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 fundsNo minimum investment: SPAXX, FDRXX, FZFXX, FDLXX
Other fund minimums: $100,000, $1,000,000, $10,000,000
Four Prime Money Market fundsNo minimum investment: SPRXX
Other fund minimums: $100,000, $1,000,000, $10,000,000
Four National Municipal Money Market fundsTwelve State Municipal Money Market fundsLink
Comments
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.
This is good to know.
I vaguely remember this being mentioned previously (probably by you).
Thanks!
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.
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 you have multiple MMFs in a Fidelity account, it isn't clear which fund Fidelity will tap next once your core fund is depleted.
(link).
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
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?
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.
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.
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.
Is it reasonable to assume that Investment Rate is the yield we receive?
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.
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.
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
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.
When their yields are close to each other, VUSXX is just an easy choice for me.
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.
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.
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.
In any case, you get only 2022 data (thru the supplementary info). I am not aware if brokerages release contemporaneous info on this.
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