Fidelity FZDXX Prime Money Market Fund

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arf30
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Re: Fidelity FZDXX Prime Money Market Fund

Post by arf30 »

UpperNwGuy wrote: Thu Nov 03, 2022 5:23 pm Because it is not MUCH riskier. It is a wee bit more risky, negligible risk in my opinion. Let's not exaggerate risks.
Definitely your opinion - the MM fund that failed in 2008 held commercial paper and they'll be the ones to fail next time around.
UpperNwGuy
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Re: Fidelity FZDXX Prime Money Market Fund

Post by UpperNwGuy »

arf30 wrote: Thu Nov 03, 2022 5:41 pm
UpperNwGuy wrote: Thu Nov 03, 2022 5:23 pm Because it is not MUCH riskier. It is a wee bit more risky, negligible risk in my opinion. Let's not exaggerate risks.
Definitely your opinion - the MM fund that failed in 2008 held commercial paper and they'll be the ones to fail next time around.
What about the other MM funds that also held commercial paper and did not fail in 2008?
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anon_investor
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Re: Fidelity FZDXX Prime Money Market Fund

Post by anon_investor »

UpperNwGuy wrote: Thu Nov 03, 2022 5:43 pm
arf30 wrote: Thu Nov 03, 2022 5:41 pm
UpperNwGuy wrote: Thu Nov 03, 2022 5:23 pm Because it is not MUCH riskier. It is a wee bit more risky, negligible risk in my opinion. Let's not exaggerate risks.
Definitely your opinion - the MM fund that failed in 2008 held commercial paper and they'll be the ones to fail next time around.
What about the other MM funds that also held commercial paper and did not fail in 2008?
Prime money market funds are subject to liquidity gates. So that may be an issue. No such issue with government and treasury money market funds, which are exempt from liquidity gates.

FDLXX (treasury only money market fund) is exempt from state/local income tax, and after taxes it may have a higher yield than FZDXX for folks in high income tax states like CA and NY.
OldSport
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Re: Fidelity FZDXX Prime Money Market Fund

Post by OldSport »

Fidelity "settlement" funds seem to pay far worse than Vanguard!! :oops:

The Vanguard Federal MM fund for ANY balance is now paying something like 2.9%!!!
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dogagility
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Re: Fidelity FZDXX Prime Money Market Fund

Post by dogagility »

Kookaburra wrote: Thu Nov 03, 2022 4:35 pm Why would one want to wait until auction instead of buying sooner on secondary market?
One reason to buy at auction, if using a brokerage like fidelity, would be to have an automatic purchase of the next auction offering after the bond matures.
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anon_investor
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Re: Fidelity FZDXX Prime Money Market Fund

Post by anon_investor »

OldSport wrote: Thu Nov 03, 2022 7:24 pm Fidelity "settlement" funds seem to pay far worse than Vanguard!! :oops:

The Vanguard Federal MM fund for ANY balance is now paying something like 2.9%!!!
You can use any of the Fidelity money market fund effectively like a settlement fund, since Fidleity will auto liquidate them to pay for purchases or debits (ACH withdrawals, wires out, etc.) including FZDXX.
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justsomeguy2018
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Re: Fidelity FZDXX Prime Money Market Fund

Post by justsomeguy2018 »

arf30 wrote: Thu Nov 03, 2022 5:41 pm
UpperNwGuy wrote: Thu Nov 03, 2022 5:23 pm Because it is not MUCH riskier. It is a wee bit more risky, negligible risk in my opinion. Let's not exaggerate risks.
Definitely your opinion - the MM fund that failed in 2008 held commercial paper and they'll be the ones to fail next time around.
Define "fail" - how much principal was lost? All of it?

Also what are the odds that you could be proactive and get out of the fund if there is a fairly clear impending meltdown?
Last edited by justsomeguy2018 on Thu Nov 03, 2022 9:53 pm, edited 1 time in total.
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Kevin M
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Re: Fidelity FZDXX Prime Money Market Fund

Post by Kevin M »

UpperNwGuy wrote: Thu Nov 03, 2022 5:23 pm
arf30 wrote: Thu Nov 03, 2022 2:52 pm FZDXX is a much risker fund (commercial paper) compared to FDLXX/VMFXX/VUSXX/T-Bills, not sure why anyone would want to put 100k+ into it (yes I know you can hold less than 100k).
Because it is not MUCH riskier. It is a wee bit more risky, negligible risk in my opinion. Let's not exaggerate risks.
Agreed.
If I make a calculation error, #Cruncher probably will let me know.
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Re: Fidelity FZDXX Prime Money Market Fund

Post by lgb »

justsomeguy2018 wrote: Wed Nov 02, 2022 5:43 pm
Nate79 wrote: Wed Nov 02, 2022 5:38 pm You can get 3.5% in FDIC insured savings account. That should be your floor for any interest rate. Anything less is lazy.
While I get your point, at this point I am kind of tired of constantly moving money around to various banking institutions chasing yield. I'm working on consolidating everything into 1 central location. If things change significantly I'll potentially consider other options.
(but
The math nerds, and worse if a frugal math nerd - maybe they go hand in hand, will always do that additional work and be happy to gloat how they got the best deal and didn't get less than possible... I can certainly appreciate that and fall on that side of the scale for certain things, but not everything, just depends it seems...
......on a smaller scale it would be like driving around to the cheapest gas station across town to save on the costs less per gallon there... (but what about wear and tear on tires and brakes and potential for accident, chipped window, time lost doing something else more productive.. how much difference is it actually.....hahaha...just like politics there are extremes swaying both directions of 'giving a care' of whether to chase that extra yield and move money around to do so...) .......some just enjoy the challenge or enjoy the feeling of ensuring they've gotten what they feel is the best deal available, or not in their view screwed over in comparison to something else etc.. Everybody is different! Just need to recognize who it is you're talking with to know which camp you'll likely find them. Makes things entertaining. :)
investor.was.here
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Re: Fidelity FZDXX Prime Money Market Fund

