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Expense ratio on Schwab's MM fund, SWVXX

MikeMMikeM
in Fund Discussions
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?

Comments

  • yogibearbullyogibearbull
    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.
  • MikeMMikeM
    edited March 2023
    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
    edited March 2023
    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.
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