Treasury vs Non-Treasury MM funds

VintageFreak

Folks,

While I'm looking at prospectuses of the various MM funds I own at TRP, Vanguard, Fido, Schwab, etc, is there a way to verify that my MM fund is investing in treasuries? Worried of one/all of them breaking the buck, like happened to some funds in last financial crisis.

I worry when I see stuff like this...

Yankee/Foreign 60% of assets

in Vanguard Prime Money Market
https://investor.vanguard.com/mutual-funds/profile/VMMXX

msf

By definition, prime MMFs are not exclusively invested in federal government securities, let alone treasuries. This is why the SEC instituted regulations on prime MMFs that require them to impose redemption fees and/or restrict redemptions when they have liquidity issues.

To both avoid those restrictions and to make sure that your MMF owns only government securities, buy a "government MMF". For the most safety, buy a MMF that by prospectus says that it invests substantially all of its money in Treasuries.

VUSXX comes close. Its prospectus reads:

Under normal circumstances, at least 80% of the Fund’s assets will be invested in U.S. Treasury securities; the remainder of the assets may be invested in securities issued by U.S. governmental agencies.

For 100% in treasuries, FDLXX's prospectus reads: "Normally investing at least 99.5% of total assets in cash and U.S. Treasury securities."

Fidelity also offers FZFXX. That isn't really a Treasury fund despite its name, because it can invest any amount in repurchase agreements. Those don't have the same Treasury protection, nor are they state tax exempt (at least as of a 1994 Supreme Court ruling). Only 30% of its income last year was state exempt, meaning the rest wasn't in Treasuries.

VintageFreak

@msf thank you!

I think I have two safer choices at Vanguard - Vanguard Federal Money Market and Vanguard US Treasuries - the latter probably leaves nothing to imagination and what I should go with.

EDIT: At Schwab, TRP I'm in "Government Money Market".