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Merrill - its "cents-less" difficulty with money market funds

msf
edited April 2023 in Fund Discussions
It's been so long since I used a MMF with Merrill that I'd forgotten why I avoid buying them there.

This may be a petty ("penny") issue, but Merrill does not seem able to handle fractional shares of some MMFs. Most of us are familiar with the problem of being left with change when buying stocks because they can only be purchased (at most brokerages) in whole shares. Merrill has the same difficulty with some of the MMFs it sells.

With certain MMFs funds, one must enter a whole number of dollars. In addition, only whole dollars of monthly dividends (interest) get reinvested. The pennies left over get deposited into the transaction account. Once one accumulates 100 pennies, one can manually buy another share.

There's no apparent rhyme or reason as to which funds are handled this way. Merrill offers institutional class shares of MMFs from BlackRock, Federated Hermes, and Fidelity. Some but not all of funds from each of those families have this problem. The only pattern seems to be that Merrill's website accepts fractional share orders for all the floating NAV money market funds it sells.

MMFs sold at Merrill, with today's SEC yields.

Comments

  • davidrmorandavidrmoran
    Thank you. This is extremely helpful news and I have been wondering about it (unable to find this detail at ML) ever since Fido began to offer actually usable MM funds.

    I just put a thou into FIGXX in my ML brokerage account and it seems to have gone through.

    Will check after end of day to believe it, with these guys. 4.7% return will do just fine.
  • hank
    edited April 2023
    msf said:

    It's been so long since I used a MMF with Merrill …

    It’s been a long time since I remember folks getting excited about money market funds. About 40 years. The 80s as I recall.:)

    BTW - If anybody missed it, this week’s Barron’s notes that municipal money market funds are now yielding a nice return. Around 4%. May be better than the plain vanilla variety - depending on tax bracket. Appears, however, they are not quite as secure as the taxable ones.
  • msf
    Some of the MMFs settle same day, some next day. This is likely not unique to Merrill. Further, each fund has its own trading cutoff time, well before 4PM. If you place an order after that cutoff time, you'll get an order acknowledgement reading:

    The market is now closed. This order will be processed based on the next market close price.

    If you have an account with Merrill and log in, you can find this detail on one of their research pages:
    https://olui2.fs.ml.com/Mutualfunds/MFBDCashManagement.aspx

    You can navigate to this via: Research -> Mutual Funds -> Cash Management Solutions
  • sma3
    The rates of treasury only funds at Schwab vs Muni MMF are almost equal unless you are in the higher tax brackets ( over 22-24%) . Treasuries avoid state income tax while most MMF do not have enough single state paper to make a difference
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