Fidelity Money Market Fund Premium Class FZDXX Paying Over 3% - Risk Factor?

sams1985 | Oct 17, 2022 | 781 posts since 2022

Fidelity has an excellent interface, high transfer limits, good customer service and generally easy to move money around without major restrictions.

Seems like an excellent place to park my liquid cash while i wait on those mythical 5% brokered cd's. I'm completely new to money market funds - what kind of risk are we looking at ?

Post an answer

Answers

RZ | Oct 17, 2022 | 391 posts since 2017

Risk not 0 but minimal. No guarantee that the $1.00 share price will not be breached but historically this was a rare and transient occurrence. Major funds like Fidelity hold billions of dollars and invest in short term securities, primarily TBills.

sams1985 | Oct 18, 2022 | 781 posts since 2022

Thank you. Are dividends from money market funds taxed differently than CD/savings interest or is it all just ordinary income?

RZ | Oct 18, 2022 | 391 posts since 2017

Ordinary income. Also note that minimum deposit for this fund is 100k

jack12 | Oct 18, 2022 | 307 posts since 2021

Is that for IRAs only?

Thats what I own in my IRA

Reg acct is SPRXX - it pays a bit less

Seems like I was not allowed to buy SPRXX in my IRA but its been years since I asked

YurieGlovotch | Oct 23, 2022 | 105 posts since 2020

Are you sure about 3%? The last time I looked, the yield was 0.67% https://www.marketwatch.com/investing/fund/fzdxx

RichardW | Oct 23, 2022 | 810 posts since 2019

YurieGlovotch…The yield which you mention is apparently the average annual yield (the
average yield of FZDXX from 9/30/2021 to 9/30/2022). The yield which sams1985 lists in this post is the 7-day yield. The 7-day yield is the common way of specifying current money market fund yields. Ken utilizes the 7-day yield when he posts the rates of money market funds in his blog “Latest Liquid Bank Account Rates”. As of 10/20/2022 the 7-day yield of FZDXX was 3.02%. The current value of the 7-day yield can be found here: https://fundresearch.fidelity.com/mutual-funds/performance-and-risk/31617H805

YurieGlovotch | Oct 24, 2022 | 105 posts since 2020

Wow! It looks like Market Watch is living under a rock. Perhaps you could consider Citizens Access as they just upped the yield to 3.00% with no expense ratio.

The financial institution, product, and APY (Annual Percentage Yield) data displayed on this website is gathered from various sources and may not reflect all of the offers available in your region. Although we strive to provide the most accurate data possible, we cannot guarantee its accuracy. The content displayed is for general information purposes only; always verify account details and availability with the financial institution before opening an account. Contact [email protected] to report inaccurate info or to request offers be included in this website. We are not affiliated with the financial institutions included in this website.