Post by investor.was.here »

Nate79 wrote: Wed Nov 02, 2022 5:38 pm You can get 3.5% in FDIC insured savings account. That should be your floor for any interest rate. Anything less is lazy.
You are referring to upgrade.com? They have a $10k/week ACH limit. You can probably wire in/out to bypass that but annoying and fees eat away at gains. You can get 3% at SoFi so $500 on $100k position - a few wires, hardly worth your time.

But it does the beg the question of why hold a mutual fund when you can get a similar rate at SoFi. Hard to know if they'll always be competitive but there's reason to think they might.
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Re: Fidelity FZDXX Prime Money Market Fund

Post by Nate79 »

investor.was.here wrote: Fri Nov 04, 2022 5:28 am
Nate79 wrote: Wed Nov 02, 2022 5:38 pm You can get 3.5% in FDIC insured savings account. That should be your floor for any interest rate. Anything less is lazy.
You are referring to upgrade.com? They have a $10k/week ACH limit. You can probably wire in/out to bypass that but annoying and fees eat away at gains. You can get 3% at SoFi so $500 on $100k position - a few wires, hardly worth your time.

But it does the beg the question of why hold a mutual fund when you can get a similar rate at SoFi. Hard to know if they'll always be competitive but there's reason to think they might.
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Re: Fidelity FZDXX Prime Money Market Fund

Post by SnowBog »

lgb wrote: Fri Nov 04, 2022 1:11 am
justsomeguy2018 wrote: Wed Nov 02, 2022 5:43 pm
Nate79 wrote: Wed Nov 02, 2022 5:38 pm You can get 3.5% in FDIC insured savings account. That should be your floor for any interest rate. Anything less is lazy.
While I get your point, at this point I am kind of tired of constantly moving money around to various banking institutions chasing yield. I'm working on consolidating everything into 1 central location. If things change significantly I'll potentially consider other options.
(but
The math nerds, and worse if a frugal math nerd - maybe they go hand in hand, will always do that additional work and be happy to gloat how they got the best deal and didn't get less than possible... I can certainly appreciate that and fall on that side of the scale for certain things, but not everything, just depends it seems...
......on a smaller scale it would be like driving around to the cheapest gas station across town to save on the costs less per gallon there... (but what about wear and tear on tires and brakes and potential for accident, chipped window, time lost doing something else more productive.. how much difference is it actually.....hahaha...just like politics there are extremes swaying both directions of 'giving a care' of whether to chase that extra yield and move money around to do so...) .......some just enjoy the challenge or enjoy the feeling of ensuring they've gotten what they feel is the best deal available, or not in their view screwed over in comparison to something else etc.. Everybody is different! Just need to recognize who it is you're talking with to know which camp you'll likely find them. Makes things entertaining. :)
And there's a spectrum of things between...

For myself, I maintain a local credit union account, a account at HMBradley, and my Fidelity accounts. It takes me seconds to move money between them to whatever is the best deal between them. (I'm not looking to add any more.)

To your gas station analogy, it would be more like 3 gas stations on different corners of an intersection near my home. If one has notably cheaper gas prices, it would add an insignificant amount of time and wear/tear to drive to a different one of the 3 than I used last time.
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Re: Fidelity FZDXX Prime Money Market Fund

Post by LadyGeek »

This thread is now in the Investing - Theory, News & General forum (general discussion).
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BlackDiamond
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Re: Fidelity FZDXX Prime Money Market Fund

Post by BlackDiamond »

I see FZDXX is at 3.13% for the 7-day yield. As other posters have mentioned, there are nearly a dozen banks offering 3.5%+ now for MMF. The highest I've come across is Merchant Bank with 3.82%. https://www.merchantsbankofindiana.com/money-market/

It will be interesting to see if any banks reach the 4% mark without any major restrictions or hoops to jump through.

I don't see rates making any significant increases from here though. T-bills and CDs seemed to have already priced in the Feds recent rate hikes weeks ago and could be topping out for now in the current range.
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Re: Fidelity FZDXX Prime Money Market Fund

Post by mix »

BlackDiamond wrote: Fri Nov 04, 2022 10:52 am I see FZDXX is at 3.13% for the 7-day yield. As other posters have mentioned, there are nearly a dozen banks offering 3.5%+ now for MMF.
If you look at a chart of the 7-day yield for FZDXX for this past year you can see it takes about 2-weeks after a Fed Funds rate adjustment for the yield to rise to match the increase. It's only been 3 days...
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Re: Fidelity FZDXX Prime Money Market Fund

Post by Lyrrad »

mix wrote: Fri Nov 04, 2022 11:22 am
BlackDiamond wrote: Fri Nov 04, 2022 10:52 am I see FZDXX is at 3.13% for the 7-day yield. As other posters have mentioned, there are nearly a dozen banks offering 3.5%+ now for MMF.
If you look at a chart of the 7-day yield for FZDXX for this past year you can see it takes about 2-weeks after a Fed Funds rate adjustment for the yield to rise to match the increase. It's only been 3 days...
FZDXX tends to adjust to the new rate within a couple of days now. I think it's becuase they have a lot of overnight repurchase agreements.

