Money Market Rates 101

For those interested in safe investments, the Vanguard Admiral Treasury Money Market Fund (VUSXX) can’t be overlooked.  We here at Money Market Rates 101 are all about finding the latest and greatest for you, our reader.  The Vanguard Admiral fund is one of the more popular money market funds available.

Currently, this fund is closed, but will likely reopen soon as these funds usually do.  The fund’s administrator (Vanguard) closed the fund to new investors when the markets began to drop earlier in the year.  The Vanguard Admiral Treasury fund seeks to keep a minimum share price of $1 (or 1:1) and invests entirely in short-term government obligations such as Treasury bills.  The minimum investment is fairly high, but the expenses are only 0.15% (as of 12/29/08).

Performance for these low-risk Vanguard Admiral treasury Market Fund investments are about 0.44% (SEC).  Since inception, the Vanguard Admiral Treasury fund has pulled an average of 3.79%.

As of March 9, the fund’s reinvestment limit for current participants will drop to $10,000 per day, which will mean anything more than that to be reinvested will cash out.  Institutional investors in the Vanguard Admiral Treasury Money Market Fund will be locked out on that day as well.  The Vanguard Admiral fund, like all similar funds, are linked to the Federal Reserve’s interest rates, which are extremely low right now, so the yield of the Vanguard Admiral Treasury fund is currently very low.

Of course, like most investment funds, the Vanguard Admiral fund is not FDIC insured and investments are not guaranteed.  The Vanguard Admiral Treasury funds pay dividends monthly.