Muni Money Market Funds

  |     |   44 posts since 2015

One alternative to bank and credit union deposits, sometimes referenced in DepositAccounts data, are mutual fund money market accounts (MMF), although uninsured. The funds endeavor to maintain a stead asset value of $1/share. During the last financial crises, several (aggressive) MMFs "broke the buck" which resulted in a rather big fuss.

Recently, there has been a bit of a disruption in the muni bond market, as many fear that governments will have declining tax revenues, and thus defaults may surface.

In that context, I happened to notice that Vanguard's Municipal MMF (VMSXX) technically has broken the buck. I seldom drill down on their site to the level shown below, but found that as of this week's close, the market value is less than $1, although the fund is still quoted at $1.00 (because amortized cost method is permitted for retail MMFs). I haven't noticed any commentary on financial sites about such a development. I would appreciate anything you see on this.


Price and yield

Price as of 03/20/2020



$0.00 0.00%

Daily market value as of 03/20/2020

$0.9986. ?

7 day SEC yield

as of 03/20/2020

2.10% C

Compound yield


Product summary

Vanguard Municipal Money Market Fund seeks to provide federally tax-exempt income and preserve shareholders’ principal investment by maintaining a share price of $1. As such it is considered one of the most conservative investment options offered by Vanguard. Although the fund invests in short-term, high-quality securities, the amount of income that a shareholder may receive will be largely dependent on the current interest rate environment and the availability of eligible municipal securities. Investors in a higher tax bracket who have a short-term savings goal and seek a competitive tax-free yield may wish to consider this option.

  |     |   44 posts since 2015
From Seeking Alpha
Fed steps into troubled muni market
Mar. 20, 2020 11:18 AM ET|About: iShares National Muni Bond ETF (MUB)|By: Liz Kiesche, SA News Editor

Through the Money Market Mutual Fund Liquidity Facility, the Federal Reserve Bank of Boston will now be able to make loans available to eligible financial institutions secured by certain high-quality assets purchased from single state and other tax-exempt municipal money market mutual funds.

The Fed is expanding its program to support the flow of credit to the economy.

"It’s not a panacea for a sector that many are worried about given the likely financial burdens that are set to hit state and local governments," says Bloomberg's Cameron Crise.

This makes some munis eligible for participation in the plan where banks can purchase them from money market mutual funds and use them as collateral to the Fed without incurring a penalty for balance sheet usage.
  |     |   39 posts since 2014
The Vanguard NY Municipal Money Market has a 7 day SEC yield of 3.83%? In the highest Fed/NY Tax bracket that's the equivalent of a 7.6% yield! I'm sure this is short lived, particularly with the Fed stepping into the muni market. It would also make it much more painful for NY to borrow money at a time when they won't be receiving April taxes until July.
  |     |   63 posts since 2015
Just checking in here: I exchanged from the Municipal Money Market Fund on the 20th. I was given a price of $1.00/share according to the trade confirmation and to account history. On a $3,000 transaction (selling shares of the MMMF and buying shares of another), my confirmation shows 3000.000 shares (not 3004.205 if it were at .9986).

That said, the yield has been off the charts here--it got up to a 4.05% high for a 7-day yield on the 25th (three times higher than the Prime Money Market Admiral 7-day yield on the same date). There was severe/extreme displacement in the short-term muni market, particularly early this week. I presume the 4.05% reflects a few days of really high yields early in the week and that the rates have since come down substantially (although it will take a few days for the 7-day yield to show that decline).

One note in comparing the fund's after-tax return--it does have some income subject to Alternative Minimum Tax which could affect the comparable after-tax yield for some people.
  |     |   44 posts since 2015
As I said, the fund is still quoted at $1.00 (because amortized cost method is permitted for retail MMFs)"

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