The 1 day yields for FZDXX on Wednesday, Thursday, and Friday this week were 3.08%, 3.45% and 3.70%, and it will be 3.70% on Saturday and Sunday too.

I look up yields on https://institutional.fidelity.com/app/ ... /2738.html on the "Fees & Distributions" tab and selecting a date range under "Historical Prices, Distribution & Yields"
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Re: Fidelity FZDXX Prime Money Market Fund

Post by whodidntante »

UpperNwGuy wrote: Thu Nov 03, 2022 5:23 pm
arf30 wrote: Thu Nov 03, 2022 2:52 pm FZDXX is a much risker fund (commercial paper) compared to FDLXX/VMFXX/VUSXX/T-Bills, not sure why anyone would want to put 100k+ into it (yes I know you can hold less than 100k).
Because it is not MUCH riskier. It is a wee bit more risky, negligible risk in my opinion. Let's not exaggerate risks.
I think the risk of loss is low, but in a crisis, the fund might limit redemptions for a period. That wouldn’t bother me, but it’s a risk worth knowing because it’s a potential disaster for some situations.
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dogagility
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Re: Fidelity FZDXX Prime Money Market Fund

Post by dogagility »

mix wrote: Fri Nov 04, 2022 11:22 am
BlackDiamond wrote: Fri Nov 04, 2022 10:52 am I see FZDXX is at 3.13% for the 7-day yield. As other posters have mentioned, there are nearly a dozen banks offering 3.5%+ now for MMF.
If you look at a chart of the 7-day yield for FZDXX for this past year you can see it takes about 2-weeks after a Fed Funds rate adjustment for the yield to rise to match the increase. It's only been 3 days...
The daily yield is 3.22% and rising.
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VictorStarr
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Re: Fidelity FZDXX Prime Money Market Fund

Post by VictorStarr »

dogagility wrote: Sat Nov 05, 2022 7:02 am
mix wrote: Fri Nov 04, 2022 11:22 am
BlackDiamond wrote: Fri Nov 04, 2022 10:52 am I see FZDXX is at 3.13% for the 7-day yield. As other posters have mentioned, there are nearly a dozen banks offering 3.5%+ now for MMF.
If you look at a chart of the 7-day yield for FZDXX for this past year you can see it takes about 2-weeks after a Fed Funds rate adjustment for the yield to rise to match the increase. It's only been 3 days...
The daily yield is 3.22% and rising.
Actually 1 day yield is already 3.7%, 7 Day is 3.22%.

https://institutional.fidelity.com/app/ ... /2738.html
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dogagility
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Re: Fidelity FZDXX Prime Money Market Fund

Post by dogagility »

VictorStarr wrote: Sat Nov 05, 2022 7:38 am
dogagility wrote: Sat Nov 05, 2022 7:02 am
mix wrote: Fri Nov 04, 2022 11:22 am
BlackDiamond wrote: Fri Nov 04, 2022 10:52 am I see FZDXX is at 3.13% for the 7-day yield. As other posters have mentioned, there are nearly a dozen banks offering 3.5%+ now for MMF.
If you look at a chart of the 7-day yield for FZDXX for this past year you can see it takes about 2-weeks after a Fed Funds rate adjustment for the yield to rise to match the increase. It's only been 3 days...
The daily yield is 3.22% and rising.
Actually 1 day yield is already 3.7%, 7 Day is 3.22%.

https://institutional.fidelity.com/app/ ... /2738.html
I stand corrected. :beer
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Re: Fidelity FZDXX Prime Money Market Fund

Post by Kevin M »

Yield for 4-week Tbill bought at auction this week was 3.681%, which for me is taxable-equivalent yield (TEY) of 4.18% (marginal tax rates = 22% and 9.3%). With FZDXX at 3.7%, this doesn't make much sense in an IRA at Fidelity, but may in taxable.

I bought some with auto-roll in taxable, so we shall see which does better on a TEY basis. FZDXX would need to be about 3.93% in about 2 weeks from settlement for breakeven, assuming linear increase in yield over four weeks from settlement on 11/8.

I also bought some of the 8-week at 3.958%, which is TEY = 4.49% for me, also with auto roll turned on.

Still holding cash in FZDXX in IRAs for TIPS purchases over the next few weeks.

Kevin
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Re: Fidelity FZDXX Prime Money Market Fund

Post by justsomeguy2018 »

Kevin M wrote: Sat Nov 05, 2022 3:14 pm Yield for 4-week Tbill bought at auction this week was 3.681%, which for me is taxable-equivalent yield (TEY) of 4.18% (marginal tax rates = 22% and 9.3%). With FZDXX at 3.7%, this doesn't make much sense in an IRA at Fidelity, but may in taxable.

I bought some with auto-roll in taxable, so we shall see which does better on a TEY basis. FZDXX would need to be about 3.93% in about 2 weeks from settlement for breakeven, assuming linear increase in yield over four weeks from settlement on 11/8.

I also bought some of the 8-week at 3.958%, which is TEY = 4.49% for me, also with auto roll turned on.

Still holding cash in FZDXX in IRAs for TIPS purchases over the next few weeks.

Kevin
How do the different yield quotes work exactly? If 1-day yield is 3.7%, does that mean every dollar that day earned 3.7%/360 days?
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Re: Fidelity FZDXX Prime Money Market Fund

Post by Kevin M »

justsomeguy2018 wrote: Sat Nov 05, 2022 4:05 pm
Kevin M wrote: Sat Nov 05, 2022 3:14 pm Yield for 4-week Tbill bought at auction this week was 3.681%, which for me is taxable-equivalent yield (TEY) of 4.18% (marginal tax rates = 22% and 9.3%). With FZDXX at 3.7%, this doesn't make much sense in an IRA at Fidelity, but may in taxable.

