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I followed the early discussions of short-term rates with interest. Being a gambler at heart I’m inclined to roll the dice a little. “Anything but cash” for me. I like Blackrock’s short-term bond fund NEAR for monies you guys would probably commit to cash. Very high credit quality and prone to go up when the equity markets go down - thus providing better ballast to the portfolio. Should do at least as well as cash or TRBUX / TBUX over 3-5 year time frames.
If the Fed lowers rates I would think that would cause money market yields to fall. Sure seems like they will under pressure from the Administration - be it appropriate from an economic perspective or not. Of course, some of the discussion here has pertained to longer dated CDs or Treasuries.
I did not miss @catch22’s excellent point in another thread that the BLS is where inflation numbers come from for assigning TIP’s inflation premium. Good point. The games being played re BLS may indeed affect the desirability of TIPs. I’ve found TIPs a little “squirrelley” anyway. Held inside a fund they can produce unwanted / unexpected results.
Unless the economy totally tanks and goes into a very deep recession, I expect higher inflation going forward. So, for me, that’s another reason to roll the dice a little and own a well diversified portfolio rather than one concentrated on the short end.
I said crypto is very risky, probably 5-10% max in portfolio. Just pointing out like you implied that politics should not factor into investing decision. Many people have missed out on biggest gains of last year because (maybe in part at least) they don’t like politics of people in the space (crypto, Palantir, Fannie Mae, Freddie Mac).
I have advocated more than 12 years ago that Treasury should take very small amount from bond sales and put into S&P 500 - very radical at the time but President just this year is talking about setting up a sovereign wealth fund.
I apologize for my poor attempt at humor in middle of the night. Did not mean to offend you about crypto.
I totally dismissed bitcoin (prefer gold) and other crypto, maybe Buffett and deep value folks are too conservative with investments (avoiding most tech), at least for young people.
FWIW, the SUTXX US Treasury Mmkt at Schwab slowly declined from 4.12% on 5/30 to 4.01% on 7/14; and then increased from there to 4.13% currently.
fwiw, FIGXX 7d is back to 4.2% Fidelity MMFs tended not to waver much in yield over the past few months. For FIGXX, all I can find is: July 25: 4.18% June 7: 4.19% May 2, 2025: 4.22%
I can provide more precise info on SPAXX, a different Fidelity MMF (and retail vs. institutional), but one managed by the same managers with roughly the same breakdown of assets. For the dates OJ gave: May 30: 3.94% July 14: 3.95% (no decline) Aug 5: 3.97% (de minimis increase on date of OP) Aug 7: 3.96% current
And for a Fidelity fund that's similar to SUTXX, there's FSIXX: May 30: 4.15% July 14: 4.16% (no decline) Aug 5: 4.16% (no change) Aug 7: 4.16% (no change)
This may say more about Fidelity vs. Schwab than about trends in the short term market.
Surely, they'll drop. But the talking heads I hear mostly think Powell and the Fed will cut just once this year. With all the zany junk going on in the Orange regime, will they even go that far with rates? Seems to me that Powell is focused on providing a dose of stability, as far as he's able. Of course, what happens is a TEAM decision. And of course, it's easy to find contrary opinions from "experts."
Being a gambler at heart I’m inclined to roll the dice a little. “Anything but cash” for me. I like Blackrock’s short-term bond fund NEAR for monies you guys would probably commit to cash.
[...]
Unless the economy totally tanks and goes into a very deep recession, I expect higher inflation going forward.
For a 'gambler at heart', who likes NEAR and is concerned about inflation, why not VTAPX? It seems to correlate pretty strongly with NEAR over the recent cycle w a bit more volatility and a good bit higher return. Plus, you get bonus inflation protection.
I read somewhere that projected record government sales of 4 week T-bills to meet financing needs may support those short terms rates. To the extent that money market mutual funds purchase these instruments that could be good for MMFs.
“For a 'gambler at heart', who likes NEAR and is concerned about inflation, why not VTAPX? It seems to correlate pretty strongly with NEAR over the recent cycle w a bit more volatility and a good bit higher return. Plus, you get bonus inflation protection…”
Thanks, I’ll stay where I am. My cash allocation (mainly NEAR) is currently just 14% of portfolio. 86% is already invested in assets designed to provide “inflation protection”. That includes equities, commodities, REITs, multi-asset and tactical allocation funds - plus a few leveraged income-focused CEFs.
