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How is the yield for Wealthfront’s money market fund calculated?
The yield for the Wealthfront Treasury Money Market Fund (WLTXX), is measured in 3 ways: as a 7-day SEC yield, compound yield, and compound tax-equivalent yield.
On the fund performance page, you can view the 7-day SEC yield and compound yield for WLTXX, and for clients with WLTXX in their Cash Account, they can also view their specific compound tax-equivalent yield, which factors in potential benefits due to state income taxes based on the address for the account.
What is the 7-day SEC yield?
The 7-day SEC yield is a standardized measure of the annualized yield for a money market mutual fund. As the primary yield figure for all money market funds, it provides investors with a way to compare money market funds and gauge potential returns.
Since performance in a money market fund can fluctuate daily, the 7-day SEC yield is calculated as the previous 7 days' income per share net of expenses, divided by price per share, and then multiplied by (365/7) to arrive at an annualized yield number. It generally includes any applicable waivers or reimbursements.
It’s worth noting that a 7-day yield doesn’t include the effects of reinvested interest, which could mean monthly compounding, which is why we also include a compound yield.
What is a compound yield?
Also known as a 7-day effective yield, the compound yield is an annualized net yield that describes the amount one could earn over a one-year period assuming that dividends are reinvested on a monthly basis at the average rate of the last seven days.
For clients looking to compare the yield in various products, such as the interest rate in the Wealthfront Cash Account, the compound yield is more similar to an Annual Percentage Yield (APY), which factors in compounding monthly interest.
What is a compound tax-equivalent yield?
Similar to the compound yield above, the compound tax-equivalent yield adjusts for the fact that income earned from Treasuries (and other tax-exempt loans) in WLTXX are exempt from state and local taxes. This figure also includes the effects of compounding from reinvested dividends each month.
Since state and/or local income taxes will vary, the compound tax-equivalent yield is only displayed in a client’s dashboard, using the latest income and state of residence data provided by the client.
The compound tax-equivalent yield represents what clients would need to earn in an account with fully-taxable interest to achieve similar after-tax performance in their state.
Why does Wealthfront provide a compound tax-equivalent yield?
We focus on after-tax returns because this information can be more accurate for making an informed decision and comparing yields.
For clients who pay state and/or local income taxes, the compound tax-equivalent yield provides a better comparison to the APY clients would need to earn in a high yield savings account to achieve a similar after-tax performance.
How is it calculated?
For more information about the fund: Introducing WLTXX, Wealthfront’s Money Market Fund
An investor should consider the investment objectives, risks, and charges and expenses of the fund carefully before investing. A prospectus which contains this and other information about the fund may be obtained by calling 844-995-8437 or emailing support@wealthfront.com. The prospectus should be read carefully before investing.
Investment management and advisory services are provided by Wealthfront Advisers LLC (“Wealthfront Advisers”), an SEC-registered investment adviser, and brokerage related products are provided by Wealthfront Brokerage LLC ("Wealthfront Brokerage"), a Member of FINRA/SIPC. Wealthfront Strategies LLC (“Wealthfront Strategies”) acts as the investment adviser to the Wealthfront Treasury Money Market Fund (ticker: WLTXX) (the “Wealthfront Money Market Fund”). The Wealthfront Money Market Fund is distributed by IMST Distributors, LLC.
The information contained in this communication is provided for general informational purposes only, and should not be construed as investment or tax advice. Nothing in this communication should be construed as a solicitation or offer, or recommendation, to buy or sell any security.
The Wealthfront Money Market Fund is a money market fund that seeks to provide a competitive yield with low risk and high liquidity by investing primarily in debt securities issued by the US Treasury. This interest is generally exempt from state and local taxes. The expense ratio is 0.25%.
Effective October 14, 2025, Wealthfront Strategies has voluntarily agreed to waive all of the annual unitary management fee it receives from the Fund through March 1, 2026.
The Wealthfront Money Market Fund pays Wealthfront Strategies an annual management fee of 0.25% of its average daily net assets. Wealthfront Strategies’s receipt of this fee presents a conflict of interest in that any investment you make in the Wealthfront Money Market Fund will result in additional compensation for Wealthfront Strategies, which may benefit Wealthfront Brokerage and its affiliates. Please see the Cash Sweep Disclosure Statement to learn more about Wealthfront Brokerage’s Cash Sweep Program.
Although the Wealthfront Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee that it will do so. Investments in the Wealthfront Money Market Fund are securities and are not insured by the FDIC, carry no bank or government guarantee, are not deposits, and are subject to investment risk, including loss of principal amount invested. The Wealthfront Money Market Fund sponsor is not required to reimburse the Funds for losses, and you should not expect that the sponsor will provide financial support to the Wealthfront Money Market Fund at any time, including during periods of market stress.
Investing involves risk. Principal loss is possible.
Wealthfront Advisers and its affiliates do not provide legal or tax advice and do not assume any liability for the tax consequences of any client transaction. Clients should consult with their personal tax advisors regarding the tax consequences of investing with Wealthfront Advisers and engaging in these tax strategies, based on their particular circumstances. Clients and their personal tax advisors are responsible for how the transactions conducted in an account are reported to the IRS or any other taxing authority on the investor’s personal tax returns. Wealthfront Advisers assumes no responsibility for the tax consequences to any investor of any transaction.
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