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Fidelity tricks of the "trade"

msf
in Fund Discussions
A few little lesser known ways I recently discovered to facilitate trading with Fidelity:
  • You can set up an automatic investment (for more shares of a TF fund you already own) as late as the night before the purchase; this way you're only out of the market one day when moving money from fund to fund
  • You can do a same day exchange across families by calling Fidelity (you can't do this online); this only works if exchanging a specific dollar amount though
  • If you ask, you can use FDRXX as your core fund in IRAs; the only options available online are SPAXX or a sweep into FDIC banks. Current yields are: 0.98%, 0.93, 0.13% respectively.
As much as I generally prefer doing everything online, it pays to chat with your broker from time to time. I found out about the two items requiring calls when they came up in conversation, not because I specifically asked.

One other trading oddity: there are a few funds that (depending on the brokerage) settle T+2 (formerly T+3), rather than next day. It turns out that American Funds is one family that takes two days at Fidelity.

Comments

  • davfordavfor
    @msf This is useful information. Thanks.
  • bartab
    Thank you very much. Is there a broker charge on the same day exchange between different fund companies?
  • JunksterJunkster
    @msf. Correct me if I am wrong, but Fidelity has several higher minimum requirement money market funds with yields over 1.40% to as high as 1.52%. I talked to a branch manager who didn’t seem too up to speed on these funds other than to say they aren’t very liquid. I think he meant the money is not readily available if you suddenly want to buy another fund. Apparently the managers of these higher yielding funds don’t want you to continually move in and out and can possibly ban you for future purchases if they feel you are too active. If we get three raises in the Fed funds this year these money market funds will be in the 2.25% range. That could be a positive change in the dynamics of some retirees’ retirement.
  • msf
    I forgot to ask. While the commission schedule shows an extra fee, this evening a broker set up a sale for me with no commission added. He was helping me fix a problem, so the trade may have been treated as a special case - not something I could do myself. Likewise, since one can't do a same day multi-family exchange online, Fidelity may not impose a fee. It's worth a call.
  • Sven
    Thank you for the very useful info.
  • msf
    Junkster said:

    Correct me if I am wrong, but Fidelity has several higher minimum requirement money market funds with yields over 1.40% to as high as 1.52%. I talked to a branch manager who didn’t seem too up to speed on these funds other than to say they aren’t very liquid. I think he meant the money is not readily available if you suddenly want to buy another fund. Apparently the managers of these higher yielding funds don’t want you to continually move in and out and can possibly ban you for future purchases if they feel you are too active. If we get three raises in the Fed funds this year these money market funds will be in the 2.25% range. That could be a positive change in the dynamics of some retirees’ retirement.

    Here are Fidelity's prime MMFs:
    http://fundresearch.fidelity.com/mutual-funds/category-performance-daily-pricing-yields/GPMM

    There are a couple of things I can think of that the branch manager might have meant. One is that these higher yielding MMFs are prime funds, meaning that they're not government only funds. These days, that means that they could impose a redemption fee or freeze your money for a week if the fund gets too close to breaking a buck. (Institutional prime funds also have floating NAVs, but mere mortals are only going to be looking at retail prime funds.)
    http://www.newstimes.com/news/article/SEC-releases-new-rules-for-money-market-mutual-5647983.php

    The other thing the branch manager may have meant is that these are "position" funds - they can't be used as the settlement/core account. So whenever you want to move money into them, you have to place a buy order. (Fidelity will automatically pull from them if you don't have enough money in your core account for a withdrawal or purchase, so at least that's not painful.)

    The highest yielding MMF at Fidelity that seems to be within reach is FZDXX. $100K min in taxable accounts (though you don't need to keep that balance), but just $10K in IRAs. It's currently yielding 1.35%. (There's a more accessible share class of this fund, SPRXX, with a $2.5K min, and a yield of 1.23%.)

    I'd look into Vanguard muni MMFs. Right now they're also yielding 1.35% or so. In addition, they're federally tax exempt, and for some states, locally exempt as well. That state exemption is even more valuable now that state income taxes are harder to deduct than before.

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