Sure but there is no scenario in which you have to maintain a large balance in the Fidelity MM fund. You can (very easily) buy shorter term treasures directly if you want liquid safe short term reserves. And roll them automatically. You can avoid large cash balances, etc. The vanguard MM fund is great, but ... I don't think it matters much.I stay under $1K in any money market fund, so it's not a big deal, but I'm aware of the expense ratio (ER)Of course everything else being equal a lower expense ratio is a good thing on any fund of any type. But everything must be equal; a better yielding fund (including a MM fund) with a higher expense ratio might be taking on more risk.Not really. IF MM "A" is yielding 5.4% (after expenses) and MM "B" is yielding 5.2% (after expenses) what difference does it make what the ER of either fund is? I would be inclined to go with MM "A" regardless of what its ER was.Say what? Absolutely it matters.
The expense ratio doesn’t really matter on money market funds because the stated yield is after the expenses.
But this is surely a don't care for about everybody. Most of my money is in bonds and bond funds, or stock funds. The exact return of the MM fund I use to hold cash is not a big deal. When MM rates were low, I tried to make sure money didn't sit in them long (it got moved to other investments). With good rates like now, I don't care as much.
Either way, an extra (for example) .2% on the 2 or 3 percent of my portfolio in cash because I have a great MM fund is not something I think about a lot. That amount is dwarfed by so many other things.
Any expense ratio over .03 makes me wonder. To me a .42% ER shows "dealer profit."
Expenses in MM funds that I own:
FIDELITY GOVERNMENT MONEY MARKET (SPAXX) ER = .42%; 7-Day Yield 4.96%
VMFXX, VANGUARD FEDERAL MONEY MARKET FUND, ER = .11, 7 day SEC yield 5.27%
I speculate that the difference in payouts of the two funds is the ER.
With Fidelity, I'll hold my nose and continue... knowing there is a better deal and knowing that I keep my MM balance low. (.0042 times a $500 average balance is $2.10 a year...big deal) The Fidelity Visa card is sweet!
If I had a high balance in my Fidelity MM fund, I'd make a change.
Why? expenses matter. Those 31 extra basis points (Fidelity .42 minus Vanguard .11) could be mine.
That's $310 on a $100K investment.
Statistics: Posted by TN_Boy — Sat May 04, 2024 8:12 am — Replies 88 — Views 9783