Vanguard Treasury Money Market Fund (VUSXX) Review (October 2026)
Short answer
VUSXX's 7-day SEC yield was 3.82% on October 2, 2026, per Vanguard, with a 0.07% expense ratio and a $3,000 minimum. It is Vanguard's Treasury-only money market fund, it paid slightly more than VMFXX (3.79%) the same day, and most of its income is usually exempt from state income tax. For a Californian in the 9.3% bracket, that exemption is worth up to about 0.36 points of yield (3.82% x 9.3%).
| Item | Figure | Source, as of |
|---|---|---|
| 7-day SEC yield | 3.82% | vanguard.com, 10/02/2026 |
| Expense ratio | 0.07% | vanguard.com, 12/19/2025 |
| Minimum investment | $3,000 | vanguard.com, 10/02/2026 |
| Compare: VMFXX 7-day SEC yield | 3.79% | vanguard.com, 10/02/2026 |
| A-rated 5-year MYGA (benchmark) | 5.50-6.05% | public carrier rate sheets, 10/14/2026 |
7-day yields change daily.
| Fund family | Vanguard |
| Holdings type | U.S. Treasury bills, notes, and repurchase agreements collateralized by Treasuries |
| Weighted avg. maturity | ~30 days |
| State tax on dividends | Substantially state-tax-exempt (typically 80-100% of dividends qualify as direct U.S. Treasury interest) |
Money market fund vs MYGA, after tax
What $100,000 earns in 5 years: money market fund vs MYGA, after tax
Rates used: Money market fund 3.76%, the highest 7-day yield we tracked (VUSXX, fund sites, September 23, 2026); yields change daily; change it to the rate you are offered. MYGA 5.95%, the best A-rated rate we track as of October 13, 2026: Delaware Life Pinnacle Plus 5-year (AM Best A-, negative outlook, 7/31/2026), $100,000 and up, effective October 6, 2026 (Delaware Life rate sheet).
| Money market fund, interest taxed every year | $115,550 |
|---|---|
| MYGA, tax-deferred, before tax | $133,507 |
| MYGA after paying tax on all the interest at withdrawal | $126,136 |
| Tax deferral alone adds about | $674 |
| MYGA ahead of the money market fund, after tax | $10,586 |
Assumes 22% federal and 0% state income tax, no withdrawals, rates held for the whole term. MYGA interest is taxed as ordinary income when you withdraw it, not as capital gains. Gains taken before age 59 1/2 can owe a 10% IRS penalty, and cashing out early can cost a surrender charge. In an IRA both grow tax-deferred, so the edge there is the rate alone. A MYGA is backed by the issuing insurer's claims-paying ability and your state's guaranty association up to its limits, not the FDIC. General education, not tax, legal or financial advice.
How Vanguard Treasury Money Market Fund actually works
VUSXX is the cleanest 'cash' vehicle in the Vanguard menu for taxable accounts in high-state-tax states. The fund publishes a year-end government-interest percentage; in years when the portfolio is overwhelmingly direct T-bills, the state-tax exemption is near 100% and the after-tax yield often beats every HYSA in the country.
Every U.S. money market fund operates under SEC Rule 2a-7, which dictates portfolio quality, weighted average maturity (60 days max for the WAM, 120 days for the weighted average life), and daily/weekly liquid asset minimums. The differences between funds are at the margin: which short paper they hold, what expense ratio they charge, and what tax treatment the dividends qualify for.
For the federal vs state tax answer, with a California example, see is VUSXX tax exempt?.
Holdings overview
Holdings type: U.S. Treasury bills, notes, and repurchase agreements collateralized by Treasuries.
Weighted average maturity (WAM): ~30 days. WAM determines how fast the fund's yield repositions when the Fed moves. A 30-day WAM means within roughly one month of a Fed rate move, the entire portfolio has repriced, that's why MMF yields chase the Fed funds rate so tightly.
State-tax treatment: Substantially state-tax-exempt (typically 80-100% of dividends qualify as direct U.S. Treasury interest).
Rates expire like milk.
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What we like
- 80-100% state-tax-exempt, meaningfully better after-tax yield for high-state-tax residents.
- 7 bps expense ratio (as of 12/19/2025), among the lowest in the Treasury MMF category.
- Direct Treasury holdings, the safest collateral on the planet.
- Backed by Vanguard, $9T+ asset manager, mutual-ownership structure.
What we don't
- Headline 7-day yield can trail VMFXX by a few bps before the state-tax adjustment (on the October 2, 2026 check it was 0.03 points ahead).
- $3,000 minimum.
- Yield resets fast in a Fed cutting cycle, no lock.
- Periodically adds non-Treasury repo when supply is tight, which can dilute the state-tax exemption that year.
