If you’ve ever stared at your brokerage account and wondered why your "settlement fund" is suddenly making more money than your high-yield savings account used to, you’re looking at the VMRXX 7 day yield. It’s the engine under the hood of the Vanguard Cash Plus Market Fund.
Money market funds aren't exactly the stuff of thrilling dinner party conversation. I get it. But when the Federal Reserve starts moving levers, these boring funds become the smartest place to park a house down payment or an emergency fund. Vanguard’s VMRXX is a heavy hitter in this space. It's essentially where the big kids play when they want safety without letting their cash rot in a 0.01% checking account.
But here is the thing: the "yield" you see on the dashboard isn't like a stock dividend or a fixed bond coupon. It’s a moving target.
What the VMRXX 7 Day Yield Actually Tells You
Most people look at a yield and think, "Cool, that's what I'll earn this year." Not quite. The VMRXX 7 day yield is a specialized metric. It represents the average income return over the previous seven days, annualized. Basically, if the fund kept performing exactly like it did last week for a full year, that's your number.
It’s a snapshot. A postcard from the recent past.
Because VMRXX invests in ultra-short-term debt—think US Treasury bills, certificates of deposit, and commercial paper—the yield reacts quickly to the market. When the Fed hikes rates, the VMRXX yield climbs like a staircase. When they cut? It slides down. Honestly, it’s one of the most honest reflections of the current "cost of money" you can find as a retail investor.
The SEC requires this specific 7-day calculation to prevent fund managers from "window dressing" their returns. They can't just show you a lucky one-day spike. It has to be a sustained weekly average. This protects you from marketing fluff.
The SEC Yield vs. Compound Yield
You'll often see two numbers: the SEC 7-day yield and the 7-day compound yield. The difference is small but matters if you're obsessive about the math. The standard yield is simple interest. The compound yield assumes you’re reinvesting those monthly dividends back into the fund.
Over a year, that compounding adds up. It might only be a few basis points, but if you're holding $100,000 in VMRXX, a few basis points is a nice steak dinner.
Why VMRXX Often Beats Your Local Bank
Banks are greedy. There, I said it. When interest rates rise, banks are very slow to raise the interest they pay you on savings accounts, but they’re lightning-fast at raising the interest they charge on your credit card.
VMRXX doesn't work like that.
As a money market fund, Vanguard passes through the interest earned on the underlying securities (minus a very small expense ratio) directly to the shareholders. Since the expense ratio for VMRXX is famously low—usually around 0.10%—the VMRXX 7 day yield stays high.
Compare that to a "high yield" savings account at a big national bank. They might give you 4% while VMRXX is pushing 5% or higher. Why the gap? Because the bank has to pay for branches, tellers, and Super Bowl commercials. Vanguard is just a giant machine that buys government debt and hands you the proceeds.
The Risks Nobody Mentions
Is VMRXX safe? Yes. Is it "bank" safe? Technically, no.
Your savings account is backed by the FDIC up to $250,000. If the bank fails, the government cuts you a check. VMRXX is a mutual fund. It does not have FDIC insurance. In the history of money market funds, there have been incredibly rare instances of a fund "breaking the buck"—meaning the share price dropped below $1.00.
It happened in 2008 with the Reserve Primary Fund. It almost happened again in 2020 before the Fed stepped in to provide liquidity to the markets.
However, VMRXX is a "taxable" money market fund that invests in high-quality, short-term fragments of debt. Vanguard is also arguably the most conservative manager in the game. They aren't chasing an extra 0.05% yield by taking on sketchy corporate debt. They prioritize liquidity. If you’re worried about VMRXX failing, you’re basically worried about the entire US financial plumbing system exploding. In that scenario, your FDIC-insured bank account probably has bigger problems too.
Who should actually use VMRXX?
If you have cash you need in six months—maybe for a wedding, a tax bill, or a house—VMRXX is the spot. If you’re a long-term investor, though, don’t get seduced by a high VMRXX 7 day yield.
💡 You might also like: Will Real Estate Market Crash: What Most People Get Wrong
Cash is a terrible long-term investment. Inflation is a quiet thief. Even if VMRXX is paying 5%, if inflation is 3.5%, your "real" return is tiny. After you pay taxes on those dividends? You’re barely breaking even. Use it as a parking lot, not a destination.
How to Track Changes and What to Watch For
You should check the yield at least once a month. You don't need to be obsessive, but you should notice trends. If the VMRXX 7 day yield starts dropping while the Fed hasn't changed rates, it usually means the market is "pricing in" a future rate cut. Bond traders are smarter than the rest of us; they see the rain before the first drop hits the ground.
You can find the daily update on Vanguard’s official site. Don't look at third-party finance blogs that might have outdated data from three months ago. In the world of money markets, three months is an eternity.
Tax Implications: The Part Everyone Hates
Unless you’re holding VMRXX inside an IRA or 401k, the income it generates is taxable at your ordinary income rate. It’s not "qualified dividends." It’s treated just like the interest from a savings account.
If you are in a very high tax bracket—think 35% or 37%—you might actually be better off in a municipal money market fund like VMSXX, even if the "headline" yield is lower. You have to do the "Tax-Equivalent Yield" math. Sometimes a 3% tax-free yield is worth more than a 5% taxable yield once the IRS takes their cut.
Practical Steps for Managing Your Cash
Don't just let your money sit in a 0% checking account because moving it feels like a chore. The friction of clicking a few buttons is usually worth hundreds or thousands of dollars a year in lost interest.
- Check your current "idle" cash. Look at your checking and traditional savings. If you have more than one month of expenses there, you're losing money.
- Verify your Vanguard account type. VMRXX is often the default settlement fund for many Vanguard brokerage accounts. If it isn't, you can manually buy shares.
- Monitor the Fed. You don't need to be an economist. Just know that when the Federal Open Market Committee (FOMC) meets, the VMRXX 7 day yield will likely move shortly after.
- Automate the sweep. Set up your account so that any dividends from your stocks or ETFs automatically land in VMRXX. It ensures your "resting" money is always working.
- Calculate your "Tax-Equivalent Yield." If you're a high-earner, compare VMRXX to Vanguard's municipal (tax-exempt) offerings. Use an online calculator to see which puts more actual cash in your pocket after Uncle Sam visits.
Keeping an eye on the VMRXX 7 day yield is a low-effort way to ensure you aren't being the "sucker" in the financial system. It’s about getting paid what the market says your cash is worth, nothing more and nothing less.