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Monday, February 16, 2015

VUBFX Vanguard's Ultra Short Term Bond Fund

Bob Brinker talked about Vanguard's Ultra Short Term Bond Fund.  This is a new fund from Vanguard that they announced on November 24, 2014.   Key features:
  • The new fund, which is scheduled to launch in early 2015, will offer investors low-cost exposure to money market securities and high-quality short-term bonds* with an average estimated duration of one year. 
  • However, the fund should not be viewed as an alternative to money market funds, which seek to offer a stable $1 net asset value.
  • Unlike a money market fund, Vanguard Ultra-Short-Term Bond Fund will have a fluctuating net asset value and subject you to principal risk. 
  • Expense ratio as of 02/10/2015 is 0.20%
  • SEC yield as of 02/13/2015 is 0.00% (yes, ZERO!)  It just started Friday so it may have to buy some bonds and subtract the management fee before it can calculate a higher yield.
Currently (2/16/15) you can get 1.00% at two banks that offer FDIC insurance.  This rate tool helps find the best rates for savings accounts:
    Due to the risk to principal if rates go up this year,  I'd go with an FDIC  savings account at 1.00% instead.   If your cash is in a Vanguard IRA, perhaps you can move your cash out of Vanguard and into an IRA at one of these banks to get the full 1%.