Tax notes
Money market fund dividends are reported on Form 1099-DIV as ordinary income and taxed at your marginal federal rate (10%-37%). For high earners in 32%+ brackets plus state tax, the after-tax yield on a 4.20% MMF can drop to 2.50-2.70%.
If the fund holds U.S. Treasury obligations, the portion of dividends attributable to those holdings is exempt from state and local income tax in most states (CA, NY, NJ, MA, OR enforce this strictly, CT, IL have minimum percentage thresholds). The fund publishes a year-end disclosure showing what percentage of dividends qualify. For a Californian in the 9.3% state bracket, the state-tax exemption on a Treasury-only MMF is worth ~40 bps of effective after-tax yield.
By contrast, multi-year guaranteed annuity (MYGA) growth defers tax until withdrawal. For a high earner who doesn't need the income, that deferral compounds into a meaningful effective-yield bump.
When a MYGA beats this MMF, $250,000 math
Vanguard Treasury Money Market Fund’s 7-day SEC yield was 3.82% on 10/02/2026. That yield resets within days of any Fed move, up or down. A multi-year guaranteed annuity (MYGA) locks a rate for the entire term. Comparing both on $250,000:
| Scenario ($250,000, annual compounding) | 5-Year Term |
|---|---|
| Vanguard Treasury Money Market Fund @ 3.82% (held constant for illustration) | $301,540 |
| A-rated 5-year MYGA @ 5.50% (low end of the 5.50-6.05% range, public carrier rate sheets 10/14/2026) | $326,740 |
| MYGA advantage (before tax) | +$25,200 |
And the MYGA math above understates the gap, because:
- The MMF yield is held constant. In reality MMF yields move with the Fed funds rate, the Fed raised its target range to 3.75-4.00% on September 16, 2026, and the next move could go either way.
- MMF dividends are taxed every year as ordinary income. MYGA growth defers tax until withdrawal. For a 32% federal + 9.3% CA earner, annual tax drag is ~30-40% of the yield.
- The MYGA rate is contractually guaranteed; the MMF yield is not guaranteed at all.
For money you don't need within 3 years, the math almost always favors a MYGA, not because MMFs are bad, but because MMFs were never designed for multi-year money.
VUSXX 7-day yield today, and the checks on this page
| As of | VUSXX 7-day SEC yield | VMFXX 7-day SEC yield |
|---|---|---|
| 09/23/2026 | 3.76% | 3.74% |
| 10/02/2026 | 3.82% | 3.79% |
Both funds moved up after the Fed raised its target range to 3.75% to 4.00% on September 16, 2026. A Treasury money fund's yield follows the 4- to 13-week Treasury bill rate with a lag of a few weeks; the bill rates themselves are in Treasury bills explained.
VUSXX minimum and how to buy it
The minimum initial investment is $3,000 (Vanguard, October 2, 2026). It has no purchase fee at Vanguard. At other brokerages it may be available with a transaction fee or not at all, and some will steer you to their own Treasury fund instead, such as Schwab's SNSXX or Fidelity's FDLXX. All three are compared on this month's money market fund ranking.
From my desk: how I compare this to locked rates
VUSXX is where I expect to find the cash of someone who has already done their homework on fees and state tax. That is exactly the person for whom the next question matters: how much of this balance is really emergency money, and how much has sat for years because nothing felt safe enough to lock.
Example: on $250,000, VUSXX at 3.82% held constant for five years grows to about $301,540 before tax; a 5-year MYGA at 5.50% (low end of the A-rated range on October 14, 2026) grows to about $326,740, and the MYGA defers the tax until withdrawal. The MYGA rate is backed by the claims-paying ability of the issuing insurer and carries a surrender charge for early exit. I do not sell or advise on money market funds; this is the insurance side of the comparison.
Who this fund is best for
Short-term cash you may need within the next 6-12 months. Brokerage cash that would otherwise sit in a low-yield sweep. Emergency reserves. Any cash position where liquidity and current yield matter more than rate certainty.
Who should consider an alternative
If you have $50K+ that you reliably won't touch for 3+ years, the MMF is the wrong vehicle. The usual vehicle for 3-5 year money is a top-rated MYGA; A-rated 5-year MYGAs topped out around 5.50-6.05% on October 14, 2026 (public carrier rate sheets). The math is in the table above, and it's not close. See current MYGA rates →
FAQ, Vanguard Treasury Money Market Fund
Q: Is my money market fund FDIC-insured?
A: No. Money market funds are SEC-regulated mutual funds, not bank deposits. They are not FDIC- or NCUA-insured. Government and Treasury MMFs invest in extremely safe collateral (T-bills, repo backed by Treasuries, agency paper) but are not guaranteed to maintain the $1.00 NAV.
Q: What is the 7-day SEC yield?
