Money moves into and out of a Mercury Treasury portfolio in a fixed order where your Treasury ladder is the last thing touched. This article explains how deposits are put to work, how withdrawals are funded, what Mercury's daily rebalancing does and doesn't do, and how auto transfer rules interact with a ladder.
Deposits
When you move money from your Mercury checking or savings account into Treasury, it arrives in Near-term first, on the same business day. Mercury allocates it toward your targets in order:
- Near-term, up to its target.
- Reserve, up to its target, if your objective includes it.
- Long-term ladder: first refilling any rungs that are underweight or empty in order of maturity date, then spreading out excess cash across rungs starting from rungs with the closest maturity date.Treasuries are bought on business days while the bond market is open, in $1,000 increments. Any remainder under $1,000 stays in Near-term.
For deposit timing, see Managing your Treasury account.
Large deposits
A deposit that's large relative to your current portfolio usually means something has changed, such as a fundraise or a large customer payment, for example. Rather than pour it straight into targets set for a smaller balance, we'll ask you to take a quick look at your portfolio first. When you start a large transfer into Treasury, you'll be prompted to confirm or update your monthly cash outflows and review the updated recommendation before the deposit goes through.
Withdrawals
Withdrawals are funded from the most liquid part of your portfolio first and the ladder last, in this order:
- Near-term (MRGXX). Same-day availability if requested before 3pm ET on a business day.
- Reserve (MCRYX). Typically settles in 1 to 2 business days.
- Long-term ladder, only if the first three can't cover the request. Rungs are sold closest to maturity first, and proceeds settle the next business day.
When a withdrawal reaches your ladder
Before you confirm a withdrawal that would sell any part of your ladder, you'll see a warning.
Selling the rung closest to maturity keeps the sale price close to the Treasury’s face value, because a Treasury’s price moves toward its face value as maturity approaches. A rung within one business day of maturing can’t be sold; Mercury waits for it to mature and then releases the cash.
Automated rebalancing
Mercury Advisory reviews every Treasury portfolio each market day. It acts in two situations:
- Near-term exceeds its target by one month of cash or more, because of a deposit, maturing rungs, or fund dividends. The excess moves to Reserve and then to your ladder.
- Near-term falls below its target by two months of cash or more, and you don’t hold a ladder. Reserve is sold to bring Near-term back to its target.
Mercury Treasury will never sell a ladder rung through daily rebalancing. If your ladder is above its target, we let rungs mature and redirect the cash rather than selling early. A rung is only sold if you make a withdrawal large enough to reach it, or if you change your portfolio in a way that requires it.
Your portfolio will not trade just because market moves shifted a percentage point or two. Fund dividends, coupons, and maturing rungs all flow through the same order above, so small drifts close on their own.
Auto transfer rules and your ladder
Auto transfer rules that move money out of Treasury draw from Near-term, the same-day part of your portfolio. Keeping at least three months of cash there, which is the default, means most rules run without ever getting near your ladder.
If a transfer rule needs to sell a ladder rung to complete, the rung will be sold at market prices so the transfer can go through, which may result in a gain or loss. We’ll send you an email once a rung has been sold. To avoid early sales, review your transfer rules and keep enough in Near-term and Reserve to cover them.
U.S. Treasury securities held in a Treasury ladder fluctuate in market value before maturity as interest rates change. Selling a Treasury ladder before its maturity date may result in a gain or loss. Mercury Advisory’s portfolio management is designed to avoid selling Treasury ladders before they mature.
All investing involves risk. Yields fluctuate, may decline, and are not guaranteed. Past performance is not indicative of future results.
Mercury Treasury is offered by Mercury Advisory, LLC, an SEC-registered investment adviser (“Mercury Advisory”). This communication does not constitute an offer to sell or the solicitation of an offer to buy any security. All Brokerage and Clearing services are provided by, and securities are offered through Apex Clearing Corporation, an SEC-registered broker dealer and member FINRA/SIPC. Treasury accounts are not FDIC insured, are not bank deposits, and are not guaranteed by Choice Financial Group or Column N.A., and may lose value. Mercury Advisory is a wholly-owned subsidiary of Mercury Technologies, Inc. Learn more here.