posted on 12-02-2019

Vanguard Prime Money Market Fund (VMMXX)

Updated December 2, 2019

What Is a VMMXX?

The Vanguard Prime Money Market Fund, or VMMXX, is an investment fund offered through Vanguard that invests in U.S. government securities and foreign bonds.

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 VMMXX 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 VMMXX?

The fund holds $121 billion in assets (2019). 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 quite similar, in both purpose and composition of investments.

The VMFXX invests in short-term U.S. government bonds and obligations. It is the safest possible fund.

The VMMXX invests mostly in U.S. Treasury bills and short-term commercial paper. Either fund provides a safe investment, but with relatively low returns, reflecting its low risk.