A: The 7-day SEC yield is the annualized net yield earned by the fund over the prior 7 days, after expenses. It is the industry-standard yield disclosure and is updated daily. It is roughly forward-looking for the next week, not a guarantee of forward yield.
Q: How quickly does the yield reset when the Fed changes rates?
A: Very fast. Government MMFs hold paper with a weighted average maturity (WAM) of roughly 7-45 days, so within a month of a Fed move the entire portfolio has repriced. A 25 bp cut typically shows up in the 7-day yield within 2-4 weeks.
Q: Can I lose money in a money market fund?
A: Realistically, almost never on government and Treasury funds. Twice in history a U.S. money market fund has 'broken the buck' (NAV below $1.00): the Community Bankers U.S. Government Fund in 1994 and the Reserve Primary Fund in 2008. Both were edge cases. Government and Treasury MMFs are the safest tier.
Q: Are Treasury MMF dividends state-tax-exempt?
A: Generally yes, the portion of dividends attributable to direct U.S. Treasury obligations is exempt from state and local income tax in most states. Funds publish a year-end 'U.S. government interest' percentage. For high-state-tax residents (CA, NY, NJ, OR), this can boost effective yield by 30-50 bps.
Q: How is a MMF different from a high-yield savings account?
A: HYSAs are FDIC-insured bank deposits; MMFs are SEC-regulated mutual funds. HYSA APYs are set by the bank and tend to lag the Fed. MMF 7-day yields move with the Fed within weeks. Top MMFs typically out-yield top HYSAs by 30-80 bps in a stable rate environment.
Q: Why would I ever choose a MYGA over a money market fund?
A: For money you won't need for 3+ years. A MYGA locks today's rate (A-rated 5-year MYGAs topped out around 5.50-6.05% on October 14, 2026, per public carrier rate sheets) for the full term, the MMF yield can fall 200+ bps in a single year if the Fed cuts. MYGAs also defer tax until withdrawal, which is meaningful for high earners.
Q: What happens to a MMF in a Fed cutting cycle?
A: Yield drops in lockstep, fast. In 2020 the Fed cut from 1.75% to 0.25% over 4 months; government MMF 7-day yields fell from ~1.65% to ~0.02% by mid-year. Anyone who locked a 3-5 year CD or MYGA at the 2020 highs out-earned MMF holders by hundreds of bps annually.
More Money Market Fund research
- Best Money Market Funds 2026 (ranked)
- MMF vs MYGA, when each wins
- MMF vs HYSA, yield spread and risk
- MMF vs CD, liquidity vs lock
- Breaking the buck, 1994 & 2008 cases
- How MMF yields track the Fed funds rate
- High-Yield Savings reviews
- Best MYGA rates 2026
My take
Vanguard Treasury Money Market Fund (VUSXX) is a competent, reasonably priced money market fund. For short-term cash inside a Vanguard brokerage account, it does its job. For money you actually won't need for 3+ years, you can do meaningfully better with a locked rate on a top-rated MYGA, same A-rated insurance carriers, 100+ bps higher rate, tax deferred. Worth a 15-minute independent second opinion before letting six-figure cash sit in this fund for years.
About Hans Goldstein: Independent retirement income specialist. CA Life License #4273294. NPN #20602398. Reviews 30+ carriers and the full menu of cash alternatives. Phone: 213-414-2808. Email: hans@hansgoldstein.com.
Hans is independently licensed as an insurance producer; he does not sell money market funds or other securities. These reviews are based on publicly available fund prospectuses, fact sheets, SEC filings, and SEC-yield reporting requirements.
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Money market funds are great for short-term cash. For money you don't need for 3+ years, a multi-year guaranteed annuity (MYGA) typically pays 100-150 bps more and defers tax. Get an independent side-by-side before you let cash drift in a MMF for 5 years.
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Disclosure
This review reflects publicly available fund prospectuses, fact sheets, and approximate 7-day SEC yields as of the date stated above. Money market fund yields change daily and reset roughly in line with the federal funds rate; always confirm current yield, expense ratio, holdings, and weighted average maturity against the most recent fund disclosure document before committing capital. Money market funds are not FDIC-insured. Government and Treasury money market funds historically maintain a stable $1.00 NAV but are not guaranteed to do so, see "breaking the buck" history. Prime money market funds may impose liquidity fees or redemption gates during market stress. This is general education, not a personal recommendation or an offer of any product. Hans Goldstein is an independent licensed insurance producer (NPN 20602398) and does not sell securities or money market funds; comparisons to multi-year guaranteed annuities (MYGAs) are provided for informational context only. No compensation has been received from any fund company in connection with the publication of this review. Always read the actual fund prospectus and consult a licensed advisor before investing. Past yield does not predict future yield. State income tax treatment of U.S. Treasury obligations varies and is subject to change. Tax discussion reflects federal and California law as of 2026 and is subject to change.