The weekend Wall Street Journal writes, "Vanguard Props Up Yields at Some Money Funds", which discusses the recent announcement by Vanguard to merge its Treasury money funds and close its Federal MMF to new investors. (See June 3 Crane Data News "Vanguard Merges Treasury Money Funds, Closes Federal Money Market".) The Journal article says, "As money-market-fund yields remain low, Vanguard Group Inc. said it is taking steps to keep returns positive. Vanguard said the $6.7 billion Treasury Money Market Fund will merge into the cheaper $21.8 billion Admiral Treasury Money Market Fund in August.... The firm also has closed the Federal Money Market Fund to new accounts and institutional money and slapped a $10,000 daily limit on existing retail accounts." Vanguard spokeswoman Rebecca Cohen told WSJ, "New cash must be invested in securities at current yields, which are historically low. This can dilute the fund's overall yield, to the detriment of current investors in the fund." The article continues, "Vanguard's moves come as the money-market-fund business faces up to months of negligible yields on its offerings because the Federal Reserve's target overnight lending rate among banks is between zero and 0.25%. Several fund firms have waived fees on some of their money-market funds to ensure investors don't lose money." Cohen added that Vanguard remained committed to its money-market business. "We strongly believe that the money-market fund is a great product for investors, providing safety, liquidity and income," she said.
