I got booted out of FZDXX

[COcheesehead]

FZDXX is one of Fidelity’s high yield money market funds. It has a $100k minimum for taxable accounts and $10k for deferred. We have it in multiple accounts. Whenever it dipped below the minimum, Fido did nothing, until today. They booted us out of it and put the funds in a regular core account in my wife’s IRA because it was below the minimum. The interest difference is about .16% so not a big deal, but it’s the first time I have seen them enforce the minimum.

 

[latexman]

Hmmm, my first thoughts are they think dark days are ahead. Time to tighten their belts.

 

[audreyh1]

Interesting. At some point I had read in the prospectus that the taxable account minimum after buying in was something like $5000 or maybe a little lower.

And that they would give you 30 days notice.

 

[BrianB]

I also moved our IRA cash to FZDXX and I have wondered if they would do this. Can you give us a little more information? Was the balance just under the $10k minimum or close to zero? Was your balance below $10k for just a few days, or weeks or?

BrianB

 

[audreyh1]

Oh god don’t make me read that FZDXX prospectus again!

 

[COcheesehead]

I also moved our IRA cash to FZDXX and I have wondered if they would do this. Can you give us a little more information? Was the balance just under the $10k minimum or close to zero? Was your balance below $10k for just a few days, or weeks or?

BrianB

I used the fund as a core account so when bonds matured we had tens of thousands in it. When I reinvested the funds it could easily go down to a few hundred. So on average thousands, but as of the last few days about $250.

 

[audreyh1]

I suspect that’s the issue. But still - there is supposed to be some notice.

Prospectus may have changed since I read it years ago.

 

[COcheesehead]

No warning. I just look at my accounts every morning and anything with a change is highlighted in yellow so it stood out.

 

[gromit]

The FZDXX prospectus says Audrey has a pretty good memory . They say they provide 30 days notice.


"If your fund balance falls below $10,000 worth of shares for any reason and you do not increase your balance, Fidelity may sell all of your shares and send the proceeds to you after providing you with at least 30 days' notice to reestablish the minimum balance. Your shares will be sold at the NAV, minus any applicable shareholder fees, on the day Fidelity closes your fund position. Certain fund positions are not subject to these balance requirements and will not be closed for failure to maintain a minimum balance."

 

[COcheesehead]

The FZDXX prospectus says Audrey has a pretty good memory . They say they provide 30 days notice.


"If your fund balance falls below $10,000 worth of shares for any reason and you do not increase your balance, Fidelity may sell all of your shares and send the proceeds to you after providing you with at least 30 days' notice to reestablish the minimum balance. Your shares will be sold at the NAV, minus any applicable shareholder fees, on the day Fidelity closes your fund position. Certain fund positions are not subject to these balance requirements and will not be closed for failure to maintain a minimum balance."

Zero warning, nadda, nothing.

 

[pjm-7]

Don't feel bad. Fido kicked me out over thirty years ago. My money market fund dipped below the minimum (whatever it was back then) and I got the boot. I reopened the account with the minimum. It dipped again a few months later and they sent me my money. I opened my money market with Vanguard and also moved a small IRA. I vowed never to do business with Fido again. I have carried my grudge since. I did open my HSA there a couple years ago when they established their no-fee HSA. I am in the process of draining the account. All of my years in the investment business I have continued my dislike for them. To think of the money that could have been placed with them that didn't happen. I know it sounds petty at this point. Fido just isn't on my radar.

 

[COcheesehead]

Don't feel bad. Fido kicked me out over thirty years ago. My money market fund dipped below the minimum (whatever it was back then) and I got the boot. I reopened the account with the minimum. It dipped again a few months later and they sent me my money. I opened my money market with Vanguard and also moved a small IRA. I vowed never to do business with Fido again. I have carried my grudge since. I did open my HSA there a couple years ago when they established their no-fee HSA. I am in the process of draining the account. All of my years in the investment business I have continued my dislike for them. To think of the money that could have been placed with them that didn't happen. I know it sounds petty at this point. Fido just isn't on my radar.

