Money Market Funds ?

SloughSally

I am considering switching about £50K held  within an ISA account with iweb in VL60 to a money market fund , possibly Vanguard Short-Term Money Market Fund -Accumulation.
1. Would the procedure to keep the ISA status  be to simply sell the VL60 and buy once Iweb has credited the cash to my ISA account or would I need to do some kind of transfer?
2. Is the  OCF / risk factor is 0.12% competitive?
3. Are there any other MMFs that can be held within an ISA account with iweb that are worth considering eg different currency.
4. What are the main downsides of MMFs apart from the possible cut in Central banks interest rates?
5.Would any interest rate cut impact immediately or take a month or two to kick in due to short term rates already acquired.
Thank you .

Exodi

SloughSally said:

I am considering switching about £50K held  within an ISA account with iweb in VL60 to a money market fund , possibly Vanguard Short-Term Money Market Fund -Accumulation.
1. Would the procedure to keep the ISA status  be to simply sell the VL60 and buy once Iweb has credited the cash to my ISA account or would I need to do some kind of transfer?
2. Is the  OCF / risk factor is 0.12% competitive?
3. Are there any other MMFs that can be held within an ISA account with iweb that are worth considering eg different currency.
4. What are the main downsides of MMFs apart from the possible cut in Central banks interest rates?
5.Would any interest rate cut impact immediately or take a month or two to kick in due to short term rates already acquired.
Thank you .

1. Yes, sell and buy.
2. Yes - it's the same as Vanguard charge on their own platform and one of the cheapest alongside competitor funds (Royal London is slightly cheaper).
3. Yes - https://www.markets.iweb-sharedealing.co.uk/investments-search/?term=money+market
4. Lack of upside potential.
5. Not instantly, returns depend on the underlying short term debt instruments.

OldScientist

1) Yes, it is as simple as selling VL60 and buying the other fund.
2) Yes, the OCF is similar enough to other short term MMFs (e.g., see 3)
3) Not in another currency, but Royal London Short Term Money Market Y Acc is a good alternative (OCF=0.10%). We hold both the Vanguard and Royal London funds.
4) Under certain, fairly extreme, circumstances, they can be illiquid (in other words you might not be able to sell when you want to) although such circumstances might also present problems for normal savings accounts. STMMF are NOT covered by the FSCS (e.g., see https://www.ii.co.uk/analysis-commentary/nine-things-know-about-money-market-funds-vs-cash-savings-ii524341 ) in the same way savings accounts are
5) Depending on the holdings, it might take a month or two for the growth to fall to the new interest rate.

SloughSally

Thank you both very much for your informative replies.
Exodi, within the link you’ve given me regarding available STMMFs available with iWeb the Vanguard MMF has a FE fund info rating of two crowns, the other 6 products all have 4 or 5 is that significant?

dunstonh

b the Vanguard MMF has a FE fund info rating of two crowns, the other 6 products all have 4 or 5 is that significant?

It shouldn't form any part of your research.  Completely ignore them.