Vanguard Treasury Money Market Funds are often considered by investors looking for a secure and liquid investment option. These funds primarily invest in short-term U.S. Treasury securities, which are backed by the full faith and credit of the United States government. For the decade ending December 31, 2024, an impressive 6 out of 6 Vanguard money market funds have outperformed their Lipper peer group average, showcasing their consistent competitive performance. It’s important to remember that past performance doesn’t guarantee future results, and these figures can vary over different time periods. This comparison specifically includes mutual funds with a minimum 10-year track record, according to data from LSEG Lipper.
One of the key advantages of Vanguard Treasury Money Market Funds is their low expense ratios. Vanguard’s average expense ratio for money market funds stands at a mere 0.11%, significantly lower than the industry average of 0.24%. These asset-weighted averages, sourced from Vanguard and Morningstar, Inc. as of December 31, 2023, highlight Vanguard’s commitment to providing cost-effective investment solutions. Lower expense ratios can translate directly into higher returns for investors over time.
While Vanguard Treasury Money Market Funds offer attractive yields compared to traditional bank savings accounts, it’s crucial to understand the differences. Bank accounts may provide greater liquidity, ATM access, and overdraft protection. Investors should carefully weigh these factors against the potential for higher yields in money market funds. For example, data from the FDIC National Rates and Rate Caps can be compared to current Vanguard money market fund yields to illustrate this potential yield advantage.
It is essential to acknowledge that all investments carry risk, including the potential loss of principal. Specifically regarding Vanguard money market funds, including the Vanguard Municipal Money Market Fund (available to retail investors only), Vanguard Cash Reserves Federal Money Market Fund, and Vanguard Federal Money Market Fund, investors should be aware of certain risks. Although these funds aim to maintain a stable $1.00 per share value, this is not guaranteed. These funds are not insured or guaranteed by the FDIC or any other government agency. Furthermore, Vanguard, as the fund sponsor, has no legal obligation to provide financial support to these funds and may not do so, even during periods of market stress. Investors could experience losses and should carefully consider these risks before investing in Vanguard Treasury Money Market Funds.
Disclaimer: Past performance is no guarantee of future returns. Investment in money market funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency, and there is no guarantee that the fund will maintain a stable share price of $1.00.
