Stable value funds usually have a separate restriction that you can't move money out of it directly into a short-term bond fund or similar. It's specifically designed to prevent interest rate arbitrage.Thank you. Good point. I checked and it seems the rule has an exception: "Any investor transferring money out of a given fund may not transfer money back into that same fund for 30 days. ... Money market funds, short-term bond funds, and Vanguard Retirement Savings Trust are also exempt from the exchange policy."Your fund probably has rules that prevent you from making this switch without detouring through a non-competing fund for 30-90 days.
But even a 30-90 day exchange policy should be fine here in this case, because interest rates will come down slower than that, right?
Should I switch now (and switch back in one or two years)? Or is there any drawback to that approach?
What you're asking is pretty safe. The bigger question is whether these short-term funds meet your needs as a whole.
Back in 2021, the Vanguard MMF was paying 0.01%.
Statistics: Posted by exodusNH — Fri Jul 05, 2024 9:20 am — Replies 5 — Views 469