Vanguard money market funds are often considered for their competitive performance and low expense ratios, making them an attractive option for investors seeking to preserve capital and earn interest. For the 10-year period ending December 31, 2024, an impressive 6 out of 6 Vanguard money market funds outperformed their Lipper peer-group average. It’s important to remember that past performance is not indicative of future results, and these results can vary over different time periods. This comparison specifically includes mutual funds with at least a 10-year track record, according to data from LSEG Lipper. To explore fund performance in detail, you can view fund performance.
One of the key advantages of Vanguard money market funds is their low expense ratio. The average expense ratio for Vanguard money market funds stands at a mere 0.11%, significantly lower than the industry average of 0.24%. These averages are asset-weighted, and the industry average excludes Vanguard. Data is sourced from Vanguard and Morningstar, Inc., as of December 31, 2023. This lower expense ratio can contribute to potentially higher returns for investors over time by minimizing costs.
While Vanguard money market funds offer benefits, it’s crucial to understand their nuances compared to traditional bank accounts. Bank accounts may provide greater liquidity, ATM access, and overdraft protection. Investors should carefully weigh these differences based on their individual financial needs and priorities before making an investment decision.
When considering yield, it’s worth noting the potential of money market funds. For a comparison of yields against bank savings accounts, resources like the FDIC National Rates and Rate Caps offer valuable insights. For the most current Vanguard money market fund yields, refer to the information provided above.
It is essential to acknowledge that all investing involves risk, including the potential loss of invested capital. Specifically, the Vanguard Municipal Money Market Fund, available to retail investors, carries the risk of losing money. Although it aims to maintain a $1.00 per share value, this is not guaranteed. The fund may impose fees or temporarily suspend share sales under certain market conditions. It’s also important to note that investments in this fund are not insured or guaranteed by the FDIC or any other government agency, and Vanguard has no obligation to provide financial support to the fund.
Similarly, the Vanguard Cash Reserves Federal Money Market Fund and Vanguard Federal Money Market Fund also carry potential risks. Investing in these funds could lead to financial loss, and while they strive to preserve a $1.00 per share value, this is not assured. These funds are not bank accounts and lack FDIC insurance or government guarantees. Vanguard is not obligated to cover fund losses and may not provide financial support, even during market volatility. Understanding these risks is paramount for any investor considering Vanguard money market funds.