In 2022 VTAPX lost nearly 3% while NEAR gained a little. To me the latter is a better cash substitute. Cash should not experience down-years. Certainly VTAPX is a great fund and may meet your needs. For a very conservative investor who wanted to throw a whole lot at it, it might provide adequate inflation protection - but don’t count on it. And you are correct that over 10 years VTAPX has outperformed NEAR (by about 0.34% on an annual return basis).
A gambler isn’t reckless. What he does is weigh probabilities and attempt to derive intelligent decisions based on them. Investing is a lot like that.
it used to be that sovereign wealth funds were for countries that had huge liquidity surpluses; not for those worried their debt interest rate payments exceed defense spending, a noted harbinger for past empires.
but with a potus unable to math , making america grift again, here we are.
In 2022 VTAPX lost nearly 3% while NEAR gained a little. To me the latter is a better cash substitute. Cash should not experience down years.
Calendar years are easy to get statistics on. But I think the sentiment here is that cash should not be down more than 12 consecutive months, regardless of whether those months exactly align with calendar years.
From its low on 10/6/21, NEAR did not recover (including divs) until 12/16/22. That's more than 14 months underwater. It took eight months for it to hit its nadir, down 1.32%, on 6/14/22.
NEAR is a good fund, it outperforms cash over periods of multiple years, and this short term bond fund should do better then ultrashort funds when/if the yield curve steepens. So if you're betting on a rate reduction (i.e. the Fed being more concerned with avoiding a recession than with rising inflation), or if you simply want to hedge your bets, it can meet those needs.
A couple of somewhat similar funds to NEAR are the ultrashort funds PYLMX and BBBIX. The former modestly underperforms NEAR but tracks it closely with under half the volatility and 1/3 the max drawdown. The latter is just slightly more volatile, has a max drawdown that's two thirds of NEAR's, and has outperformed over the past 1,3,5,10, and lifetime of NEAR.
Though for a cash substitute, it's hard to beat RPHIX. Never a down year (twelve consecutive months, whenever), infrequent miscues, and over the lifetime of NEAR much better stats including risk metrics and performance.
My darling has PYLMX in her IRA at her broker. I have BBBMX in my IRA at my broker. Neither broker has both. It has been a while since I checked, but IIRC both held up pretty well during the GFC.
One has to be comfortable with a large amount of hi-yield fare in RPHIX. I ended up with CBUDX instead. Information on the composition of the funds is near the bottom of the links. Two funds near their range of M* standard deviation would be JPST and FLOT.
Funds with zero drawdowns since Normalization 2 (the beginning of Fed rate increases) are BIL, SGOV, OPER, USFR, and TFLO
Generally speaking, how does a fund like RPHIX compare to a moneymarket fund like SUTXX?
I spend (waste) the next couple of paragraphs below going through this year's returns because RPHIX has been a bit of a disappointment in 2025.
YTD (in just over 3/5 of the year) RPHIX has returned 2.80%. That extrapolates to about 4.7% for 2025, or about 4¼% after taking out, say 10%, for Calif. taxes. That's still subject to Fed taxes.
Through July 31, SUTXX has returned 2.42%. Its current yield is 4.12%. Converting that to a daily yield and compounding that daily yield over the remaining 5 months (153 days) gives an additional return of 1.75%. Combining 2.42% and 1.75% (i.e. taking 1.0242 x 1.0175 - 1), the expected return for the year is 4.2%. So for 2025, the two funds should, after taxes, return about the same amount.
Over most stretches of time, RPHIX has fared better, even after taking out state taxes. Here's a link to a Fidelity page (no login required) that compares RPHIX to FSIXX (Fidelity's equivalent fund to SUTXX).
But you are adding volatility with RPHIX, along with bookkeeping nonsense. Since the share price of RPHIX fluctuates, each buy or sale generates a cap gain (or loss). In addition, if you're reinvesting divs, then you're subject to wash sales. For this reason I recommend not reinvesting divs, or if you do, suspending reinvestment a month or two before you expect to make a withdrawal. This is a concern with any bond fund, not just with RPHIX.
