Note that none of the funds discussed can guarantee to hold 100% tax free US Treasury securities.Wouldn't a T-Bill ETF do better state tax wise than VUSXX?If Vanguard is your brokerage, you may as well keep your money in VUSXX.
It depends on how large the holdings are.
If you read the prospectus and online fund strategy, it is likely that VUSXX will more frequently deviate but other ETFs generally only say what they do under "normal market conditions" but reserve right to invest elsewhere as needed.
VUSXX - this is actively managed and specifically choose to use repos when rates justify so.
"This fund at a minimum invests 80% of the assets in debt issued directly by the government in the form of Treasury bills and in repurchase agreements fully collateralized by U.S. Treasury securities. As a government money market fund, this fund is required to invest at least 99.5% of its total assets in cash, U.S. government securities, and/or repurchase agreements that are collateralized solely by U.S. government securities or cash (collectively, government securities)."
I use XHLF now and here is their language. This is an index fund so they will MOSTLY buy tbills but not always :
"Under normal circumstances, the Fund will invest at least 80% of its net assets (plus the amount of any borrowings
for investment purposes) in a portfolio of U.S. Treasury securities that collectively have an average duration of
approximately 6 months, either directly or indirectly (e.g., through derivatives). The Fund may also invest up to 20%
of its net assets in certain other U.S. Treasury obligations, U.S. Government obligations, U.S. agency securities, cash
and cash equivalents, as well as in securities not included in its Index, but which BIM believes will help the Fund
track its Index."
VBIL also an index but they have wiggle room too
"Under normal circumstances, the fund will generally invest all, but at least 80% of its assets in the securities comprising the Index and in securities that the advisor determines have economic characteristics that are substantially identical to the economic characteristics of the securities that comprise the Index."
SGOV
"The Fund will invest at least 80% of its
assets in the component securities of
the Underlying Index, and the Fund will
invest at least 90% of its assets in U.S.
Treasury securities that BFA believes
will help the Fund track the Underlying
Index. The Fund will invest no more than
10% of its assets in futures, options and
swaps contracts that BFA believes will
help the Fund track the Underlying
Index. Cash and cash equivalent investments associated with a
derivative position will be treated as
part of that position for the purposes of
calculating the percentage of
investments included in the Underlying
Index. The Fund seeks to track the
investment results of the Underlying
Index before fees and expenses of the
Fund.
The Fund may lend securities
representing up to one-third of the value
of the Fund’s total assets (including the
value of any collateral received)."
Repos are a form of securities lending so SGOV reserves the right to do repos.
None of these products guarantee to buy 100% Tbills, but only VUSXX is actively managed hence if repo rates are high, they will do repos.
Index funds reserve the right to deviate from Tbills in case there is some problem with the Tbill market, so they can invest and earn something similar in risk and reward during such market disruptions. We are more likely to get nearly 100% Tbills from these index ETFs than from VUSXX. From a practical standpoint, this is a rare problem for VUSXX that happens to have happened recently. That said, I moved to ETFs wherever possible. They have portability, are index funds so MOSTLY they will do as advertised, and have low ER (XHLF only 3 bp).
Statistics: Posted by beyou — Tue Feb 11, 2025 7:27 pm