I bought some with auto-roll in taxable, so we shall see which does better on a TEY basis. FZDXX would need to be about 3.93% in about 2 weeks from settlement for breakeven, assuming linear increase in yield over four weeks from settlement on 11/8.

I also bought some of the 8-week at 3.958%, which is TEY = 4.49% for me, also with auto roll turned on.

Still holding cash in FZDXX in IRAs for TIPS purchases over the next few weeks.

Kevin
How do the different yield quotes work exactly? If 1-day yield is 3.7%, does that mean every dollar that day earned 3.7%/360 days?
Roughly. Treasury yield calcs use actual days in the year, so 365.

If the 3.7% is a coupon-equivalent yield, which I assume it is, then the APY is 3.73%, and the nominal rate is 3.67%, so you would be earning 3.67%/365 daily.
If I make a calculation error, #Cruncher probably will let me know.
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Re: Fidelity FZDXX Prime Money Market Fund

Post by Trance »

VictorStarr wrote: Tue Nov 01, 2022 11:49 pm
justsomeguy2018 wrote: Tue Nov 01, 2022 11:48 pm This fund requires a minimum of $100k to invest and is currently paying a 3.08% yield.

What happens if you buy the $100k, but then have to sell $10k so the balance drops below $100k? Is that a problem and do you still get the 3.08% yield?

Is this a bad place to hold your emergency fund given the volatile current climate?
No problem, you need to $100K for initial purchase. Later balance can drop way below $100K.
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justsomeguy2018
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Re: Fidelity FZDXX Prime Money Market Fund

Post by justsomeguy2018 »

whodidntante wrote: Sat Nov 05, 2022 4:49 am
UpperNwGuy wrote: Thu Nov 03, 2022 5:23 pm
arf30 wrote: Thu Nov 03, 2022 2:52 pm FZDXX is a much risker fund (commercial paper) compared to FDLXX/VMFXX/VUSXX/T-Bills, not sure why anyone would want to put 100k+ into it (yes I know you can hold less than 100k).
Because it is not MUCH riskier. It is a wee bit more risky, negligible risk in my opinion. Let's not exaggerate risks.
I think the risk of loss is low, but in a crisis, the fund might limit redemptions for a period. That wouldn’t bother me, but it’s a risk worth knowing because it’s a potential disaster for some situations.
What are the odds you could get your funds out before they got froze up?

What I mean is - knowing that is a risk I would probably move the funds out if it looked like another impending financial crisis was developing.

Realistic, or no?
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Re: Fidelity FZDXX Prime Money Market Fund

Post by justsomeguy2018 »

Kevin M wrote: Sat Nov 05, 2022 4:24 pm
justsomeguy2018 wrote: Sat Nov 05, 2022 4:05 pm
Kevin M wrote: Sat Nov 05, 2022 3:14 pm Yield for 4-week Tbill bought at auction this week was 3.681%, which for me is taxable-equivalent yield (TEY) of 4.18% (marginal tax rates = 22% and 9.3%). With FZDXX at 3.7%, this doesn't make much sense in an IRA at Fidelity, but may in taxable.

I bought some with auto-roll in taxable, so we shall see which does better on a TEY basis. FZDXX would need to be about 3.93% in about 2 weeks from settlement for breakeven, assuming linear increase in yield over four weeks from settlement on 11/8.

I also bought some of the 8-week at 3.958%, which is TEY = 4.49% for me, also with auto roll turned on.

Still holding cash in FZDXX in IRAs for TIPS purchases over the next few weeks.

Kevin
How do the different yield quotes work exactly? If 1-day yield is 3.7%, does that mean every dollar that day earned 3.7%/360 days?
Roughly. Treasury yield calcs use actual days in the year, so 365.

If the 3.7% is a coupon-equivalent yield, which I assume it is, then the APY is 3.73%, and the nominal rate is 3.67%, so you would be earning 3.67%/365 daily.
Well now this has me wondering whether it is better to buy 1 month t-bills at next weeks's auction or just keep the money in the prime MM fund. I guess it could go down...? I live in a no income tax state.
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Re: Fidelity FZDXX Prime Money Market Fund

Post by Lyrrad »

justsomeguy2018 wrote: Sat Nov 05, 2022 4:05 pm
How do the different yield quotes work exactly? If 1-day yield is 3.7%, does that mean every dollar that day earned 3.7%/360 days?
There are daily mil rates posted for Fidelity mutual funds at https://institutional.fidelity.com/app/ ... 21709.html

For example, every dollar in FZDXX earned $0.000101451 each day this weekend. Historical rates are also available on each funds page.
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Re: Fidelity FZDXX Prime Money Market Fund

Post by YoungSisyphus »

I’ve never looked into four week T-bills but am going to start a ladder next week, given this threads information.

I see a charge to buy on secondary market - is this avoided if you build the ladder through TreasuryDirect? Is it worth the hassle?
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Re: Fidelity FZDXX Prime Money Market Fund

Post by MikeG62 »

YoungSisyphus wrote: Sun Nov 06, 2022 8:16 am I’ve never looked into four week T-bills but am going to start a ladder next week, given this threads information.

I see a charge to buy on secondary market - is this avoided if you build the ladder through TreasuryDirect? Is it worth the hassle?
There is not charge to by Treasuries at Fidelity whether new issues or in the secondary market.

