Treasury-only money market funds

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.

15 thoughts on “Treasury-only money market funds

  1. 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?

  2. 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.

  3. 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?

  4. 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.

  5. 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.’

  6. 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?

  7. 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.

  8. 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)”

  9. 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.

  10. Infinitely safer than banks cannot be true for basic checking accounts. Money market funds, even government-bond holding ones still pay a higher rate as they are not insured by the FDIC. It can, of course, be said that both risks, whether greater or smaller than the other, are essentially infinitesimal.

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