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  • Ted March 2016
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Money Market Funds

They're still not competitive with bank money market accounts (and have more risk to boot), but they are beginning to show signs of life.

Vanguard's Prime MMF (Investor class) VMMXX now has a 7-day yield of 0.40%. The closest Fidelity Prime MMF, i.e. one that mere mortals can afford, is Fidelity Money Market Fund. It comes in Premium Class (FZDXX) yielding 0.36% with a $100K min ($10K for IRAs) and $10K min balance requirement, and "regular" class (SPRXX) yielding 0.24%.

These are all "prime" funds, meaning that come October they will have to impose liquidity constraints. In times of stress they may impose a redemption fee, hold your money up to 10 business days, or some combination of those.

Fidelity's old prime fund, Cash Reserves (FDRXX) has been promoted (or downgraded, depending on your point of view) to a government fund. No liquidity constraints, but no yield either (0.03%).

Muni MMFs are stuck at 0.01%, suggesting that a move to taxable MMFs (for now) is in order for cash you keep at a brokerage. Sweep accounts seem to be paying under 10 basis points: Fidelity's is at 0.07%, Schwab Bank yields 0.10% for savings accounts, less for checking.

Here's iMoneyNet's list of top yielding retail MMFs (so it excludes classes like FZDXX):
http://www.imoneynet.com/retail-money-funds/

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