4Wk·

Reallocation of stocks and emerging market bonds to a Vanguard CASH ETF

Hi everyone,

For various reasons (extra loan payments, a possible car purchase, energy-efficiency renovations on my house, the possible purchase of additional properties during this period of high interest rates, etc.) I’m shifting 100% of my investments outside of real estate to cash and contributing heavily to it so that my cash holdings will be higher during the upcoming periods of high interest rates.

I’ve picked out the following new ETF for this purpose:

Vanguard EUR Cash UCITS ETF EUR

Dividend-paying

0.07% TER

Money market ETF

$VCAS (-0.08%)

The ETF’s volume is still small, but it’s one of the first money market ETFs with monthly distributions. The newly launched accumulation version has already reached 500 million in volume in just a few months.

9 Comments

Frank@BlueVelvet

4Wk

I've started saving in that account, too—just for my emergency fund. Ultimately, it saves me the trouble of switching between different money market accounts.

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Immo_Investor@Immoinvestor1981

4Wk

@BlueVelvet
Exactly.

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Metis@Metis

4Wk

Interesting. I find that exciting. I currently have my money in a money market ETF that has a significantly higher TER; I'll keep an eye on it and switch if necessary.

Thanks for the introduction!

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Epi@Epi

4Wk

Thanks for the tip—I didn't know that before.

But tell me, what's the point of the monthly distribution? I mean, it's a cash ETF that shifts funds from interest-bearing cash to non-interest-bearing cash every month. Why would anyone do that?

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Metis@Metis

3Wk

@Epi Don't you also get interest on overnight deposits paid out? Depending on the bank, it's either quarterly or monthly.

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Epi@Epi

3Wk

@Metis I don't know much about overnight money, but as far as I know, the interest is credited directly to the overnight money account, meaning it immediately earns more interest.

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Metis@Metis

3Wk

@Epi Well, that's true—so you have to actively transfer the money back into the money market ETF. Depending on the bank and the amount, you can actually set that up to happen automatically.

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Epi@Epi

3Wk

@Metis Sure, but if you automate that, the payout really becomes pointless.

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Gomerdoc@Gomerdoc

3Wk

And what I don't quite understand is: where's the advantage here? With Scalable, I get 3.1% on my money market account, and there are banks that offer even higher rates. Or if I lock the money away for a year: same thing. The performance of this ETF so far has been, well, let's just say extremely modest, hasn't it?

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