I would encourage you to extend duration a little as the yield curve is pretty steep between 4-weeks and 9-months. Current yields (as of 11/5/22):

4-week = 3.66%
13-week = 4.12%
6-month = 4.57%
12-month = 4.74%
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Re: Fidelity FZDXX Prime Money Market Fund

Post by Lyrrad »

YoungSisyphus wrote: Sun Nov 06, 2022 8:16 am I’ve never looked into four week T-bills but am going to start a ladder next week, given this threads information.

I see a charge to buy on secondary market - is this avoided if you build the ladder through TreasuryDirect? Is it worth the hassle?
TreasuryDirect
- Buy in $100 increments at auction.
- Schedule purchases up to about two months in advance
- Can enable reinvesments for up to two years
- Cannot sell before maturity without transferring to brokerage first

Brokeragaes
- Buy in $1000 increments at auction or secondary market
- Buy at auction between announcement and auction date.
- Buy and sell in secondary market when bond market is open. Each brokerage has its own offerings, so bid-ask spread may be different
- Some brokerages offer reinvestment options.

--
I've been building a ladder at Fidelity over the past couple of months. I like the autoroll option that I can enable when I purchase at auction.

I've been buying the 4 and 8 week bills for cash that I may need to use in the next several months. I don't think there's that much of an advantage to going longer duration under a year for short term needs, since I expect that future 4 week and 8 week bills will have higher rates and rolling them will offer close to the same return as the longer term bills.
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Kevin M
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Re: Fidelity FZDXX Prime Money Market Fund

Post by Kevin M »

Lyrrad wrote: Sun Nov 06, 2022 11:11 am I've been buying the 4 and 8 week bills for cash that I may need to use in the next several months. I don't think there's that much of an advantage to going longer duration under a year for short term needs, since I expect that future 4 week and 8 week bills will have higher rates and rolling them will offer close to the same return as the longer term bills.
This view is referred to by academics as the unbiased expectations theory, which basically argues that the expected return on bonds of different maturities is the same; i.e., the expected return for rolling 4-week bills for 52 weeks is the same as that for a 52-week bill.

There are other theories that attempt to address some of the observed shortcomings of the expectations theory.

This is a pretty good overview of yield curve theories: Theories of the Term Structure of Interest Rates.

Kevin
If I make a calculation error, #Cruncher probably will let me know.
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Re: Fidelity FZDXX Prime Money Market Fund

Post by billaster »

UpperNwGuy wrote: Thu Nov 03, 2022 5:43 pm
arf30 wrote: Thu Nov 03, 2022 5:41 pm
UpperNwGuy wrote: Thu Nov 03, 2022 5:23 pm Because it is not MUCH riskier. It is a wee bit more risky, negligible risk in my opinion. Let's not exaggerate risks.
Definitely your opinion - the MM fund that failed in 2008 held commercial paper and they'll be the ones to fail next time around.
What about the other MM funds that also held commercial paper and did not fail in 2008?
Only because the Treasury stepped in and provided a temporary share price guarantee to stop a panic run on the funds. Without that temporary guarantee, many more funds may have broken the buck.

As a result of the 2008 meltdown, new rules were instituted. Instead of providing an emergency guarantee, commercial paper funds are now required to institute liquidity gates. This could mean up to a 2% withdrawal fee and delaying all withdrawals up to 10 business days.

So if such a situation occurs again, don't expect the Treasury to bail you out. They have made it clear that they will not. Shareholders assume all of the risk.

Each person has to decide if the risk of a 2% haircut and no access to funds for two weeks is acceptable when one can get equivalent or better rates at Vanguard without that risk.
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Kevin M
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Re: Fidelity FZDXX Prime Money Market Fund

Post by Kevin M »

billaster wrote: Sun Nov 06, 2022 2:19 pm Each person has to decide if the risk of a 2% haircut and no access to funds for two weeks is acceptable when one can get equivalent or better rates at Vanguard without that risk.
Right, I would not keep a lot in taxable in FZDXX, except for fairly short term where I plan to use the funds soon to buy other fixed income. I keep much more taxable in VUSXX (Treasury MM) at Vanguard, then either buy Treasuries at Vanguard, or transfer chunks to Fidelity to buy there.

But, I may keep a significant amount in FZDXX in a Fidelity IRA, since I prefer Fidelity to Vanguard for buying Treasuries, and it's not so easy or quick to move IRA money around. If I became at all nervous about FZDXX, which I am not now, I'd buy very short-term Treasuries instead, and I might do that anyway if I didn't think I'd use the cash for at least a month.

Kevin
If I make a calculation error, #Cruncher probably will let me know.
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AllMostThere
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Re: Fidelity FZDXX Prime Money Market Fund

Post by AllMostThere »

Lyrrad wrote: Sun Nov 06, 2022 11:11 am I've been building a ladder at Fidelity over the past couple of months. I like the autoroll option that I can enable when I purchase at auction.

I've been buying the 4 and 8 week bills for cash that I may need to use in the next several months. I don't think there's that much of an advantage to going longer duration under a year for short term needs, since I expect that future 4 week and 8 week bills will have higher rates and rolling them will offer close to the same return as the longer term bills.
I too was doing similar, but then read on this forum that there is approximately a 1-week delay between maturity and re-investment. A 4-week yield is actually a 5-week yield due to this delay of being out of T-Bill market thus reducing your expected dividends by ~ 25%. I know it's a mental thing, but I've now been re-focusing on 13-week and 26-week durations to mitigate some of this delay impact.

