Summary of Why We've STOPPED Buying Fidelity’s Money Market Funds (SPAXX, VMFXX or T-Bills)| Weekly Update

In the video titled "Why We've STOPPED Buying Fidelity’s Money Market Funds (SPAXX, VMFXX or T-Bills)| Weekly Update," the presenters discuss their decision to withdraw funds from Fidelity's money market offerings in favor of Vanguard's higher-yield options. The discussion is centered around the current state of Money Market Funds, Treasury Yields, and investment strategies.

Main Financial Strategies and Market Analyses:

• Comparison of Money Market Funds:
  • The presenters analyze the yields of top Money Market Funds from Fidelity, Schwab, and Vanguard, focusing on the 7-Day SEC yield as a standardized measure of performance.
  • Fidelity's funds are noted to have higher expense ratios compared to Vanguard, leading to lower net yields for investors.
• Investment Shift:
  • They recommend moving excess cash from Fidelity's Money Market Funds to Vanguard's offerings due to better yields and lower expenses.
  • The presenters emphasize the importance of understanding the expense ratios associated with Money Market Funds and how they impact overall returns.
• Treasury Yields Overview:
  • The video reviews recent trends in Treasury Yields, noting fluctuations in response to economic factors and Federal Reserve communications.
  • The presenters highlight expectations for upcoming treasury auctions and the current landscape of corporate and agency bonds.
• Investment Flexibility:
  • They mention the strategy of using T-Bill ladders to maintain liquidity while maximizing yield, as T-Bills offer better returns compared to Fidelity’s Money Market Funds.

Step-by-Step Guide:

• Evaluate Current Money Market Fund Options:
  • Compare yields and expense ratios across Fidelity, Schwab, and Vanguard.
• Consider Moving Funds:
  • If yields at Vanguard are significantly higher, consider transferring cash from Fidelity to Vanguard or E-Trade.
• Utilize T-Bill Ladders:
  • Invest in a series of T-Bills with staggered maturities to maintain access to cash while earning higher yields.
• Monitor Treasury Auctions:
  • Keep track of upcoming treasury auctions and yields to identify the best investment opportunities.

Presenters/Sources:

The video features insights from members of the "Super Savers" and "Bond Course" community, though specific names are not mentioned in the subtitles. The content is also supported by references to various financial platforms and treasury yield resources.

Notable Quotes

— 06:50 — « They're simply paying much less than all these shorter maturity T bills and the main reason is that the expense ratio on Fidelity's money market funds are some of the highest in the industry. »

— 07:12 — « Fidelity needs to make money somehow and for them money market funds seem to be one of the places where they can make a very nice big chunk of money. »

— 08:45 — « We decided to move the vast majority of our excess cash that was parked in Fidelity's money market funds back into 4-week T-Bill ladders and keep these 40 plus basis points in our own pockets so to speak. »

— 09:40 — « Vanguard's money market rates are some of the best in the industry plus they've recently lowered the expense ratios on a number of their other funds as well. »

— 10:08 — « If all you're doing is moving your excess Fidelity cash there to park in VMFXX, this may not matter all that much to you. »

Category

Business and Finance

Video