I get it.

 

[MarieIG]

Oh god don’t make me read that FZDXX prospectus again!

 

[dmpi]

Desperate brokers are looking for anyway to save a buck. I'm waiting to get kicked out of SNAXX. I wouldn't be surprised.

 

[Montecfo]

Glad I'm not at FIDO and can buy these through my broker on a drama-free basis.

 

[Chuckanut]

The key word in the prospectus is ‘may’.

Sometimes a business has to fire its customers, or at least put a leash on them. It appears FIDO may start doing that to those who aren’t playing the game regarding minimum deposits. My bet is that if a customer has 50 million plus with them, FIDO would not bother to quibble over the low amount in a MM account. But, a guy like me would be shown the fund door in a flash. “Nothing personal Mr. Chuckanut, come back to this fund when you have a a spare $100,000 to keep in it. Bye.”

 

[Koolau]

The FZDXX prospectus says Audrey has a pretty good memory . They say they provide 30 days notice.


"If your fund balance falls below $10,000 worth of shares for any reason and you do not increase your balance, Fidelity may sell all of your shares and send the proceeds to you after providing you with at least 30 days' notice to reestablish the minimum balance. Your shares will be sold at the NAV, minus any applicable shareholder fees, on the day Fidelity closes your fund position. Certain fund positions are not subject to these balance requirements and will not be closed for failure to maintain a minimum balance."

This sounds reasonable. Maybe a pain to have to send more funds to meet the minimum, but fair because of the notice AND the ability to meet the requirements (with a check!) or a transfer from other funds. YMMV

 

[Phroig]

For some reason, the minimum in an HSA is $100K, not $10K.

 

[COcheesehead]

Glad I'm not at FIDO and can buy these through my broker on a drama-free basis.

Where can you buy FZDXX outside Fidelity? Just curious.

 

[PatrickA5]

Desperate brokers are looking for anyway to save a buck. I'm waiting to get kicked out of SNAXX. I wouldn't be surprised.

How low can SNAXX get before they give the boot? I don't own any, but if I tried to maybe move to Schwab for a bonus, I'd probably try to scrape up enough money to get into SNAXX, but doubt I would be able to keep up the minimum.

 

[easysurfer]

Hopefully not a stupid questions ...

What is the advantage to the companies to boot the lower balance accounts? Lower balance accounts too expensive and not worth their time to process?

 

[dmpi]

How low can SNAXX get before they give the boot? I don't own any, but if I tried to maybe move to Schwab for a bonus, I'd probably try to scrape up enough money to get into SNAXX, but doubt I would be able to keep up the minimum.

I got in because I sold off my bond fund at the end of last year. I used that money in a CD buying binge earlier this year. Now I only have 400K in SNAXX. They haven't kicked me out yet and it's been a few months.... but we'll see.

 

[copyright1997reloaded]

I have investment accounts at Ameritrade, Schwab, Fidelity and plenty of others over the years. All have their quirks, good points and bad points.

I recently had an unexpected issue with Ameritrade/Schwab regarding a UTMA account being transferred within days of the child reaching 21. The bad part is I couldn't get anyone at the local branch to respond, as I needed to do something in person to get the issue resolved. The good news is that someone in the various internal organization was able to get the branches attention (I did mention they were in danger of losing a 7-figure account due to the issue I was having with the small account), and a real person at the branch reached out to me, we had an in-person meeting and they were very nice and helpful in getting things resolved.

All in all I've had positive experiences across all three organizations, but not perfect.

 

[misanman]

What is the advantage to the companies to boot the lower balance accounts?

Might have to do with the interest rate paid. If the account is small it might not justify earning what the big accounts earn. Just a guess.

 

[ShokWaveRider]

Interesting, you do not get booted out of SNAXX if you fall below $1m.