Edit: Others have indicated that this is NOT a concern with Fidelity accounts. Thanks to those who responded as I investigate validity this option further.
Last edited by AllMostThere on Tue Nov 08, 2022 8:47 am, edited 2 times in total.
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Eno Deb
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Re: Fidelity FZDXX Prime Money Market Fund

Post by Eno Deb »

AllMostThere wrote: Mon Nov 07, 2022 5:18 pm
Lyrrad wrote: Sun Nov 06, 2022 11:11 am I've been building a ladder at Fidelity over the past couple of months. I like the autoroll option that I can enable when I purchase at auction.

I've been buying the 4 and 8 week bills for cash that I may need to use in the next several months. I don't think there's that much of an advantage to going longer duration under a year for short term needs, since I expect that future 4 week and 8 week bills will have higher rates and rolling them will offer close to the same return as the longer term bills.
I too was doing similar, but then read on this forum that there is approximately a 1-week delay between maturity and re-investment. A 4-week yield is actually a 5-week yield due to this delay of being out of T-Bill market thus reducing your expected dividends by ~ 25%. I know it's a mental thing, but I've now been re-focusing on 13-week and 26-week durations to mitigate some of this delay impact.
This is not the case if you use Fidelity's auto-roll for T-bills. Since it takes a couple of days after the auction for new issue purchases to settle, they can buy the new bond before the old one matures and match up the settlement date with the maturity date of the old one, so there is no gap.
Lyrrad
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Re: Fidelity FZDXX Prime Money Market Fund

Post by Lyrrad »

AllMostThere wrote: Mon Nov 07, 2022 5:18 pm I too was doing similar, but then read on this forum that there is approximately a 1-week delay between maturity and re-investment. A 4-week yield is actually a 5-week yield due to this delay of being out of T-Bill market thus reducing your expected dividends by ~ 25%. I know it's a mental thing, but I've now been re-focusing on 13-week and 26-week durations to mitigate some of this delay impact.
I believe that this may be the case at Schwab, but Fidelity does not have such a delay in my experience.

In another thread (viewtopic.php?p=6946471#p6946471), someone mentioned that auto roll can reduce your available balance. I decided to move my Treasuries purchases to a separate brokerage account to try to avoid having auto roll interfering with my other transactions.
HereToLearn
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Re: Fidelity FZDXX Prime Money Market Fund

Post by HereToLearn »

VictorStarr wrote: Sat Nov 05, 2022 7:38 am
dogagility wrote: Sat Nov 05, 2022 7:02 am
mix wrote: Fri Nov 04, 2022 11:22 am
BlackDiamond wrote: Fri Nov 04, 2022 10:52 am I see FZDXX is at 3.13% for the 7-day yield. As other posters have mentioned, there are nearly a dozen banks offering 3.5%+ now for MMF.
If you look at a chart of the 7-day yield for FZDXX for this past year you can see it takes about 2-weeks after a Fed Funds rate adjustment for the yield to rise to match the increase. It's only been 3 days...
The daily yield is 3.22% and rising.
Actually 1 day yield is already 3.7%, 7 Day is 3.22%.

https://institutional.fidelity.com/app/ ... /2738.html
The 7 day yield is now 3.5%. That was a sizable jump. I don't know how to look up the daily yield.
BlackDiamond
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Re: Fidelity FZDXX Prime Money Market Fund

Post by BlackDiamond »

HereToLearn wrote: Mon Nov 07, 2022 9:24 pm

The 7 day yield is now 3.5%. That was a sizable jump. I don't know how to look up the daily yield.
1 day yield is at 3.7% as of 11/04/2022

https://institutional.fidelity.com/app/ ... /2738.html
frugalor
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Re: Fidelity FZDXX Prime Money Market Fund

Post by frugalor »

Nate79 wrote: Fri Nov 04, 2022 5:53 am
investor.was.here wrote: Fri Nov 04, 2022 5:28 am
Nate79 wrote: Wed Nov 02, 2022 5:38 pm You can get 3.5% in FDIC insured savings account. That should be your floor for any interest rate. Anything less is lazy.
You are referring to upgrade.com? They have a $10k/week ACH limit. You can probably wire in/out to bypass that but annoying and fees eat away at gains. You can get 3% at SoFi so $500 on $100k position - a few wires, hardly worth your time.

But it does the beg the question of why hold a mutual fund when you can get a similar rate at SoFi. Hard to know if they'll always be competitive but there's reason to think they might.
No, dollarsavingsdirect but HMBradley just increased to 4% but with some required actions.
dollarsavingsdirect looks like immigrantdirect from many years ago. they weren't the best rate back then, they will probably be lower than others in a few months. HMBradley is too much work. I have moved all my money from HMBradley into T-Bill/T-Notes. At this point, T-Bill/T-Notes make more sense than banks.
SnowBog
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Re: Fidelity FZDXX Prime Money Market Fund

Post by SnowBog »

frugalor wrote: Mon Nov 07, 2022 10:52 pm
Nate79 wrote: Fri Nov 04, 2022 5:53 am
investor.was.here wrote: Fri Nov 04, 2022 5:28 am
Nate79 wrote: Wed Nov 02, 2022 5:38 pm You can get 3.5% in FDIC insured savings account. That should be your floor for any interest rate. Anything less is lazy.
You are referring to upgrade.com? They have a $10k/week ACH limit. You can probably wire in/out to bypass that but annoying and fees eat away at gains. You can get 3% at SoFi so $500 on $100k position - a few wires, hardly worth your time.

