Tuesday, June 03, 2008

Fidelity Select Money Market Fund

Yesterday I switched the bulk of my cash from the Fidelity Money Market Fund (SPRXX) to the Fidelity Select Money Market Fund (FSLXX), which has a higher yield and is currently #1 for retail money market fund yield. You can in fact get significantly higher yield from some banks (with FDIC protection to boot), but for now I prefer and need to convenience of keeping my cash at Fidelity where I can easily shift it into my checking account.

I am not positive but I believe that this Select fund was previously only available when trading between Fidelity Select mutual funds, but now there is no such restriction. Oddly, FSLXX has only a $2,500 initial investment requirement compared to the $25,000 minimum for SPRXX. I talked to a Fidelity rep on the phone, she consulted with two other people, I read the Fidelity web site, and shifted through the fund prospectus, but I could find no explanation as to why anybody would want SPRXX rather than FSLXX.

As of this morning the 7-day yield for FSLXX is 2.64%, compared to an annual yield of 3.73% for a money market demand account at Countrywide and 3.44% at Capital One Online Savings. I actually opened an account at Capital One Bank as my local bank here in New York City (Capital One bought North Fork), but the online savings is completely separate from the bank.

-- Jack Krupansky

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