Treasury-only money market funds

6 Aug 2008 12: 53 am | Filed under: bonds

The key is that these funds only invest in short-term US Treasury bills, the safest bonds around, not corporate debt or mortgage debt like most money market funds. They pay a little less interest, but they more than make up for it with safety. You actually can lose money in a money market fund, and it has started to happen with some funds. There was a shot across the economy’s bow early last fall when a GE money market fund traded at 96 cents.

These are infinitely safer than banks. For spending money, you can just write checks from them to your checking account once a month or every 2 weeks or so.
American Century Capital Preservation Fund (800-345-2021),
Dreyfus 100% U.S. Treasury Fund (800-645-6561),
Fidelity Spartan U.S. Treasury Fund (800-544-8888),
USGI U.S. Treasury Securities Cash Fund (800-873-8637),
Vanguard Treasury MMF (800-662-7447), or
Weiss Treasury Only Money Fund (800-430-9617).

Do your own research, but to my knowledge the American Century and Dreyfus funds are not affiliated with any banks. This may be a good thing.

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12 Responses to “Treasury-only money market funds”

Bjorn
September 17th, 2008 at 11:07 am

I am relying very heavily on Treasury-Only Money Market Funds, and Treasury Direct, for the safekeeping of savings during this economic crisis. However, I am beginning to worry about a possible government default due to its massive debt.

If a government default actually occured, do you have any thoughts on how that might impact T-Bills?
Mike
September 17th, 2008 at 11:16 am

Then you are sitting pretty for probably at least the next couple of years.

They will default, but years from now and probably through a combination of broken entitlement promises and inflation.

Massive inflation may follow this deflation when the rate of credit and wealth destruction slows and is surpassed by government’s spending increases and money printing. I plan to rotate out of Treasuries as gold gets cheaper. Other assets will get attractive again too — $40 oil, anyone? Japanese industrials yielding 10%? There will be blood in the streets.

The gold bugs will be right in the long run, but they might go broke in the short run. Don’t be fooled by the gold rally today. $600 is the target.
Arno
October 13th, 2008 at 6:44 pm

Also be careful of “Government Bond” mutual funds, especially Fidelity, which invests heavily in MORTGAGE BACKED SECURITIES.
http://www.geldpress.com/2008/09/not-all-government-bond-funds-are-created-equal/
JB
November 3rd, 2008 at 4:41 pm

Treasury only money market funds seem to be the smart play with cash at the moment, anyone have a recomendation on who to use for this? Anyone used and have feedback on Weiss Capital Securities?
AM
November 16th, 2008 at 10:40 am

actually, dreyfus is owned by bank of new york mellon but that’s also considered one of the top safe banks (for now).
Alexis
November 17th, 2008 at 6:09 pm

Dreyfus is owned by BNY/Mellon, however a lot of these money market funds that market themselves as 100% US Treasuries are not — many of them contain repo agreements, CP, CDs, ABCP, Strips and various other “short term” notes. The HSBC U.S. Treasury Money Market Fund is 100% US Treasuries with no repo agreements or anything else. Be sure to read the Prospectus of whatever fund you are thinking of buying to be sure that it doesnt have any portion of these non-US Treasury securities.
PT
December 5th, 2008 at 12:23 pm

For those curious about The American Century Capital Preservation Fund……From American Century themselves:
‘JPMorgan Chase Bank, 4 Metro Tech Center, Brooklyn, NY 11245, and Commerce
Bank, N.A., 1000 Walnut, Kansas City, Missouri 64105, each serves as custodian of
the funds assets. The custodians take no part in determining the investment policies
of the funds or in deciding which securities are purchased or sold by the funds.
The funds, however, may invest in certain obligations of the custodians and may
purchase or sell certain securities from or to the custodians. JPMorgan Chase Bank is
paid based on the monthly average of assets held in custody plus a transaction fee.’
Charles
February 12th, 2009 at 5:39 pm

Most Money market funds are FDIC insured. Where does the FDIC go for money when the banks go bust and the FDIC runs out of money? To the Treasury and the ‘full faith and credit’ of the US govt., just like a treasury only MM account. What’s the difference?
Mike
February 12th, 2009 at 5:47 pm

The difference is that promises will be broken. The last to be broken will be the interest and principal on the government’s own debt, because once they do that, the game is over.
ignaatz
February 13th, 2009 at 8:59 pm

Ain’t this chart a revolting development:
http://i278.photobucket.com/albums/kk106/ignaatz/TYCDS.jpg
bltw
February 28th, 2009 at 6:19 pm

Careful about the difference between a Money market Fund (NOT FDIC insured) and a Money Market Deposit Account (FDIC insured).

From the FDIC website “You are probably familiar with the traditional types of bank accounts - checking, savings, trust, certificates of deposit (CDs), and IRA retirement accounts - that are insured by the FDIC. Banks also may offer what is called a money market deposit account, which earns interest at a rate set by the bank and usually limits the customer to a certain number of transactions within a stated time period. . . .Do not confuse a money market mutual fund with an FDIC-insured money market deposit account (described earlier)”
Mike
February 28th, 2009 at 7:18 pm

Right, but the point here is not to have to rely on the government’s guarantees, other than of course its promise to pay back the principal on its short-term notes.