Vanguard Federal Money Market (VMFXX)
Investment Objective
The Fund seeks to provide current income while maintaining liquidity and a stable share price of $1.
Principal Investment Strategies
The Fund invests primarily in high-quality, short-term money market instruments issued by the U.S. government and its agencies and instrumentalities. Although these securities are high-quality, most of the securities held by the Fund are neither guaranteed by the U.S. Treasury nor supported by the full faith and credit of the U.S. government. To be considered high-quality, a security generally must be rated in one of the two highest credit-quality categories for short-term securities by at least two nationally recognized rating services (or by one, if only one rating service has rated the security). The Fund maintains a dollar-weighted average maturity of 60 days or less and a dollar-weighted average life of 120 days or less.
Under the new money market reforms, government money market funds are required to invest at least 99.5% of their total assets in cash, government securities, and/or repurchase agreements that are collateralized solely by government securities or cash (collectively, government securities). The Fund generally invests 100% of its assets in government securities and therefore will satisfy the 99.5% requirement for designation as a government money market fund.
Principal Risks
The Fund is designed for investors with a low tolerance for risk; however, the Fund is subject to the following risks, which could affect the Fund's performance:
- Income risk, which is the chance that the Fund's income will decline because of falling interest rates. Because the Fund’s income is based on short-term interest rates – which can fluctuate significantly over short periods – income risk is expected to be high.
- Manager risk, which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.
- Credit risk, which is the chance that the issuer of a security will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer's ability to make such payments will cause the price of that security to decline. Credit risk should be very low for the Fund because it invests primarily in securities that are considered to be of high quality.
You could lose money by investing in this Fund. Although a money market fund seeks to preserve the value of an investment at $1 per share, it cannot guarantee it will do so. Investment in this Investment Option is not insured or guaranteed by the FDIC or any other government agency. The sponsor has no legal obligation to provide financial support to the underlying fund, and you should not expect that the sponsor will provide financial support to the underlying fund at any time.
Review Fact Sheet, Prospectus, Annual Report
FAQs
As government securities, the fund's holdings have very high credit quality, although some are not backed by the full faith and credit of the U.S. government. The portfolio managers seek to add value primarily by emphasizing specific issues that appear attractively priced based on historical yield-spread relationships.
How does VMFXX pay out? ›
Over the course of the month, VMFXX collects income from the investments it owns (more on this later), which it then pays out on the first trading day of the following month. For example, on September 1, 2023, the VMFXX dividend per share was $0.00473, which came from income earned during the month of August 2023.
What is the risk of VMFXX? ›
Principal Risks
Income risk, which is the chance that the Fund's income will decline because of falling interest rates. Because the Fund's income is based on short-term interest rates – which can fluctuate significantly over short periods – income risk is expected to be high.
How safe are Vanguard money market funds? ›
Money market funds and other securities held in the Vanguard Brokerage Account are eligible for SIPC coverage. Securities in your brokerage account are protected up to $500,000. To learn more, visit the SIPC's website. Up to $250,000 by FDIC insurance.
Why is VMFXX closed? ›
Vanguard closed the fund in April 2020 to protect existing shareholders following a spike in demand for government money market funds during the first-quarter. Vanguard sought to preserve the fund's yield by preventing excessive purchases of low-yielding government securities over a short time period.
Can Vanguard Federal Money Market Fund lose money? ›
However, this only happens very rarely, but because money market funds are not FDIC-insured, meaning that money market funds can lose money.
What is the seven day yield of VMFXX? ›
Seven-Day Yield Example
The Vanguard Federal Money Market Fund (VMFXX) reports the top seven-day yield in the government category as of January 3, 2018. It has a simple seven-day yield of 1.22% and a compound seven-day yield of 1.23%.
Does Vanguard have a high yield savings account? ›
The Vanguard Cash Plus Account offers a high interest rate and federal insurance up to $1.25 million for individual accounts. It's a cash management account, which provides the services and features of checking or savings accounts, but these types of accounts are typically offered by brokerages, not banks.
Is VMFXX a money market fund? ›
VMFXX – Vanguard Federal Money Market Investor Fund Stock Price | Morningstar.
What is the difference between VMFXX and Vmrxx Vanguard? ›
One key difference between VMRXX and VMFXX is that VMRXX invests more than 25% of its assets in securities issued by companies in the financial services industry. In contrast, VMFXX invests primarily in government-backed securities.
What is the 7-day yield? The 7-Day Yield represents the annualized fund yield based on the average income paid out over the previous seven days assuming interest income is not reinvested and it reflects the effect of all applicable waivers. Absent such waivers, the fund's yield would have been lower.
What happened to Vanguard Prime money market fund? ›
The $125.3 billion Prime fund will transition to a government money market fund and be renamed Vanguard Cash Reserves Federal Money Market Fund in late September 2020 to better meet investor needs and lower risk.