But it does the beg the question of why hold a mutual fund when you can get a similar rate at SoFi. Hard to know if they'll always be competitive but there's reason to think they might.
No, dollarsavingsdirect but HMBradley just increased to 4% but with some required actions.
dollarsavingsdirect looks like immigrantdirect from many years ago. they weren't the best rate back then, they will probably be lower than others in a few months. HMBradley is too much work. I have moved all my money from HMBradley into T-Bill/T-Notes. At this point, T-Bill/T-Notes make more sense than banks.
There are NO requirements for HMBradley until something like April now, at least for those who converted...

That said, Treasuries are better at the moment, so most of my money have been moved over to those. With 1-2 months of expenses kept in FZDXX.
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Re: Fidelity FZDXX Prime Money Market Fund

Post by whodidntante »

UpperNwGuy wrote: Thu Nov 03, 2022 5:43 pm
arf30 wrote: Thu Nov 03, 2022 5:41 pm
UpperNwGuy wrote: Thu Nov 03, 2022 5:23 pm Because it is not MUCH riskier. It is a wee bit more risky, negligible risk in my opinion. Let's not exaggerate risks.
Definitely your opinion - the MM fund that failed in 2008 held commercial paper and they'll be the ones to fail next time around.
What about the other MM funds that also held commercial paper and did not fail in 2008?
Those were better because they didn't fail.
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Re: Fidelity FZDXX Prime Money Market Fund

Post by UpperNwGuy »

whodidntante wrote: Tue Nov 08, 2022 5:01 am
UpperNwGuy wrote: Thu Nov 03, 2022 5:43 pm
arf30 wrote: Thu Nov 03, 2022 5:41 pm
UpperNwGuy wrote: Thu Nov 03, 2022 5:23 pm Because it is not MUCH riskier. It is a wee bit more risky, negligible risk in my opinion. Let's not exaggerate risks.
Definitely your opinion - the MM fund that failed in 2008 held commercial paper and they'll be the ones to fail next time around.
What about the other MM funds that also held commercial paper and did not fail in 2008?
Those were better because they didn't fail.
In other words, it was how the funds were managed that determined their survival or failure, not the presence of commercial paper inn their holdings.
YoungSisyphus
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Re: Fidelity FZDXX Prime Money Market Fund

Post by YoungSisyphus »

AllMostThere wrote: Mon Nov 07, 2022 5:18 pm
Lyrrad wrote: Sun Nov 06, 2022 11:11 am I've been building a ladder at Fidelity over the past couple of months. I like the autoroll option that I can enable when I purchase at auction.

I've been buying the 4 and 8 week bills for cash that I may need to use in the next several months. I don't think there's that much of an advantage to going longer duration under a year for short term needs, since I expect that future 4 week and 8 week bills will have higher rates and rolling them will offer close to the same return as the longer term bills.
I too was doing similar, but then read on this forum that there is approximately a 1-week delay between maturity and re-investment. A 4-week yield is actually a 5-week yield due to this delay of being out of T-Bill market thus reducing your expected dividends by ~ 25%. I know it's a mental thing, but I've now been re-focusing on 13-week and 26-week durations to mitigate some of this delay impact.
Asking .. is this really accurate? Fidelity has always managed things for me much faster.
HereToLearn
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Re: Fidelity FZDXX Prime Money Market Fund

Post by HereToLearn »

BlackDiamond wrote: Mon Nov 07, 2022 10:50 pm
HereToLearn wrote: Mon Nov 07, 2022 9:24 pm

The 7 day yield is now 3.5%. That was a sizable jump. I don't know how to look up the daily yield.
1 day yield is at 3.7% as of 11/04/2022

https://institutional.fidelity.com/app/ ... /2738.html
Thanks! It is now saying 3.76% for 1 day yield this morning, and the 7 day has updated to 3.5%. Interesting source that I never knew existed.
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Re: Fidelity FZDXX Prime Money Market Fund

Post by protagonist »

EngCapt1 wrote: Wed Nov 02, 2022 12:24 am
Fidelity may not enforce it, but they certainly have the right to.

Yes, but not a big deal.
Worst case scenario (which has never happened to me though I have used FZDXX for years, often with less than $10K in it), is they move your funds into your core account with a lower yield. You could then decide what to do with your money.
I'm not even sure if they enforce the initial $100K rule, if you have more invested in Fidelity. I don't recall if I ever deposited that much in FZDXX initially. Maybe I did.
I don't know why people worry about this.
I treat FZDXX as my primary checking account.
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JoMoney
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Re: Fidelity FZDXX Prime Money Market Fund

Post by JoMoney »

protagonist wrote: Tue Nov 08, 2022 8:53 am
EngCapt1 wrote: Wed Nov 02, 2022 12:24 am
Fidelity may not enforce it, but they certainly have the right to.

Yes, but not a big deal.
Worst case scenario (which has never happened to me though I have used FZDXX for years, often with less than $10K in it), is they move your funds into your core account with a lower yield. You could then decide what to do with your money.
I'm not even sure if they enforce the initial $100K rule, if you have more invested in Fidelity. I don't recall if I ever deposited that much in FZDXX initially. Maybe I did.
I don't know why people worry about this.
I treat FZDXX as my primary checking account.
FWIW, being a "Private Client" status alone doesn't get you past the $100k initial purchase (in taxable account, it's only $10k initial purchase for an IRA account) ... but if you do use (pay for) their "Wealth Management" services you can get access to the lower fee premium and institutional class money market funds without making the initial purchase minimum. According to their Fidelity Rewards+ program benefits page, if you have $2m in their "Wealth Management" you can access money market fund minimums requiring $10M initial investment waived.

