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Fidelity Money Market Funds

Observant1
edited July 2023 in Other Investing
I recently opened a new Fidelity account (have existing Fidelity accounts).
The default settlement fund for this account is SPAXX.
I researched Fidelity money market fund options but didn't realize so many funds were available!

Their money market funds include:

Eleven Government and U.S. Treasury Money Market funds
No minimum investment: SPAXX, FDRXX, FZFXX, FDLXX
Other fund minimums: $100,000, $1,000,000, $10,000,000

Four Prime Money Market funds
No minimum investment: SPRXX
Other fund minimums: $100,000, $1,000,000, $10,000,000

Four National Municipal Money Market funds

Twelve State Municipal Money Market funds

Link

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Comments

  • yogibearbullyogibearbull
    edited July 2023
    Click on the M-Mkt tab of this link to see how impressive the Fido lineup is,
    https://www.fidelity.com/mutual-funds/fidelity-funds/overview

    I think you are aware that Fido also has the practice of looking through ALL your m-mkt holdings, taking as much as needed from the core/settlement m-mkt, and the rest automatically from the rest of m-mkt funds held. So, you don't even have to do lot of shifting as you may have to do, say, at Schwab.

    So, in addition to SPAXX, just find another lower ER Fido m-mkt fund that your account is eligible for.
  • Observant1
    edited July 2023
    yogibearbull said:

    [snip]
    I think you are aware that Fido also has the practice of looking through ALL your m-mkt holdings, taking as much as needed from the core/settlement m-mkt, and the rest automatically from the rest of m-mkt funds held.
    [snip]

    @yogibearbull,

    This is good to know.
    I vaguely remember this being mentioned previously (probably by you).
    Thanks!
  • yogibearbullyogibearbull
    It has been mentioned by others. BUT I have verified it in my Fido a/c.

    I have a margin a/c at Fido. But Fido is very aggressive in sending margin notices even when those aren't really required. For example, if I sell $x in mutual fund/OEF (T+1) and right away buy about $x in ETF (T+2), OR if I put in a T-Bill auction order for Monday that will settle on Thursday with a maturing T-Bill, Fido will send margin alerts anyway. But everything will even out on the settle date. So, I just ignore Fido margin alerts in such cases - NOT a good idea generally.

  • msf
    The minimum to open FZDXX in an IRA is $10K, otherwise it is $100K. See summary prospectus (this info isn't on the fund's web page).

    The minimum amount Fidelity expects you to keep in FZDXX is $10K, even for a taxable account. I've been told that Fidelity is lenient in enforcing this policy. They give you 30 days notice in any case. From the statutory prospectus:
    If your fund balance falls below $10,000 worth of shares for any reason and you do not increase your balance, Fidelity may sell all of your shares and send the proceeds to you after providing you with at least 30 days' notice to reestablish the minimum balance.
    If you have multiple MMFs in a Fidelity account, it isn't clear which fund Fidelity will tap next once your core fund is depleted.
  • mcmarasco
    I believe FIDO will deplete the MM with the most $$$. That’s what I’ve been told. At one time I had multiple MM, but not for long. It wasn’t worth the headache.
  • FD1000
    The following is one link where you see Fidelity MM and what they pay in real time
    (link).
  • fundly
    Other brokerages may have these funds on their platform. I was pleasantly surprised to find FNSXX the highest paying prime fund available with a $0 minimum in my Wellstrade account.
  • yogibearbullyogibearbull
    After the GFC 2008-09, there was some consolidation among the m-mkt funds. Current complex rules make the operation of m-mkt funds difficult. Many smaller shops shut or merged their m-mkt funds and made m-mkt funds from other firms available. But big firms rarely offer other firms' m-mkt funds.

    So, I was surprised that WellsTrade relies on other firms' m-mkt funds who pay a fee/cut to WellsTrade.
    https://www08.wellsfargomedia.com/assets/pdf/personal/investing/wellstrade-money-market-funds.pdf
  • BaluBalu
    edited July 2023
    yogibearbull said:

    It has been mentioned by others. BUT I have verified it in my Fido a/c.

