Fidelity investments may be sparking a war among money market funds by offering a 1.91% yield on money in new brokerage and retirement accounts. That’s 47 times higher than Fidelity competitor, TD Ameritrade, 10 times higher than Charles Schwab and 27 times higher the E*Trade. Vicky Ge Huang reports on Fidelity’s move at AdvisorHub, writing:
“I am not surprised to hear that Fidelity is offering better interest rates,” said Greg O’Gara, senior wealth management analyst at Aite Group. “They continue to try to reach out to their client base and prospects by offering superior product alternatives in a down market environment.”
Schwab, which offers sweep yields of 0.18% to 0.61%, did not comment on whether the firm will seek to raise its rate, but spokesman Mike Peterson said the company does not recommend clients keep cash in sweep vehicles for long periods.
“Purchased money market funds will generally pay higher interest yields than any sweep vehicle,” he wrote in an email.
Peter Crane, whose Crane Data tracks money-market fund returns, said the cash sweep yield Fidelity is offering is within spitting distance of the average 2.12% in his firm’s index of 100 retail money-market funds.
“It’s a shocker,” he said.
I encourage readers to consolidate their assets at Fidelity. Low fees, strong investments in technology and this new money market account show that Fidelity is competing hard to keep customers happy. Read more about why Fidelity is #1 here.
E.J. Smith - Your Survival Guy
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