ignites on Vanguard Cash Plus Account
Mutual fund news source ignites posted, "Vanguard Pilots 'Savings Account Alternative' for Clients." They explain, "Vanguard is testing whether clients who trust the firm with their long-term investments are willing to park their day-to-day cash there, too. The firm is piloting a new Cash Plus Account with a select group of clients, according to advertisements and emails sent to individuals and subsequently posted on Vanguard client message boards. The brokerage account is separate from the firm's traditional trading accounts that funnel assets to a handful of partner banks. The banks, in turn, offer FDIC protection up to $250,000 and attractive deposit interest rates. In addition, the account offers unlimited movement of assets in and out of the account, unlike traditional savings accounts." The piece adds, "Vanguard's communications advertise an APR of 2.25% for the Cash Plus Account as of Aug. 2, significantly above other sweep account options offered by the firm. The Vanguard Federal Money Market Fund offered an SEC yield of 2.17% as of Sept. 20, according to the Malvern, Pennsylvania-based firm’s website. And its Vanguard Cash Deposit bank-sweep option, which launched in a pilot earlier this year, advertised a yield of 1.75% as of the same date. A Vanguard spokesperson described Cash Plus as 'a savings account alternative that enables our clients to manage their cash assets alongside their investments.'" A posting on the Reddit "Bogleheads" message board quotes from Vanguard's communication, "The Vanguard Cash Plus Account is a brokerage account offered by Vanguard Brokerage Services (VBS), a division of Vanguard Marketing Corporation, member FINRA and SIPC. Under the Vanguard Cash Plus program, Eligible Balances swept to Program Banks are the obligations of each Program Bank and are not cash balances held by VBS. Eligible Balances swept to Program Banks are not securities: they are not covered by the SIPC but are eligible for FDIC insurance, subject to applicable limits. See the Bank Sweep Terms of Use (PDF) for more information."
