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Stashing cash, Summer 2024

rforno
in Other Investing

What's the consensus on stashing cash these days? Can always do T-bills, but what are folks' thoughts on floating ETFs such as USFR, FLRN, etc at this point in time?

FLRN is attractive in quality but I don't relish the combined tax hit compared to something like USFR which is mostly treasuries and therefore state-tax free (VA) for me. USFR is attrative on the tax front, of course .. but if we're coming to the end of higher rates, wouldn't it make sense to start going out 12-18/36 months in duration (either in t-bills or etfs) versus buying short-term floaters?

If it's not going into equities or t-bills, I'd like to move remaining idle cash into anything stable-ish except Schwab's expensive (imo) MMFs.
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Comments

  • WABACWABAC
    edited June 3
    Are we coming to the end of higher rates?

    Two thirds of my floating money is now in VRIG, one third in USFR. What's the worst thing that could happen if I don't correctly anticipate the cut, and I'm a little late to the party? Will all the punch be gone?:)

    If I were was looking for an A rating a little further out I'ld take a look at WSHNX. In the meantime, THOPX has been good to me, FCFAX has been middling.
  • dtconroe
    For now, I just use my Schwab Money Market account, that pays over 5%
  • hank
    edited June 3
    I like mm funds for what little cash I hold. For a bit longer duration I use LSST - but it hasn’t done well lately with the volatile rate picture. Actually, take a look at TBUX for a mm alternative.

    I have no idea where rates are headed. I’m fairly certain there’s a recession out there somewhere waiting to happen. Could be a humdinger when it finally arrives. Should benefit longer duration good credit quality stuff.

    Note - Recently sold core position in PYLD to raise cash for an equity dive (adventure / excursion). But I continue to hold CVSIX in the core as a fixed-income substitute.
  • MikeMMikeM
    I like FLRN a lot. A nice steady trend. If you extrapolate out the 1 and 3 month results, it is returning in the range of 6.8% and 7.2% respectively, very close to it's 1 year return of 6.9%. I also hold RPHYX in this space.

    Going out a bit farther on duration, I really like the RiverPark/Crossbridge products, RSIIX and CBLDX.

    On tax efficiency, I admit I don't pay attention since these are all held in an IRA. So maybe they don't fit as well for you.
  • rforno
    MikeM said:

    I like FLRN a lot. A nice steady trend. If you extrapolate out the 1 and 3 month results, it is returning in the range of 6.8% and 7.2% respectively, very close to it's 1 year return of 6.9%. I also hold RPHYX in this space.

    Going out a bit farther on duration, I really like the RiverPark/Crossbridge products, RSIIX and CBLDX.

    On tax efficiency, I admit I don't pay attention since these are all held in an IRA. So maybe they don't fit as well for you.

    Yeah, this is in taxable, so a fair amount of FLRN will get double-taxed for me. :( I'm leaning towards USFR at the moment for the tax benefits.
  • rforno

    Dumped the cash into SGOV. Far cheaper than Schwab's Treasury MMFs and I won't be paying Schwab an insane fee for the privilege of holding my cash.
  • Mona
    rforno said:


    Dumped the cash into SGOV. Far cheaper than Schwab's Treasury MMFs and I won't be paying Schwab an insane fee for the privilege of holding my cash.

    @rforno why did you decide against USFR?

  • rforno
    Mona said:

    rforno said:


    Dumped the cash into SGOV. Far cheaper than Schwab's Treasury MMFs and I won't be paying Schwab an insane fee for the privilege of holding my cash.

    @rforno why did you decide against USFR?

    Didn't feel 100% going into floaters at this point in time, especially in large amounts. Rather than cogitate about it too much, I just went with a straight treasury fund instead ... will draw that down as I buy other equities over the next several months if/when/as volatility presents itself.
  • Sven
    For taxable account, you can consider USSH, WisdomTree 1-3 yr Laddered Treasury, ER 0.15. Same as USFR.

    We are shifting to 1 and 2 year treasuries as they are rising in recent weeks.
  • rforno
    Sven said:

    For taxable account, you can consider USSH, WisdomTree 1-3 yr Laddered Treasury, ER 0.15. Same as USFR.

    We are shifting to 1 and 2 year treasuries as they are rising in recent weeks.

    With less than $1M AUM and an average daily volume of < 300s that sounds kinda dangerous if you ever want/need to exit it quickly to use the cash elsewhere. UTWO might be a better option if you want more liquidity (and AUM) as a cash substitute --- albeit it wouldn't be laddered.
  • Sven
    Thanks for the info. USSH is a new fund, inception date 3/12/24, with $495K asset.

    Pros and cons exist in either ETF or treasury approaches. Once can extend the duration of the ladder % from 6 months to 1 to 3 year treasury. Also keep some in money market.
  • AndyJ
    edited June 6
    @rforno: Didn't feel 100% going into floaters at this point in time, especially in large amounts. Rather than cogitate about it too much, I just went with a straight treasury fund instead ... will draw that down as I buy other equities over the next several months if/when/as volatility presents itself.
    Good call, I'd say. I've started reducing floaters from a large chunk to more of a medium-sized chunk, and ready to go further if conditions call for it. The strength of the move down in T rates is saying to start heading in that direction, imho.