I think the two funds (RPHIX and SUTXX) can be used well in tandem. SUTXX to hold at least a few months worth or even a couple of years worth of cash, and RPHIX for longer term cash.
RPHIX also carries a transaction fee, though Schwab has introduced an Automatic Investment Program (like Fidelity's) that lets you buy additional shares of some TF funds for $10/purchase. Look for AIP on Schwab's pricing page. https://www.schwab.com/legal/schwab-pricing-guide-for-individual-investors
@WABAC - thanks for the post, and for reassuring me that I'm not an idiot posting about BBH and Payden. (Or perhaps we both are).
Some of the funds you mentioned as not losing money did draw down microscopic amounts (in the rounding error range). Worth mentioning only to show that unlike cash, all bond funds can lose money. The Fed announced raising rates on March 16, 2022.
I've looked at most of the other funds you mentioned. All worth the look, none that jumped out and said "pick me". Not that I don't have some preferences, e.g. USFR over TFLO. But the differences are minor, and I've been happy rolling my own 1-3 month T-bills as opposed to using Treasury funds. A bit more work, though.
RPHIX does hold lots of high yield debt. Normally that would concern me as well. Which is why I've been more inclined to look at funds like FLOT and FLRN than funds with lower grade assets. But RPHIX reduces risk in a few different and distinctive ways. With rare exceptions it has succeeded and has a long track record to point to.
To summarize the Fund’s goal and investment approach, we seek to invest the Fund’s assets in securities that we believe are ‘money good’, that we are highly confident will pay interest and principal without interruption largely because they are extremely short term in maturity, have been already called for redemption, or are uniquely positioned within their capital structure as it relates to their priority claim on assets and cash flows.
@msf, I track a lot of ultra-short and short funds by duration rather than strictly by M* category; otherwise CBLDX wouldn't fit.
Aside from money markets, my IRA at this point is basically a ladder of M* standard deviations from BUBIX to CLBDX with a side of PRCWX. My gubbermint fund is FGUSX, which does not require a millions bucks at FIDO.
I do not own VTAPX but have considered it as well as several other inflation-protected funds. I have also looked at NEAR before but did not invest. Being pretty risk-tolerant, I was just curious about the logic of picking one over the other, so thanks to everyone for the discussion.
My personal expectations are based on the assumption that Powell & Co will bend sooner rather than later. We will then get a rate cut this fall and, perhaps, another one early next year with Christmas season being weaker than expected if tariffs stay in place. In this case, I would expect MM yields to fall and inflation to drift up.
So, I have been trying to come up with a good place place to shift some of my MM holdings in such a scenario. Any thoughts would be much appreciated.
P.S. RPHIX looks like an excellent option (alas, misunderstood by M* just like PVCMX I am so fond of). Too bad I did not come across it a couple of years ago, I would have put some money into it instead of USFR.
The rate has been dropping lately but trended consistently 0.25% to 0.75% above comparable promotions or HYS accounts at other banks. Current offer is 4.25% nominal (~ 4.33% APY).
The promotion has been renewable at/near expiration, YMMV, though the exact procedure seems to change from quarter to quarter.
Requires $25K+ in new money. Available only in states with Citi branches.
SoFi HYS account rate - though not guaranteed - has been holding at 3.80% APY since the beginning of the year, so the current boosted rate offer is 4.50% APY.
Additional $50 or $300 account bonus with $1K+ or $5K+ direct deposit within 25 days (paid within 7 days thereafter).
Requires SoFi Plus, which comes with direct deposit or $10/month subscription.
One has to be comfortable with a large amount of hi-yield fare in RPHIX. I ended up with CBUDX instead. Information on the composition of the funds is near the bottom of the links. Two funds near their range of M* standard deviation would be JPST and FLOT.
This is what makes AAA CLOs so interesting. We've seen that no matter how an investment is structured (AAAs being first in line from a whole pool of debt) nothing will protect you if the whole house of cards comes tumbling down. That's what happened with CDOs in 2008.
