Treasury Funds: These funds invest in Treasury bills, bonds and notes that are frequently traded. This kind of mutual fund invests in short-term debts from governments, banks, and corporations. If you’re not familiar with money market funds, an MMF is a type of mutual fund (don’t confuse money market funds with bank-offered money market accounts). Looking specifically at "retail" funds (as opposed to funds geared to the "institutional" market), Crane reported that "Treasury Retail MFs currently yield 0.22% (up.16 bps in May), Government Retail MFs yield 0.21% (up.17 bps in May), and Prime Retail MFs yield 0.42% (up.28 bps for May)." The MMF landscape In February, that average was just 0.02%, the exact bottom-of-the-barrel spot where it had remained for two years! As of last Thursday (5/19), Crane Data reported that the average "7-day-yield" on the 100 largest taxable money market funds (MMFs) stood at 0.53%. As rates finally get up off the floor, that recommendation is starting to make sense again. In the past, we have recommended holding uninvested cash in a money market fund (MMF). After all, some brokerage sweep accounts are still paying 0.01% (that works out to $1 a year on a $10,000 investment!). Our suggestion has been to hold that cash in your brokerage sweep account, but with rates starting to move up, you may want to consider other options. SMI’s Stock Fund Upgrading strategy currently has three positions "in cash," one in each of our three Upgrading risk categories. With interest rates near record lows, there wasn’t much to write about! Every option was unattractive.īut with rates rising, the picture is starting to change - if only slightly thus far. It’s been a long while since we’ve written about cash options in a brokerage account. While the rates listed here are long outdated, the vehicles mentioned are worth investigating as they tend to be "best of class." Rates are constantly changing, so do your homework, but these vehicles are a good place to start your search. Editor's Note: Yields have risen markedly since this article was written in May 2022.
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