Introducing our new money market fund
17 July 2019 | Topical insights
Maybe your client needs to keep money in cash while deciding how it should best be invested, or a client’s existing investments have been converted into cash in anticipation of a future event?
Whatever the reason, the new Vanguard Sterling Short-Term Money Market Fund could be the ideal low-risk vehicle for parking your money.
It is designed to hold savings rather than grow them and is invested in a highly diversified way, across multiple institutions, unlike cash held at one bank.
Money market funds are low-risk funds that invest in interest-paying short-term debt such as treasury bills and certificates of deposit, as well as cash. Our new fund is actively managed by an experienced team of specialist fund managers and targets the short-term debt of governments, banks and companies with strong balance sheets and high credit ratings.
The triple aim over time of the Vanguard Sterling Short-Term Money Market Fund is to provide a vehicle in which to hold capital, while maintaining high levels of liquidity and generating a slightly higher return than cash.
At this stage, we can only provide an estimate of the fund’s underlying and distribution yields as it is a new fund without a track record. However, based on the pre-launch model portfolio we estimate that its initial underlying yield will be approximately 0.55% to 0.6%.1
At Vanguard in the US, we’ve been managing money market investments for more than 35 years to provide investors with an effective cash-management tool. We’re now bringing that know-how and experience to the UK to provide local investors with more choice.
Please note though that low risk does not mean no risk and clients may not get back everything they invest.
The yield on this fund is subject to fluctuation and will be driven by general interest rate levels, changes in expectations over the future direction of interest rates, and broader market and liquidity conditions.
1Based on the model portfolio’s estimated net yield as of July 3, 2019.
Investment Risk Information
An investment in a money market fund is not a guaranteed investment. An investment in a money market fund is different from an investment in deposits, as the amount invested in a money market fund is capable of fluctuation. Money market funds do not rely on external support for guaranteeing the liquidity of the money market fund or stabilising the Net Asset Value per share. The risk of loss of the amount invested shall be borne by the investor.
The underlying yield reflects the annualised income net of expenses of the fund (calculated in accordance with relevant accounting standards) as a percentage of the mid-market unit price of the fund as at the date shown. It is based on a snapshot of the portfolio on that day. It does not include any preliminary charge and investors may be subject to tax on distributions.
The fund may invest in financial derivative instruments that could increase or reduce exposure to underlying assets and result in greater fluctuations of the fund's Net Asset Value. Some derivatives give rise to increased potential for loss where the fund's counterparty defaults in meeting its payment obligations.
This article is directed at professional investors and should not be distributed to, or relied upon by retail investors.
This articleis designed for use by, and is directed only at persons resident in the UK.
The material contained in this document is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information in this document is general in nature and does not constitute legal, tax, or investment advice. Potential investors are urged to consult their professional advisers on the implications of making an investment in, holding or disposing of shares, and the receipt of distribution from any investment.
The Authorised Corporate Director for Vanguard® Investments Money Market Funds is Vanguard Investments UK, Limited. Vanguard Asset Management, Limited is a distributor of Vanguard® Investments Money Market Funds.
The KIID and the Prospectus for this fund is available from Vanguard via our website https://global.vanguard.com/portal/site/home
Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Conduct Authority.
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