What’s especially notable is that slight differences between CLOs and CDOs have given CLOs more resistance to economic downturns. In fact, a [White & Case] report notes that CLOs were minimally affected by the same troubles as CDOs during the Great Recession. A shift toward CLOs and away from CDOs could benefit traders, investors and lenders without forming a bubble that would inevitably burst.
I'm not ready to pull the trigger on AAA CLOs just yet. Let's see what happens over the next few months. Even then, I'd look at just the best of the best - the most "pure" AAA CLO fund. That seems to be PAAA. Though JAAA serves as a good reference for how AAA CLOs have behaved over a few years. And JBBB serves as a good comparison for seeing how the quality of the tranche (AAA vs BBB) matters.
An ETF I haven't seen mentioned that's somewhat in FLOT's space is VRIG. FLOT and FLRN hold about 2/3 of their assets in corporate bonds (the rest in gov bonds) and track each other closely. VRIG takes a different path, splitting its non-gov bonds evenly between corporate and securitized. This seems to result in slightly more risk but with commensurate rewards.
VRIG has a longer (but still miniscule) effective duration (0.23 years vs. 0.01 years); lower credit quality (A+ vs. AA-), worse 3 year std dev (0.99 vs 0.57) resulting in a lower Sharpe ratio (1.34 vs 1.81). On the plus side, VRIG comes with better long term performance.
It also seems to do better with short term jolts: Feb-March 2020: both dropped around 13% (daily data); March 2023: both dropped around 1½% through March 13 but FLOT continued dropping another ¾% over the next few days; April 2025: VRIG dropped ¾% while FLOT dropped twice that.
Some have used the word "gamble". I'm still looking for how best to spread my bets.
A very thorough comprehensive discussion of some cash-like alternatives by @msf …And thanks!
I had thought JAAA was “good enough” for my less stringent needs and held a lot going into the late March / early April market drop. But when the initial “mini-crash” occurred (the first of several bad days) and I sold a large portion of JAAA to reinvest the money in rapidly falling equities, guess what? JAAA was down more than 0.50% (intra-day) at the time. So the equities I ran to weren’t as “cheap” for me as they would have been with a more stable cash substitute. JAAA did recover in following days. The question remains: “Where were you when I needed you?”
I didn’t own or track NEAR at the time, but my observations have been it holds up much better during those brief times when equities (and a lot of other stuff) are rapidly selling off. That’s the reason I no longer own JAAA - but may someday find a spot for it or PAAA which @msf has pointed out seems a bit more stable. Some may also wish to look at VNLA. I owned some then, and it held up better during the selloff than did JAAA.
Note: The “gamble” one takes with NEAR (ISTM) is the small sensitivity to rates. Over longer periods that shouldn’t be a problem, but near term (1-3 years) it will outperform or lag cash based on how rates in the 1-3 year part of the curve are moving. As far as quality goes, it doesn’t get much better.
Comments
I followed the early discussions of short-term rates with interest. Being a gambler at heart I’m inclined to roll the dice a little. “Anything but cash” for me. I like Blackrock’s short-term bond fund NEAR for monies you guys would probably commit to cash. Very high credit quality and prone to go up when the equity markets go down - thus providing better ballast to the portfolio. Should do at least as well as cash or TRBUX / TBUX over 3-5 year time frames.
If the Fed lowers rates I would think that would cause money market yields to fall. Sure seems like they will under pressure from the Administration - be it appropriate from an economic perspective or not. Of course, some of the discussion here has pertained to longer dated CDs or Treasuries.
I did not miss @catch22’s excellent point in another thread that the BLS is where inflation numbers come from for assigning TIP’s inflation premium. Good point. The games being played re BLS may indeed affect the desirability of TIPs. I’ve found TIPs a little “squirrelley” anyway. Held inside a fund they can produce unwanted / unexpected results.
Unless the economy totally tanks and goes into a very deep recession, I expect higher inflation going forward. So, for me, that’s another reason to roll the dice a little and own a well diversified portfolio rather than one concentrated on the short end.
Yes, thank you for an interesting thread.
I said crypto is very risky, probably 5-10% max in portfolio. Just pointing out like you implied that politics should not factor into investing decision. Many people have missed out on biggest gains of last year because (maybe in part at least) they don’t like politics of people in the space (crypto, Palantir, Fannie Mae, Freddie Mac).
