Expense ratio on Schwab's MM fund, SWVXX

MikeM

Not sure why I didn't pay attention to this before, but I never bothered to look at the expense ratio of the Schwab MM fund, SWVXX. It's 0.34%. The 7day yield given is 4.49% but with an added stipulation, 7 day yield with waivers. So, is the actual "net yield " actually 4.49-0.34 = 4.15% after expenses? Or, is the expense ratio known as "waivers"?

I'm assuming the Fidelity MM fund has the same connotation, with waivers(?)

Which now has me thinking, a couple years ago when rates were measured in fractions of a percent, 0.1, 0.2% yield, were we actually losing money being in this fund?

yogibearbull

7-day yield is NET - so after ERs, actual or reduced.

BTW Fido SPAXX has HIGHER ER.

VG VMFXX looks like a great deal.

rforno

fwiw saying I throw extra cash into very short-term t-bills. I may pay a few points on the spread, but it's still cheaper than most of Schwab's (or most people's) MMF offerings.

MikeM

Thank you @yogibearbull. That's good to know the 7 day yield is after expenses. Then I guess "with waivers" means the same as net.

msf

When rates were effectively zero, fund sponsors subsidized their funds so that they all yielded 0.01%.

SWVXX 7 day yield w/waivers: 4.49%: w/o waivers: 4.48% (as of 3/22/23)
https://www.schwabassetmanagement.com/products/swvxx

E/R (after waiver); 0.34%
E/R (w/o waiver): 0.35%
Summary prospectus

If one is willing to trade convenience for small improvements in yield (which can make sense for larger piles of cash), instead of VMFXX (0.11% ER, 4.55% yield, gov fund), one might use VUSXX (0.09% ER, 4.59% yield, pure treasury).

For Fidelity MMFs (again, sacrificing convenience for return) one might use FSIXX (0.21% ER, 0.18% w/waivers; 4.48% w/waivers; pure treasury), available with a $1K min at Merrill.
https://olui2.fs.ml.com/Publish/Content/application/pdf/GWMOL/ICCRateSheet.pdf

sma3

While I wish you could buy VMFXX at Schwab or Fido, the inconvenience and nuisances at Vanguard IMHO do not make up the difference. For $50,000 I am loosing $50 to put up with Vanguard

I don't have $1,000,000 to put into cash which is the minimum for institutional funds at least at Schwab and Fidelity I think.

Never looked at Merrill online.

@msf Is it worth looking at?

I have tried not to leave much in MMF recently, as T bills and CDs pay better and are a little bit more secure

msf

Generally speaking, one cannot buy institutional class shares at Merrill - just the higher ER retail shares. Its online system still has some archaic quirks.

On the plus side, ACAT transfers (in-kind) to and from Merrill are handled very quickly, and without cost (unless closing out an account). Merrill is available 24/7. Front line support is reasonably competent and eager to help (in a positive way).

They often have promotions for bringing money in; sometimes they boost their bonuses, as they are doing now.

This piece at MyMoneyBlog describes the promotion and also gives a one paragraph review of Merrill, with which I concur: generally okay, biggest benefit is using a Merrill balance to qualify for BofA's preferred rewards, including higher cash back rates on its credit cards.
https://www.mymoneyblog.com/merrill-edge-brokerage-bonus-preferred-rewards.html

If one wants to experiment with floating NAV MMFs (why?), Merrill gives you access to several of them.

dtconroe

I am accustomed to MM funds having "waivers" to keep expenses low, and attract deposits. I do not put "short term treasuries" or "short term CDs" in the same category. I use MMs as holding accounts, with strong liquidity criteria. My MM accounts have a lot of fluctuation in balance amounts, as I move money into and out of, those funds for other purposes. Recently, I moved money out of SNAXX to satisfy my annual RMD obligations in my IRA account, and I transferred it into SWVXX in my Joint Tenant, taxable account. So, now my SNAXX account is relatively small, but it will increase in April when I have a CD maturing, and will experience a major increase with CD maturity funds, while I am considering my options. My SWVXX account is relatively large, but it will decrease when I find an investing option I prefer.

Derf

Thanks for posting @dtconroe I haven't taken RMD yet as I'm trying to figure out what to do with the withdrawal other than pay the taxes.
Timing the market, Derf

sfnative

Between March 14th and 17th SCHW insiders bought over 128,000 shares of SCHW stock. I guess they expect to make more by doing that than the 4.5% Schwab's MMFs are paying.