The FNSXX Fidelity® Investments Money Market - Money Market Portfolio - Institutional Class , has a 3.92% 1-day Yield :shock:
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billaster
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Re: Fidelity FZDXX Prime Money Market Fund

Post by billaster »

UpperNwGuy wrote: Tue Nov 08, 2022 5:06 am
whodidntante wrote: Tue Nov 08, 2022 5:01 am
UpperNwGuy wrote: Thu Nov 03, 2022 5:43 pm
arf30 wrote: Thu Nov 03, 2022 5:41 pm
UpperNwGuy wrote: Thu Nov 03, 2022 5:23 pm Because it is not MUCH riskier. It is a wee bit more risky, negligible risk in my opinion. Let's not exaggerate risks.
Definitely your opinion - the MM fund that failed in 2008 held commercial paper and they'll be the ones to fail next time around.
What about the other MM funds that also held commercial paper and did not fail in 2008?
Those were better because they didn't fail.
In other words, it was how the funds were managed that determined their survival or failure, not the presence of commercial paper inn their holdings.
No, it was extraordinary actions by the Treasury that saved all those other commercial paper funds. They likely would have all gone down.

The Reserve Fund broke the buck on September 16, 2008. This started a run on the other commercial paper funds requiring them to rapidly liquidate assets at losing prices to handle panicked redemptions. The Treasury stepped in on September 19 and for a temporary time, guaranteed a $1 price. This stopped the run on the funds and saved them from collapse.

This is similar to the way the FDIC guarantee prevents bank runs. In the aftermath, they changed the rules to require that commercial paper money market funds institute liquidity gates because they engage in extra risk. They will not be guaranteed by the Treasury next time.

The Vanguard Prime Money Market Fund was one participant in the rescue program. Eventually Vanguard got out of the commercial paper business for money market funds.
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Re: Fidelity FZDXX Prime Money Market Fund

Post by Leif »

anon_investor wrote: Thu Nov 03, 2022 5:57 pm Prime money market funds are subject to liquidity gates. So that may be an issue. No such issue with government and treasury money market funds, which are exempt from liquidity gates.

FDLXX (treasury only money market fund) is exempt from state/local income tax, and after taxes it may have a higher yield than FZDXX for folks in high income tax states like CA and NY.
Rates are getting to the point that I need to consider after tax return and not just raw yield for taxable accounts. I'm currently using SPRXX (Prime fund). Now I'm starting to wonder if I should consider a fund with better after tax yield. I'm in CA with tax brackets of 24%/9.3%. Perhaps FDLXX (Treasury fund) or SPAXX (Gov't fund) is a better choice. How do I determine which is best? If I recall correctly, the funds need to have 50+% US Gov't securities to qualify as CA non-taxable interest. If SPAXX is CA tax free it wins with it being easiest as a settlement core fund.
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Re: Fidelity FZDXX Prime Money Market Fund

Post by BlackDiamond »

Leif wrote: Tue Nov 08, 2022 1:14 pm
anon_investor wrote: Thu Nov 03, 2022 5:57 pm Prime money market funds are subject to liquidity gates. So that may be an issue. No such issue with government and treasury money market funds, which are exempt from liquidity gates.

FDLXX (treasury only money market fund) is exempt from state/local income tax, and after taxes it may have a higher yield than FZDXX for folks in high income tax states like CA and NY.
Rates are getting to the point that I need to consider after tax return and not just raw yield for taxable accounts. I'm currently using SPRXX (Prime fund). Now I'm starting to wonder if I should consider a fund with better after tax yield. I'm in CA with tax brackets of 24%/9.3%. Perhaps FDLXX (Treasury fund) or SPAXX (Gov't fund) is a better choice. How do I determine which is best? If I recall correctly, the funds need to have 50+% US Gov't securities to qualify as CA non-taxable interest. If SPAXX is CA tax free it wins with it being easiest as a settlement core fund.
Fidelity has a small list of CA municipal money market funds that would be tax exempt-

https://www.fidelity.com/mutual-funds/f ... electTab=6
SnowBog
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Re: Fidelity FZDXX Prime Money Market Fund

Post by SnowBog »

BlackDiamond wrote: Tue Nov 08, 2022 2:16 pm
Leif wrote: Tue Nov 08, 2022 1:14 pm
anon_investor wrote: Thu Nov 03, 2022 5:57 pm Prime money market funds are subject to liquidity gates. So that may be an issue. No such issue with government and treasury money market funds, which are exempt from liquidity gates.

FDLXX (treasury only money market fund) is exempt from state/local income tax, and after taxes it may have a higher yield than FZDXX for folks in high income tax states like CA and NY.
Rates are getting to the point that I need to consider after tax return and not just raw yield for taxable accounts. I'm currently using SPRXX (Prime fund). Now I'm starting to wonder if I should consider a fund with better after tax yield. I'm in CA with tax brackets of 24%/9.3%. Perhaps FDLXX (Treasury fund) or SPAXX (Gov't fund) is a better choice. How do I determine which is best? If I recall correctly, the funds need to have 50+% US Gov't securities to qualify as CA non-taxable interest. If SPAXX is CA tax free it wins with it being easiest as a settlement core fund.
Fidelity has a small list of CA municipal money market funds that would be tax exempt-

https://www.fidelity.com/mutual-funds/f ... electTab=6
Run the math for yourself though...


I used to use FZEXX - which is the "premium" Tax-Exempt version (no state option for me). Haven't checked lately, but it was vastly behind FZDXX... I could pay 2x the taxes on FZDXX and still come out ahead... So I switched to FZDXX and have stayed there... (Although am moving some to a Treasury ladder for a slightly better rate and state tax free.)
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