I have advocated more than 12 years ago that Treasury should take very small amount from bond sales and put into S&P 500 - very radical at the time but President just this year is talking about setting up a sovereign wealth fund.
I apologize for my poor attempt at humor in middle of the night. Did not mean to offend you about crypto.
I totally dismissed bitcoin (prefer gold) and other crypto, maybe Buffett and deep value folks are too conservative with investments (avoiding most tech), at least for young people.
fwiw, FIGXX 7d is back to 4.2%
Fidelity MMFs tended not to waver much in yield over the past few months. For FIGXX, all I can find is:
July 25: 4.18%
June 7: 4.19%
May 2, 2025: 4.22%
I can provide more precise info on SPAXX, a different Fidelity MMF (and retail vs. institutional), but one managed by the same managers with roughly the same breakdown of assets. For the dates OJ gave:
May 30: 3.94%
July 14: 3.95% (no decline)
Aug 5: 3.97% (de minimis increase on date of OP)
Aug 7: 3.96% current
And for a Fidelity fund that's similar to SUTXX, there's FSIXX:
May 30: 4.15%
July 14: 4.16% (no decline)
Aug 5: 4.16% (no change)
Aug 7: 4.16% (no change)
This may say more about Fidelity vs. Schwab than about trends in the short term market.
Sallie Mae has directly on their website CD rate
15 months
4.40% APY
https://www.salliemae.com/banking/certificates-of-deposit/
IMRXX ($1,000 min)
May 30: 4.36%
July 14: 4.35% (decrease)
Aug 5 : 4.35% (no change)
Aug 7 : 4.34% (decrease)
Aug 8 : 4.35% (increase)
WMPXX
May 30: 4.36%
July 14: 4.33% (decrease)
Aug 5 : 4.34% (increase)
Aug 7 : 4.33% (decrease)
Aug 8 : 4.33% (no change)
Also, here is what I am seeing for Fidelity funds:
FIGXX
May 30: 4.18%
July 14: 4.19% (increase)
Aug 5 : 4.21% (increase)
Aug 7 : 4.20% (decrease)
Aug 8 : 4.20% (no change)
FNSXX
May 30: 4.28%
July 14: 4.28% (no change)
Aug 5 : 4.29% (increase)
Aug 7 : 4.29% (no change)
Aug 8 : 4.29% (no change)
(There was a good discussion of the subject on Protecting Against Tariff Induced Inflation thread recently.)
Thanks, I’ll stay where I am. My cash allocation (mainly NEAR) is currently just 14% of portfolio. 86% is already invested in assets designed to provide “inflation protection”. That includes equities, commodities, REITs, multi-asset and tactical allocation funds - plus a few leveraged income-focused CEFs.
In 2022 VTAPX lost nearly 3% while NEAR gained a little. To me the latter is a better cash substitute. Cash should not experience down-years. Certainly VTAPX is a great fund and may meet your needs. For a very conservative investor who wanted to throw a whole lot at it, it might provide adequate inflation protection - but don’t count on it. And you are correct that over 10 years VTAPX has outperformed NEAR (by about 0.34% on an annual return basis).
A gambler isn’t reckless. What he does is weigh probabilities and attempt to derive intelligent decisions based on them. Investing is a lot like that.
it used to be that sovereign wealth funds were for countries that had huge liquidity surpluses; not for those worried their debt interest rate payments exceed defense spending, a noted harbinger for past empires.
but with a potus unable to math , making america grift again, here we are.
Calendar years are easy to get statistics on. But I think the sentiment here is that cash should not be down more than 12 consecutive months, regardless of whether those months exactly align with calendar years.
From its low on 10/6/21, NEAR did not recover (including divs) until 12/16/22. That's more than 14 months underwater. It took eight months for it to hit its nadir, down 1.32%, on 6/14/22.
NEAR is a good fund, it outperforms cash over periods of multiple years, and this short term bond fund should do better then ultrashort funds when/if the yield curve steepens. So if you're betting on a rate reduction (i.e. the Fed being more concerned with avoiding a recession than with rising inflation), or if you simply want to hedge your bets, it can meet those needs.
