I used to work at Vanguard. I was on the main campus at Vanguard's headquarters in Malvern, Pennsylvania for 7 years. I started off as a telephone service rep of the sort who had two NASD licenses (I had a Series 6 license and a Series 63 license). My job was to sit in a massive cube farm all day long and answer phone calls from people who had their 401(k) plans at Vanguard, and also to perform trades and other transactions within their accounts at their request.
I later got promoted to the role of Account Administrator. That gave me a slight raise, and a whole lot of headache, and a grueling amount of responsibility. Specifically, I was charged with the hands-on task of taking care of a small collection of 401(k) plans, so I was on the phone every day with the HR officers of various companies, discussing the various problems some people/employees of their companies were having with their 401(k)accounts, fielding legal questions, and shepherding massive in-bound wire transfers of the latest 401(k) contributions from the employees of my client companies. I lasted in that miserable, thankless job for 2 years before calling it quits.
In the end, I still have a ridiculous amount of information rattling around in my noggin about these kinds of accounts, and especially about how Vanguard itself operates (or at least how it DID operate when I was there).
I did NOT work in VBS (which is Vanguard Brokerage Services). Instead I worked in an entirely different division of the company which dealt exclusively with 401(k) plans, 403(b)'s, and a few pension plans and and Keough plans. In spite of that, I do have a general grasp of Vanguard's brokerage operation.
For anyone not familiar with how a brokerage account works ... you have your actual brokerage shares (like maybe your have 300 shares of Microsoft and another 287 shares of Shell Oil Company), and if you want you can periodically send more and more money into Vanguard at times to enable your account buy new shares of whatever the heck latest company stock shares that you want, any time you want. But any small bits of change left over after each stock purchase in your account always goes into your "sweep account" which is kinda like a little piggy bank off on the side of your account where they dump any leftover pennies after a trade goes through. That leftover small change is always kept in the form of SOME kind of a "cash reserve" fund, typically a "money market" type of fund. And the shorthand lingo used in the industry is to refer to such a fund as a "cash account" or else just plan "cash" (but it's not REALLY cash the way we understand it as if we were standing at the service counter of a McDonald's or a 7-11). Its called a "cash account" or a "cash fund" because the shares in that particular fund are ALWAYS an even-Steven dollar per share. This aspect of a "cash fund" is what makes any given money market fund so wonderfully "liquid."
At Vanguard, I was accustomed to seeing any one of the following cash funds as the "sweep accounts" for people who held brokerage shares:
Vanguard Federal Reserve Money Market (full of Federal Reserve notes from our good friends down at the Federal Reserve)
Vanguard Treasury Reserve Money Market (full of US Treasury notes) -- THIS FUND IS NOW CLOSED TO NEW INVESTORS!!! In my experience at Vanguard, the only reason Vanguard ever closed a fund --a rare event indeed!-- was when way too many investors were suddenly swarming their way into the fund. So in order to protect the integrity and overall solvency of the fund, Vanguard had to set a cut off and stop new investors from entering the fund.
Vanguard Prime Money Market (full of private banking notes from private banks but NOT anything governmental)
So here we see Vanguard --at the behest of the SEC-- preparing to irreversibly steer people away from the Prime Money Market and also (eventually) away from the Treasury Money Market, and force them exclusively into the Federal Money Market.
Let's hear it for our good friends down at the Federal Reserve.
::ETA:: I also recall one additional money market-style fund called the
Vanguard Admiral Treasury Fund. I don't recall the difference between that Admiral Treasury Fund and the vanilla plain Treasury Fund. But they were IIRC two distinct funds.
