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Posted by on September 25, 2008, 1:45 pm
At Fidelity, 7-day effective yields of a few money market funds are
2.55% Fidelity Cash Reserves (FDRXX)
5.17% Fidelity Municipal Money Market Fund (FTEXX)
4.35% Fidelity AMT Tax-Free Money Fund (FIMXX)
Only the first is eligible for recent Federal plan to insure money
market funds, but Fidelity has deep pockets, and I think it would
regard “breaking the buck” by one of its money market funds as a
disaster. It would probably subsidize an endangered money market fund
if it could. Unless I am missing something, municipal money market
funds run by large fund families look like a good investment right
now.
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Posted by Elle on September 25, 2008, 4:50 pm
> At Fidelity, 7-day effective yields of a few money market
> funds are
>
> 2.55% Fidelity Cash Reserves (FDRXX)
> 5.17% Fidelity Municipal Money Market Fund (FTEXX)
> 4.35% Fidelity AMT Tax-Free Money Fund (FIMXX)
For about the last five years, by my recollection FTEXX has
yielded far less than FDRXX, so the above is truly an
anomaly.
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Posted by ps56k on September 25, 2008, 8:46 pm
Elle wrote:
>> At Fidelity, 7-day effective yields of a few money market
>> funds are
>>
>> 2.55% Fidelity Cash Reserves (FDRXX)
>> 5.17% Fidelity Municipal Money Market Fund (FTEXX)
>> 4.35% Fidelity AMT Tax-Free Money Fund (FIMXX)
>
> For about the last five years, by my recollection FTEXX has
> yielded far less than FDRXX, so the above is truly an
> anomaly.
>
since all of the graphing websites I've seen only handle the price/NAV,
which for a money market fund is the usual $1.00,
how would you go about comparing the yield on these over 5 yrs on a graph ??
OR any other graphical representation of the return over some period (1, 3,
5) ??
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Posted by Elle on September 25, 2008, 9:11 pm
> how would you go about comparing the yield on these over 5
> yrs on a graph ??
I regularly shift money between FTEXX (which is the default
money market yada fund for one of my Fidelity accounts) and
FDRXX (which normally has a better yield and which I must
place an order to buy). I check the yields of the two often
and am working from anecdotal memory. If you want exact
history, call Fidelity.
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Posted by dapperdobbs on September 25, 2008, 9:44 pm
On Sep 25, 1:45 pm, beliav...@aol.com wrote:
> At Fidelity, 7-day effective yields of a few money market funds are
>
> 2.55% Fidelity Cash Reserves (FDRXX)
> 5.17% Fidelity Municipal Money Market Fund (FTEXX)
> 4.35% Fidelity AMT Tax-Free Money Fund (FIMXX)
>
I'm not an expert on this subject, but I can offer some logical
deductions.
The "real-world explanation" (whatever that means, these days) is
probably the mechanics of the size of the markets and the size of
institutions. The total (liquid) US Treasury market is probably four
times the size of the $2.5 trillion total municipal market. I.e. The
liquid muni market is probably too small - and I do not know how much
of the muni's are already wholly owned (illiquid for the next five
years or more).
To my sarcastic mind, the real reason is probably within the question:
"How do you spell institutional money manager?" :-] Also, article on
MSN stated "Hedge funds hoard $600 billion cash." Those 'hedgies' will
pay a premium for the liquidity of Treasuries.
The only economic rationale for the spreads would be the scenario that
municipalities' sources of revenue dry up. (The counter-measure to
that torpedo is to only take munis directly linked to the State (e.g.
GOB, or General Obligation Bonds, backed by tax revenues), and do
research on individual counties before buying their paper. Less credit-
worthy are project or revenue bonds, whose ratings are often secured
by letters of credit to a bank, and whose financial statements are
much harder to get a copy of.)
This is more market projection than analysis, but interest rates are
still very low, so there may be better opportunities for munis one to
two years from now, depending on the state of the economy. Also, the
muni market is pretty well owned by institutions - it's harder and
harder for an individual to get a toe in. Some issues are gobbled up
($50 or $500 million) in one bite before even going to 'market'.
Usually, the individual ends up with scraps the institutions leave
behind, so one must be demanding, and patient, to get good munis, and
may end up with the better quality bonds being called in by the
municipality, as happened with many variable rate munis earlier this
year. Ask for the financials, prospectus, and look for "times interest
covered" as good indicators for a good muni - that will enable you to
assign it your own "rating" and by-pass the rating agenies and
"insured" ratings.
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