A couple of somewhat similar funds to NEAR are the ultrashort funds PYLMX and BBBIX. The former modestly underperforms NEAR but tracks it closely with under half the volatility and 1/3 the max drawdown. The latter is just slightly more volatile, has a max drawdown that's two thirds of NEAR's, and has outperformed over the past 1,3,5,10, and lifetime of NEAR.
Though for a cash substitute, it's hard to beat RPHIX. Never a down year (twelve consecutive months, whenever), infrequent miscues, and over the lifetime of NEAR much better stats including risk metrics and performance.
Testfolio comparison of the four funds
Looking at MFO Premium, RPHIX has the distinction of being a Great Owl, and a Three Alarm fund. Hmm. @Charles might want to take a look at that.
One has to be comfortable with a large amount of hi-yield fare in RPHIX. I ended up with CBUDX instead. Information on the composition of the funds is near the bottom of the links. Two funds near their range of M* standard deviation would be JPST and FLOT.
Funds with zero drawdowns since Normalization 2 (the beginning of Fed rate increases) are BIL, SGOV, OPER, USFR, and TFLO
BTW, at the present time CBLDX is my gamble.
YTD (in just over 3/5 of the year) RPHIX has returned 2.80%. That extrapolates to about 4.7% for 2025, or about 4¼% after taking out, say 10%, for Calif. taxes. That's still subject to Fed taxes.
Through July 31, SUTXX has returned 2.42%. Its current yield is 4.12%. Converting that to a daily yield and compounding that daily yield over the remaining 5 months (153 days) gives an additional return of 1.75%. Combining 2.42% and 1.75% (i.e. taking 1.0242 x 1.0175 - 1), the expected return for the year is 4.2%. So for 2025, the two funds should, after taxes, return about the same amount.
Over most stretches of time, RPHIX has fared better, even after taking out state taxes. Here's a link to a Fidelity page (no login required) that compares RPHIX to FSIXX (Fidelity's equivalent fund to SUTXX).
But you are adding volatility with RPHIX, along with bookkeeping nonsense. Since the share price of RPHIX fluctuates, each buy or sale generates a cap gain (or loss). In addition, if you're reinvesting divs, then you're subject to wash sales. For this reason I recommend not reinvesting divs, or if you do, suspending reinvestment a month or two before you expect to make a withdrawal. This is a concern with any bond fund, not just with RPHIX.
I think the two funds (RPHIX and SUTXX) can be used well in tandem. SUTXX to hold at least a few months worth or even a couple of years worth of cash, and RPHIX for longer term cash.
RPHIX also carries a transaction fee, though Schwab has introduced an Automatic Investment Program (like Fidelity's) that lets you buy additional shares of some TF funds for $10/purchase. Look for AIP on Schwab's pricing page.
https://www.schwab.com/legal/schwab-pricing-guide-for-individual-investors
Some of the funds you mentioned as not losing money did draw down microscopic amounts (in the rounding error range). Worth mentioning only to show that unlike cash, all bond funds can lose money. The Fed announced raising rates on March 16, 2022.
Portfolio Visualizer drawdown graph of BIL, TFLO, and USFR. Of the three, only USFR has beaten cash since March 2022.
I've looked at most of the other funds you mentioned. All worth the look, none that jumped out and said "pick me". Not that I don't have some preferences, e.g. USFR over TFLO. But the differences are minor, and I've been happy rolling my own 1-3 month T-bills as opposed to using Treasury funds. A bit more work, though.
RPHIX does hold lots of high yield debt. Normally that would concern me as well. Which is why I've been more inclined to look at funds like FLOT and FLRN than funds with lower grade assets. But RPHIX reduces risk in a few different and distinctive ways. With rare exceptions it has succeeded and has a long track record to point to. RiverPark Short Term High Yield update, March 2020
Aside from money markets, my IRA at this point is basically a ladder of M* standard deviations from BUBIX to CLBDX with a side of PRCWX. My gubbermint fund is FGUSX, which does not require a millions bucks at FIDO.
