury money market funds, not sure why the advisor put it in three funds that are all basically the same, but Schwab also has a treasury money market fund, SNSXX, however the ER is 0.34%. Those in your Wells account appear to have ERs of 0.18-0.20%. There is no reason that I can think of to have 3 treasury money market funds, so why add a 4th with a higher ER?

you can see all the Schwab money market funds here: https://www.schwab.com/money-market-funds
2) while my portfolio manager says he is not taking the 1% on those funds I assume that he probably collected some commission somewhere along the line to buy those funds. I don't see it but I guess it has to be there somewhere. How does that work? Should I expect to see a better return buying equivalent funds myself?
I have no idea, perhaps they are making enough off of the 1% on everything else so don't charge for cash holdings?
3) alternatively I could buy treasuries myself through schwab, assuming that there is no added risk other than poorly managing timing of the ladders. I am not trying to squeeze the most return from the investments as much as I am trying to make sure the money is safe. Should I just do that?
There is no risk in individual treasuries (other than unusual circumstances like the recent debt ceiling shenanigans). You could also look at brokered CDs, which may have higher yields, but are less liquid and so you would probably only want to buy what you can be sure you will hold to maturity. Do you want the money all in "cash", e.g. short term T-bills and/or treasury money market or would "safe" include longer term treasuries, CDs, etc.?

For my own "safe" category, I have treasuries, brokered CDs, TIPS, I-bonds, and TIPS funds (SWRSX and VTAPX). I also have a short term bond index (SWSBX), which not 100% safe but is about 2/3 is, since that portion is treasuries. I also use SWVXX for a small amount of "cash".

I don't own any ETFs, but that's another option for treasuries, eg. VGSH, which is 1-3 year treasuries.
Topic Author
regfman
Posts: 49
Joined: Fri Jul 29, 2016 4:42 pm

Re: Non instituitonal versions of treasury funds

Post by regfman »

Thanks for taking the time to answer my questions.
Sandwich
Posts: 254
Joined: Thu Jul 21, 2016 8:04 pm

Re: Non instituitonal versions of treasury funds

Post by Sandwich »

regfman wrote: Fri Jun 09, 2023 7:28 am I have a portfolio manager. .... He works through Wells with a 1% AUM.
.....

2) while my portfolio manager says he is not taking the 1% on those funds I assume that he probably collected some commission somewhere along the line to buy those funds. I don't see it but I guess it has to be there somewhere. How does that work? Should I expect to see a better return buying equivalent funds myself?....
It may be that your portfolio manager is recommending investments with companies that have revenue agreements with Wells Fargo.

See link --> https://www.wellsfargoclearingservicesl ... ements.htm
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