    I have a margin a/c at Fido. But Fido is very aggressive in sending margin notices even when those aren't really required. For example, if I sell $x in mutual fund/OEF (T+1) and right away buy about $x in ETF (T+2), OR if I put in a T-Bill auction order for Monday that will settle on Thursday with a maturing T-Bill, Fido will send margin alerts anyway. But everything will even out on the settle date. So, I just ignore Fido margin alerts in such cases - NOT a good idea generally.

    Hi Yogi,

    I am thinking of the up coming 52 wk auction. At Fidelity and Vanguard, do you by any chance know if I can enter my order for a Treasury Bill auction on the date of the auction, say before 10AM EST, or do I have to enter the order the prior day?
  • yogibearbullyogibearbull
    @BaluBalu, both post cutoff dates, so yes, you can enter orders in "early" AM on the Auction day. But I do this ahead, much ahead - soon after the Treasury Announcement is out. With T-Bills maturing in 4 brokerage accounts, and each brokerage site presenting Treasury maturity dates in its own way, and sending alerts on different schedules, I find that I can miss rolling some. So, doing this ahead allows me to takes care of that.

    Soon, I will just start using ultra-ST-bond ICSH (at Schwab) or FCNVX (at Fido) or VMFXX (at Vanguard; its 7-day yield is high enough) and be done with rolling T-Bills.
  • BaluBalu
    edited July 2023
    Hi @Yogibearbull,

    Also, can I cancel the auction order after I enter it and how late?

    In the auction results, why is Investment Rate always higher than the High Rate? I thought it would be the other way around.
    https://www.treasurydirect.gov/auctions/announcements-data-results/

    P.S.: VUSXX is yielding higher than VMFXX and is 100% state tax exempt.
  • yogibearbullyogibearbull
    Investment rate is the bond-equivalent yield.

    All brokerages show Cancel button on Treasury orders but I haven't watched when it disappears. My guess is that orders can be cancelled until the brokerage cutoff time for Auctions.
  • BaluBalu
    Thanks.

    Is it reasonable to assume that Investment Rate is the yield we receive?
  • msf
    VUSXX is yielding higher than VMFXX and is 100% state tax exempt.

    One third of its portfolio is currently (June 30th) in repurchase agreements. Those are not state tax exempt. The fund has owned even more than a third at times this year. 2023 seems to be the first year (at least in the past several) in which substantial VUSXX assets are invested in repurchase agreements.

    See, e.g. Vanguard's 2019 tax info, showing that 2.21% of VUSXX income was state-taxable.
  • BaluBalu
    edited July 2023
    Has VUSXX been less state tax exempt than VMFXX in recent memory?

    I posted in a hurry and should have qualified that VUSXX was 100% state tax exempt in 2022.. At the current 7 day yield why would not I park my money in VUSXX over VMFXX, which was my point. I will be surprised Yogi to whom the post was addressed to alert him as he was planning to park money in VMFXX did not understand the info & context.
  • DavidF
    Who is eligible to buy Fidelity Institutional Money Market Fund (FNSXX)?
  • msf
    Has VUSXX been less state tax exempt than VMFXX in recent memory?

    What matters is whether VUSXX returns more, after tax, than VMFXX.

    Typically it yields less than VMFXX on a pre-tax basis. In a tax sheltered account, that's all that matters. In a taxable account, what matters is whether the tax savings are enough to compensate for the (typically) lower yield. Sometimes the answer is yes, often it is no.

    I'm confident that Yogi is fully aware of all of this. My comments are addressed to everyone else. Especially since it is likely that VUSXX will be only 55% - 70% state exempt this year.

    See also:
    https://www.mymoneyblog.com/money-market-mutual-funds-repurchase-agreements-state-taxes.html
  • yogibearbullyogibearbull
    edited July 2023
    Thanks @BaluBalu, @msf.

    Federal VMFXX should have higher yield that Treasury-only m-mkt fund but its ER is 2 bps higher than that for VUSXX. So, they are quite close. Also, despite marginally higher current 7-day SEC yield (well, that was yesterday, and it reversed today), VUSXX underperforms VMFXX in every timeframe indicated.