    More or less like @Sven, I've been working on a collection of 1y and 2y T's, thinking even the reduced current rates are probably going to look pretty good over the next year or two.
  • JunksterJunkster
    Seems a few here are reducing floating rates. Probably not a bad move. All the bond traders appear to be loaded to the gills in floating rate/CLOs, including me. So have been reducing there a bit if only because the boat seems so crowded. Bought some junk munis this week. Friday’s employment report will be pivotal to this current move down in the 10 year or if instead we go back to the higher for longer mode.
  • AndyJ
    edited June 6
    Good call on the junk munis. I have one, a CEF, on a limited watchlist, but I missed its blast up to "not now" z-stat levels just in the past week or so. Plan to expand that list.

    But right, high-ish for longer isn't out of the picture yet.
  • Derf
    Is the upcoming 3 year T Note auction looking that bad that no one mention buying other than myself ?
  • AndyJ
    edited June 6
    @Derf, at ~ 4.50, just for me, the 3y is borderline. If there's a bump on the Friday employment numbers, it could get more interesting.
  • Derf
    @AndyJ : It's been a few years, but I can remember being dam happy to get three %. That was for 2 year CD. I started reaching out a few months early , but such is the life of an investor. Interesting times await us ! Rolling some early, rolling some late
  • MikeW
    @rforno …. Thanks very much for posting this. I didn’t realize that Schwab was charging so much for their MMs. I will have to explore some of these alternatives that folks here are recommending. So did you put all your excess cash into SGOV?
  • davidrmorandavidrmoran
    ML charges a lot, imo, 0.21% or something, for being able to buy (otherwise) high-min Fidelity mm fund.
  • Mona
    MikeW said:

    @rforno …. Thanks very much for posting this. I didn’t realize that Schwab was charging so much for their MMs. I will have to explore some of these alternatives that folks here are recommending. So did you put all your excess cash into SGOV?

    Aren't these Schwab money market yields net of the expense ratios? If so, while the expense ratios are high, the money market yields are competitive with Vanguard and Fidelity.

    https://www.schwabassetmanagement.com/products/money-fund-yields



  • yogibearbullyogibearbull
    While the distinction between the government and retail-prime m-mkt funds is going away, Schwab retail-prime yields are comparable to others' government funds.

    Schwab lags when like comparisons are made - between government funds, and between retail-prime funds.

    I have seen many bad ads where Schwab retail-prime is the only fund listed among government m-mkt funds.
  • BaluBalu
    Mona said:

    MikeW said:

    @rforno …. Thanks very much for posting this. I didn’t realize that Schwab was charging so much for their MMs. I will have to explore some of these alternatives that folks here are recommending. So did you put all your excess cash into SGOV?

    Aren't these Schwab money market yields net of the expense ratios? If so, while the expense ratios are high, the money market yields are competitive with Vanguard and Fidelity.

    https://www.schwabassetmanagement.com/products/money-fund-yields

    All three of us have Schwab accounts and so you do not need my comparison with
    Vanguard sweep account, which has a 7 day yield of 5.28% as of 6/5/2024.

    Yes, yields are net of expense ratios. But the Schwab yields are not competitive with Vanguard's for MM balances below $1M. I have not checked for the higher balances.
  • Mona
    @BaluBalu Schwab is competitive with minimum balances of $1MM on a few products. VMSXX 3.18% vs SWOXX 3.19% and VMFXX 5.28% (VMRXX 5.29%) vs SNAXX 5.30%. Schwab does not monitor if the balance falls below $1MM. Schwab is not competitive on the Treasury Money Market even with a $1MM balance. VUSXX 5.28% vs SUTXX 5.17%.
  • msf
    Based on 2023 portfolios, in high tax states (~10% marginal rates) SUTXX is competitive with VUSXX on an after-tax basis.

    Rougly 20% (19.94%) of VUSXX was subject to state income tax.
    That shaves ~20% x 5.28% x ~10% ≈ 0.1% off the after tax return.

    In contrast, SUTXX was virtually 100% (99.61%) state tax exempt.
  • AndyJ
    edited June 7
    Derf said:

    @AndyJ : It's been a few years, but I can remember being dam happy to get three %. That was for 2 year CD. I started reaching out a few months early , but such is the life of an investor. Interesting times await us ! Rolling some early, rolling some late

    Jobs and average hourly pay were both up above expectations, so this morning the whole suite of T yields are up, mainly in 2y and longer. 3y does look better.
  • Sven
    @AndyJ, good catch. BND is down 0.7% today. The 1 yr and 3 yr treasuries will at auction on auction next week, June 6th. For those who are interested, please get your order in on Sunday night.
  • Old_JoeOld_Joe
    edited June 8
    "In contrast, SUTXX was virtually 100% (99.61%) state tax exempt."

    @msf - quite some time ago you pointed that out to me, and I changed our Schwab MMKT account to SUTXX. Thanks again for that suggestion. I have no idea how I would function financially without the good suggestions from you MFO folks.

    Thanks to all of you- OJ
  • changchang
    Mixture of RPHIX, T-bills, and MMs.
  • BaluBalu
    edited June 9
    What purpose is RPHIX currently serving in a portfolio? Perhaps, looking for active management in anticipation of drop in yields at the short end? But at 1% ER? I think @WABAC or some one else already commented recently about this high ER. Also, one can see why @rforno’s complains about high ER on some money market funds.

    YTD, USFR has kept up with RPHIX with lower volatility. I will be surprised if there are not MM with lower volatility and similar 3 mo return as RPHIX.
  • FD1000
    edited June 9
    I have only two options, 99+% MM or 99+% in the market. Then I look when to sell.
    Since 11/2022, it keeps saying 99+% invested. Right now it's not even close to a SELL signal.
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