Vanguard Federal Money Market Fund (VMFXX)

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Nicole Sivens

Nicole is a personal finance educator and writer who loves all things money management.

Nicole has launched several personal finance blogs, led content strategy at a start-up, and has written for the Wirecutter, Nerdwallet, and many other nationally-recognized financial sites. Nicole's first book, "The 7-Day Financial Fix: Getting your money right one step at a time,"  was published in late 2019.

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Rachel Siegel, CFA

Rachel Siegel, CFA is one of the nation's leading experts at ensuring the accuracy of financial and economic text.

 Her prestigious background includes over 10 years of experience in creating professional financial certification exams and another 20 years of college-level teaching.  Rachel has served as Academic Director at Bloomberg, as well as Exam Development Director at the CFA Institute. She holds a BA in English and an MBA, both from Yale University.

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Updated August 9, 2020

What Is a VMFXX?

The Vanguard Federal Money Market Fund, or VMFXX, is an investment fund offered through Vanguard that invests in U.S. government securities.

As its main goal is to provide current income and preserve shareholders’ principal investments, the fund maintains a share price of $1. For this reason, it is considered one of the most conservative investment options offered by Vanguard. 

How Does VMFXX Work?

The fund invests in very short-term investments of less than one year to maturity, if interest rates go up (or down), the yield will also go up (or down). Barring a financial crisis, there is little risk associated with this fund.

What’s the Average Yield of VMFXX?

The fund holds about $138 billion in assets. The amount of income that a shareholder may receive will be largely dependent on the current interest rate environment. 

VMFXX vs. VMMXX

The Vanguard Federal Money Market Fund (VMFXX) and the Vanguard Prime Money Market Fund (VMMXX) are similar in purpose and investments.

The VMFXX invests in only short-term US government bonds and obligations. It is the safest possible thing one can invest it.

Similarly, the VMMXX invests mostly in U.S. Treasury bills and in short-term commercial paper. Either fund provides a safe place to invest cash, with minimal risk and a small return.

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Rachel Siegel, CFA is one of the nation's leading experts at ensuring the accuracy of financial and economic text.  Her prestigious background includes over 10 years of experience in creating professional financial certification exams and another 20 years of college-level teaching.

If you have a question about Vanguard Federal Money Market Fund (VMFXX), then please ask Rachel.

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