    VMRXX, the old VG Prime m-mkt, but now federal m-mkt, outperforms both VMFXX and VUSXX, but I have been out of it for a long time.

    For now, I am going to just stick with VMFXX that is also Vanguard's core/settlement fund.

    I am less interested in VG ultra-ST bond VUBFX / VUSFX and ETF cousin VUSB because they have higher duration than most others. So, I just stick to ICSH.

  • fundly
    @DavidF. As far as I can tell anyone with a self directed Wellstrade acct. can own it. I do. For other brokerages you would have to inquire.
  • Derf
    Just finished checking out VMFXX vs VMRXX which has a .02 7-day yield advantage. Not enough worth thinking about !
  • BaluBalu
    edited July 2023
    I switched from VMFXX to VUSXX a few months ago. I check their relative yield every few weeks and will stay with VUSXX as long as its after tax yield is the same or higher than that of VMFXX on average. I do not try to squeeze every last cent and switch back and forth.
    When their yields are close to each other, VUSXX is just an easy choice for me.
  • finder
    If I understand correctly, the latest 1 month Treasuries yield is about 5.4%. I wonder whether it makes sense to buy them and then reinvest them automatically as Fidelity offers. One can invest like that each week. This would be almost as liquid as a money market, with 5.4% yield, free of state and local taxes, which is better than VMFXX and VUSSX. Is there anything wrong with this idea? Maybe @Yogibearbull can comment?
  • davidrmorandavidrmoran
    >> almost as liquid

    For many people (me) this is the key for sticking w actual MM and equivalent funds, which get (potentially) used like a checkbook, or should be, including near-instant availability for emergencies. Of course now that some said funds at ML and Fido are not liquid auto-sweeps but following active sale take a day or more to settle and be drawable, maybe 'many people' should reevaluate.
  • yogibearbullyogibearbull
    You have to sign up for the auto-roll program and it basically locks that money. Any changes (additions/subtractions, etc) to it would cancel auto-roll; also the auto-roll order can be cancelled manually when it shows up around the roll time. I tried it once, but avoid it now.

    But if you are up to manual monthly roll of 4-wk Treasuries, go for it.

    Also look at 2-yr FRNs that pay floating 13-wk T-Bill rates + a spread, accrued daily, paid quarterly. A poster mentioned that you have to call Fido to place order, i.e. no online orders.
  • fundly
    @finder. Consider USFR a Floating rate etf with a 7 day duration, 5.28% 30 day sec yield which I expect will increase in the next week. All US treasury bills. No state tax. Easy peasy. Can be bought and sold anytime. Pays monthly.
  • wxman123
    Question: how do most brokerages report treasury income such as to allow a client to know the portion excluded from state taxes? Is this something that requires and accountant?
  • yogibearbullyogibearbull
    @wxman123, it is well-hidden in the supplementary info.

    One has to dig deep into brokers' website to find %income from US Treasury Obligations for funds.

    So, one can easily miss these if not specifically looking.
  • BaluBalu
    wxman123 said:

    Question: how do most brokerages report treasury income such as to allow a client to know the portion excluded from state taxes? Is this something that requires and accountant?

    Which brokerage specifically are you interested in and is your interest limited to MM funds?

    In any case, you get only 2022 data (thru the supplementary info). I am not aware if brokerages release contemporaneous info on this.

  • fundly
    The best way to get the % of US obligations for most funds is to go directly to the fund sponsor site for it .usually in late Feb for the last tax year. For example. For USFR google "Wisdom tree 2022 tax" and their funds with US obligations will be in the supp info for the tax year. From my experience brokerages do not do a good job with this if at all and the data can be wrong. But USFR being 100% treasuries should be 100% state tax free.
  • sma3
    @wxman123

    With a little hunting you can find the % of any fund that comes from Treasuries , or from some funds just assume 100%. It would be worthwhile checking to see how much of treasury MM are repos, as repos are not state tax free.

    Turbo tax will prompt you to indicate what % of the income is government and then automatically excludes that from your state tax

    It takes a little work, but it depends on what you think your time is worth.

    When I was working for a living, I usually ignore the $50 in state bond income but now I am retired, I have time to check it carefully and keep every dollar of income I am entitled to
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