Cash in investment account

Did Vanguard initiate this transaction or did you?

If this was an exchange initiated by the FI then I believe a 'Corporate Acquisition' is the proper transaction - a no cash exchange of shares.

If you initiated the transaction, then, in the real world, cash is involved - shares of one security are sold generating cash which is used to buy another security.

Just to amplify a bit on JM's remarks.

Vanguard (and other fi's) may use the term "exchange" when they refer to such transactions, but they are not exchanges in the manner you are thinking. They are a sale of shares of the old fund and a purchase of shares of the new fund. In the same way that a "reinvestment" transaction is not a single transaction, but the payment of a dividend and the purchase of more shares of the same security with the cash from that dividend.

Both an "exchange" and a "reinvestment" generate cash, even if you never see it (and you do see it in some cases). It's just that Quicken does not offer an "exchange" transaction, that works like a "reinvestment" transaction, to spare you seeing the cash, even if for only a moment.

Bottom line: There is no reason to be concerned about seeing the cash, momentarily, in your investment account.

Thank you JM and John Pollard!

I do understand that an exchange is actually a sale of one fund and a purchase of another.

John, when you say "momentarily", do you mean that if I would have just left the "cash" alone (recall from my post that I initiated the purchase of the 2nd fund in Quicken using the proceeds in "cash") that the purchase of the 2nd fund would have occurred normally on a subsequent download? Or would I still have had to initiate the purchase in Quicken as I actually did?

Jim Orson...

By "momentarily" I meant that the first transaction is a Sell which creates cash in the Quicken account, and is then followed (nearly) immediately by a Buy which uses the cash in the Quicken account. That is what happens in the real-world, and when you record the transactions that way, the cash appears in your register only alongside the "Sell" transaction. Once the Buy is recorded, the cash balance drops by that amount.

I use Vanguard, and I have used funds from a Vanguard mm fund to buy shares in other Vanguard funds. I do not remember what transactions I got when I downloaded in those situations, but I notice when I look online at my Vanguard history, there are two transactions for each of those situations. In Vanguard terms there is an "Exchange From" and an "Exchange To" ... really a sale and a purchase.; and that's what I have in my Vanguard registers ... Sells and Buys. I would have guessed that Vanguard would have downloaded two transactions for each "exchange" since there are two at the web site and since it takes two transactions to correctly account for the event ... but fi's often do not do what seems logical to the user. I could easily have modified one or both action codes after I accepted the transactions, or I could have added the Buy myself, I just can't remember. (One small clue: I notice that both my Buy transactions contain "EXCHANGE FROM Prime MM" in the Memo field, and that is something I doubt I placed there, so I'm thinking Vanguard did download two transactions for each event, but that I may have had to modify one of them.)

I have 4 fi's that I get downloads from, and no two of them do everything the same way; so I have gotten accustomed to doing some cleanup after downloads ... just a little different cleanup for each fi.

John,

Thanks for the detail. I looked at some old "exchanges" and they behaved like you say in Quicken. However, this exchange was a bit different. I made the exchange online at the Vanguard web site on Thursday evening. I did NOT enter the exchange in Quicken. The transaction(s) didn't take place until after COB on Friday (as expected). I downloaded from Vanguard on Friday evening (after the web site appeared to be updated) and only the first half (sale) of the exchange actually downloaded. The exchange on the Web site at that time was complete. The sale proceeds simply went into "cash" (in the mutual fund account) in Quicken. I proceeded to manually (in Quicken) do a buy to the other fund against the money in "cash". I did another d/l Friday evening and again Sat morn and everything seems to be ok. Balances are all the same between Quicken and Vanguard. My theory is that if I would have waited until Sat morn to do the first download, everything would have been as expected (a sale, a purchase, no cash bal). I probably jumped the gun Friday evening when the download file was not completely updated yet. I'll keep an eye on this next time I make an exchange.

Jim Orson...