My personal expectations are based on the assumption that Powell & Co will bend sooner rather than later. We will then get a rate cut this fall and, perhaps, another one early next year with Christmas season being weaker than expected if tariffs stay in place. In this case, I would expect MM yields to fall and inflation to drift up.
So, I have been trying to come up with a good place place to shift some of my MM holdings in such a scenario. Any thoughts would be much appreciated.
P.S. RPHIX looks like an excellent option (alas, misunderstood by M* just like PVCMX I am so fond of). Too bad I did not come across it a couple of years ago, I would have put some money into it instead of USFR.
1. Citibank has been offering a rolling 3-month bonus rate on their savings account.
The rate has been dropping lately but trended consistently 0.25% to 0.75% above comparable promotions or HYS accounts at other banks. Current offer is 4.25% nominal (~ 4.33% APY).
The promotion has been renewable at/near expiration, YMMV, though the exact procedure seems to change from quarter to quarter.
Requires $25K+ in new money. Available only in states with Citi branches.
2. SoFi Bank is offering a 6-month 0.70% APY Boost on their HY savings account.
SoFi HYS account rate - though not guaranteed - has been holding at 3.80% APY since the beginning of the year, so the current boosted rate offer is 4.50% APY.
Additional $50 or $300 account bonus with $1K+ or $5K+ direct deposit within 25 days (paid within 7 days thereafter).
Requires SoFi Plus, which comes with direct deposit or $10/month subscription.
APY Boost offer expires 09/03/25.
This is what makes AAA CLOs so interesting. We've seen that no matter how an investment is structured (AAAs being first in line from a whole pool of debt) nothing will protect you if the whole house of cards comes tumbling down. That's what happened with CDOs in 2008. https://www.businessnewsdaily.com/10353-cdo-financial-derivatives-economic-crisis.html
I'm not ready to pull the trigger on AAA CLOs just yet. Let's see what happens over the next few months. Even then, I'd look at just the best of the best - the most "pure" AAA CLO fund. That seems to be PAAA. Though JAAA serves as a good reference for how AAA CLOs have behaved over a few years. And JBBB serves as a good comparison for seeing how the quality of the tranche (AAA vs BBB) matters.
An ETF I haven't seen mentioned that's somewhat in FLOT's space is VRIG. FLOT and FLRN hold about 2/3 of their assets in corporate bonds (the rest in gov bonds) and track each other closely. VRIG takes a different path, splitting its non-gov bonds evenly between corporate and securitized. This seems to result in slightly more risk but with commensurate rewards.
VRIG has a longer (but still miniscule) effective duration (0.23 years vs. 0.01 years); lower credit quality (A+ vs. AA-), worse 3 year std dev (0.99 vs 0.57) resulting in a lower Sharpe ratio (1.34 vs 1.81). On the plus side, VRIG comes with better long term performance.
It also seems to do better with short term jolts:
Feb-March 2020: both dropped around 13% (daily data);
March 2023: both dropped around 1½% through March 13 but FLOT continued dropping another ¾% over the next few days;
April 2025: VRIG dropped ¾% while FLOT dropped twice that.
Some have used the word "gamble". I'm still looking for how best to spread my bets.
I had thought JAAA was “good enough” for my less stringent needs and held a lot going into the late March / early April market drop. But when the initial “mini-crash” occurred (the first of several bad days) and I sold a large portion of JAAA to reinvest the money in rapidly falling equities, guess what? JAAA was down more than 0.50% (intra-day) at the time. So the equities I ran to weren’t as “cheap” for me as they would have been with a more stable cash substitute. JAAA did recover in following days. The question remains: “Where were you when I needed you?”
I didn’t own or track NEAR at the time, but my observations have been it holds up much better during those brief times when equities (and a lot of other stuff) are rapidly selling off. That’s the reason I no longer own JAAA - but may someday find a spot for it or PAAA which @msf has pointed out seems a bit more stable. Some may also wish to look at VNLA. I owned some then, and it held up better during the selloff than did JAAA.
Note: The “gamble” one takes with NEAR (ISTM) is the small sensitivity to rates. Over longer periods that shouldn’t be a problem, but near term (1-3 years) it will outperform or lag cash based on how rates in the 1-3 year part of the curve are moving. As far as quality goes, it doesn’t get much better.