Why is my Vanguard. Money Market Fund not making any money

plumb1_2

Hi, 
I have a Vanguard Sipp last month ( 21/02/23) I put the £50,090  into the Vanguard short term money market fund. As this was paying over 3.5%.
I checked a few days ago and it was minus about the £10 mark. This morning 21/03/23 it’s in the green zone with a profit of £4.88.
I would have thought it would have increased by £150 minimum.

can someone explain what’s happening, as i am not getting much income from it. I only put it there as a short term (6 mths) as I am going to retire this year and looking to do a drawdown on this or my other DC pensions.

OldScientist

plumb1_2 said:

Hi, 
I have a Vanguard Sipp last month ( 21/02/23) I put the £50,090  into the Vanguard short term money market fund. As this was paying over 3.5%.
I checked a few days ago and it was minus about the £10 mark. This morning 21/03/23 it’s in the green zone with a profit of £4.88.
I would have thought it would have increased by £150 minimum.

can someone explain what’s happening, as i am not getting much income from it. I only put it there as a short term (6 mths) as I am going to retire this year and looking to do a drawdown on this or my other DC pensions.

The Vanguard fund is an income type (if you look at the graph available from the investments page, you'll see the price has a 'sawtooth' shape - it pays out the interest each month) - you should have had some cash deposited (if my calculation is correct, about £130) in your SIPP on or shortly after the 1 March that you'll need to reinvest in the fund manually each month. It would be nice if they did an accumulation version!

The good news is that since 1 March, it now appears to be gaining at about 4% (i.e., has caught up with the base rate change at the beginning of Feb).

plumb1_2

Hi just had a detailed look, definitely only showing a increase of £4.88 for the month.
There is £118 cash in the account because it was just invested as cash and gains of £122 in February and £109 in March I can understand the March payment being lower due it only being in the cash account for 3 weeks before I invested it all into the short term money market.

dunstonh

Why is my Vanguard. Money Market Fund not making any money

<snip>

can someone explain what’s happening, as i am not getting much income from it

So you are getting some income then?

You wouldnt expect the unit price to move much at all.   Money Market funds Inc units do not have any real return in the unit price.  It should pretty much remain at or around the 100p mark.  The income distributions to the cash account is all you would expect.

plumb1_2

Yes I understand the unit price will stay same.

Yes the income gained for 4 weeks was only £4.88 on £50k, I was expecting £120 plus as I think it was paying/ producing about 3.5%.
So each month I could reinvest the income payment.

Bobziz

Payable dates are 28th Feb & 31st March.

plumb1_2

Bobziz said:

Payable dates are 28th Feb & 31st March.

Thanks, so the payment of £4.88 could be from 21st feb, (7days)., but would have expected about £30 ? and on 31march I would get the income from the 1st March to 31st March ?

OldScientist

plumb1_2 said:

Yes I understand the unit price will stay same.

Yes the income gained for 4 weeks was only £4.88 on £50k, I was expecting £120 plus as I think it was paying/ producing about 3.5%.
So each month I could reinvest the income payment.

Sounds like you checked the cash transactions and didn't find anything there at the end of Feb/beginning of March.

The price (in £) was
21/2/23 1.0016
1/3/23 0.9996 (after a distribution of £0.0027 per unit)
20/3/23 1.0018

So, given the circumstances, I would also be expecting the amount you have suggested above. Very strange (we have very recently bought some of that fund and the subsequent increases in value appear to be correct - but we have yet to receive a distribution, so may find the same problem as you after 1 April).

It might be worth contacting Vanguard customer support.

DarwinBoy

I am assuming this relates to the Vanguard Sterling Short-Term Money Market Fund

If you invested on Feb 21st you shouldn’t have been paid any interest/dividend to date.

The “record date” for this fund is on the last day of every month (eg. Feb 28th). The interest/dividend is then paid out on the last day of the following month (eg, March 31st).

See link to Vanguard website for info this fund including the distribution dates.

https://www.vanguardinvestor.co.uk/investments/vanguard-sterling-short-term-money-market-fund-investor-gbp-income-shares/distributions

Your payment on March 31st should be £0.0027 x the number of units you owned on Feb 28th

I suspect the 4.88 you mentioned is the capital increase on the units. These go up during the month then drop after the “record date”.

dunstonh

Distribution rates, XD dates etc 

Bobziz

ex-divi date 1st Feb, so perhaps no income is paid at all because you invested on the 21st? Distribution of £0.0027 for Mar is not paid until the end of the month. Is the £4.88 something else ?