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  • As the article states, existing retail investors (as opposed to those working with advisors) can switch their accounts to use SPAXX as their core (transaction) fund. Note that FDRXX, another government fund, is currently yielding a few basis points higher. It may be possible to switch one's core account to FDRXX by asking (one can't switch to it online), I don't know. In any case, a few basis points one way or the other isn't something to jump at.

    OTOH, if you can meet the min for FZDXX, it may be worth adding that as a position fund (you have to explicitly buy shares, but they will be redeemed automatically as needed). It can only be used in addition to your core fund. This is a prime fund, so it invests in commercial paper and may be subject to holds/redemption fees in times of economic stress.

    If you're not working with an advisor, there's little in the article of note. Just that other brokerages, like TDA, rationalize their use of sweep accounts (into low paying bank accounts) by saying that they provide more safety. I do wonder whether FDIC insurance really provides more safety than, say, a 100% Treasury MMF. (Neither of the Fidelity government funds mentioned above are Treasury funds.)
  • I am a very conservative investor, so cash-management is probably more important to me than it is to many other investors who believe they should "keep their money working" (i.e. fully/near-fully invested). I also happen to use Fidelity.

    Frankly, I could not be happier with the liquidity options provided by Fidelity. My "core fund" of choice is SPAXX -- A Trsy MMF. Its 7-day yield (at 8/7/19) is 1.86%. Prior to the recent, severe downdraft in rates, I leaned heavily on laddered T-bills to boost my cash yields, going out as far as 6 months. Buys/sells of T-bills are NTF at Fidelity. For those who prefer CDs, Fidelity offers a "supermarket" of those.

    Since the rate downdraft, I've shifted excess cash reserves to 2 ultra low-duration NTF ETFs, ICSH & FLDR. they are both yielding ~ 2.5%.

    I see an ample number of attractive liquidity options (given the reality of the rate structure) at Fidelity. Methinks some advisers doth protest too much.

  • SPAXX is classified as a government MMF, meaning that it invests in government securities and is considered safe enough by the SEC that it is not required to impose redemption fees and/or redemption gates (freezes on withdrawals) in times of stress.

    But it is not a Treasury fund. Last year only 56.16% of its income came from government securities such as Treasuries that are state tax exempt. Note that if that figure drops below 50%, then none of its income will be exempt from taxes in Calif., NY, or Conn.

    Fidelity's Treasury Only MMF (100% Treasuries) is FDLXX with a 7 day yield of 1.82% (7/31/19). Fidelity also has a "Treasury" MMF, FZFXX, with a 7 day yield of 2.01% (7/31/19). But only 40.06% of income from this fund came from Treasuries and other state-exempt securities last year. So none of its income was exempt from state taxes in Calif., NY, or Conn.
  • edited April 2020
    Fwiw, and this is late and only trivially of interest now, I just got this from Fido C/S in response to my request to have everything cash-default FDRXX:

    Please note that due to Money Market reforms in recent years, we are limited regarding which securities we can offer as cash core positions. At this time, the only two positions available for cash cores in your Joint account are Fidelity Government Money Market (SPAXX) and Fidelity Cash Reserves (FCASH).

    Fido Roth IRA offers (meaning for me defaults to) FDRXX, which is ever so slightly the best.
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