Fidelity's Core Position: A Deep Dive Into Their Strategy

When you open a Fidelity account, a core position is automatically established to process cash transactions and hold uninvested cash. Your core position is where your money is held until you invest it. Fidelity Investments automatically places your uninvested money into a money market mutual fund. You can instead select a money market fund either when you open your account or after. The two options are the Fidelity Government Money Market Fund (SPAXX) or the Fidelity Treasury Fund (FZFXX), neither of which is FDIC-insured.

The core position is where your money is held until you invest it

When you open a Fidelity account, a core position is automatically established for you. This is where your money is held until you invest it. Your core position is also used for processing electronic funds transfers (EFTs), Fidelity ATM and Visa Gold Card transactions, and payments made through the Bill Pay service.

Fidelity Investments automatically places your uninvested money into a money market mutual fund. You can choose to keep your money in a money market fund or select a different option, such as an FDIC-insured bank deposit account.

Money market funds are not insured, but they are designed to maintain a value of $1, with small interest growth. They invest in cash, CDs, and very short-term treasuries. The Fidelity Government Money Market Fund (SPAXX) and the Fidelity Treasury Fund (FZFXX) are two options for money market funds. These funds are not FDIC-insured, but they are considered safe because they invest in U.S. government securities.

If you choose an FDIC-insured bank deposit account, your money will be held in an interest-bearing account at one or more program banks. This option may provide less interest than a money market fund, but your money will be insured by the FDIC up to $250,000 per account.

Ultimately, the choice of core position does not matter too much because the point of an investment account is to have your cash invested in things that will increase in value. However, if you do end up with cash in your core position, you may want to choose the option that will provide higher returns, such as SPAXX.

Fidelity Investments automatically places your uninvested money into a money market mutual fund

When you open a Fidelity account, a core position is automatically established for you. This core position is where your money is held until you invest it. Fidelity Investments will automatically place your uninvested money into a money market mutual fund.

The two options for your core position are the Fidelity Government Money Market Fund (SPAXX) or the Fidelity Treasury Fund (FZFXX). Neither of these options are FDIC-insured. SPAXX is a money market fund that invests only in US government securities with an average maturity of about a month. It earns a small amount of interest. FZFXX has a slightly lower expense ratio (and, as a result, a bit more yield) than SPAXX.

You may instead select a money market fund either when you open your account or after. If you are concerned about the safety of your money, you could put it into the treasury fund, as treasuries are backed by the full faith and credit of the US government. If the government defaulted on short-term treasury bills, they would probably also default on FDIC-insured accounts.

If you are looking to earn more interest, you could also consider a short-term bond fund, CDs, or I-Bonds. However, if you are using a brokerage account, you will not have a cash core position option.

You can choose a money market fund when you open your account or after

When you open a Fidelity account, a core position is automatically established to process cash transactions and hold uninvested cash. This core position can be invested in a money market mutual fund, such as the Fidelity Government Money Market Fund (SPAXX) or the Fidelity Treasury Fund (FZFXX). These funds invest in U.S. Government Agency and Treasury debt, and related repurchase agreements.

If you are seeking a higher level of current income, you may want to consider the SPAXX or FZFXX funds, which invest in U.S. Government Agency and Treasury debt. These funds are intended for investors seeking a high level of current income while also preserving capital and liquidity.

Alternatively, you can choose the FDIC-Insured Deposit Sweep Program, where your uninvested cash balance is swept into an FDIC-insured interest-bearing account. This option may provide slightly lower returns but could offer more security in the event of a financial calamity.

Ultimately, the choice of core position depends on your investment goals and risk tolerance. You can change your core position at any time by contacting a Fidelity representative or doing so online.

The FDIC-insured deposit sweep program shuffles your money into bank accounts that are insured by the FDIC

When you open a Fidelity account, a core position is automatically established for you. This is where your money is held until you invest it. The core position is also used for processing cash transactions, such as electronic funds transfers, bill payments, and ATM withdrawals.

Fidelity Investments will automatically place your uninvested money into a money market mutual fund, specifically the Fidelity Government Money Market Fund (SPAXX) or the Fidelity Treasury Fund (FZFXX). These funds are not FDIC-insured. However, you can choose to have your uninvested cash placed in an FDIC-insured bank account instead. This is called the FDIC-Insured Deposit Sweep Program. With this program, your uninvested cash balance is swept into an FDIC-insured interest-bearing account at one or more program banks. Your money may be slightly safer in the case of a financial crisis, but you will likely earn less interest.

It's important to note that neither option is completely risk-free. While the FDIC insures your money up to $250,000 per account, money market funds are designed to maintain a value of $1 per share, with a small amount of interest growth. There is a chance, albeit small, that you could lose money in these funds.

Ultimately, the choice between SPAXX, FZFXX, or the FDIC-insured bank account for your core position doesn't matter too much, especially if you plan to keep your cash invested in other funds. However, if you do end up with cash in your core position, and you want to optimize growth, SPAXX will likely provide higher returns if interest rates rise in the future.

The core position is used for processing cash transactions and holding uninvested cash

When you open a Fidelity account, a core position is automatically established for you. This core position is used for processing cash transactions and holding uninvested cash. It is where your money is held until you invest it.

When you sell a security, the proceeds are deposited into your core position. When you buy a security, the cash in your core position is used to pay for the trade. This happens automatically. Your core position is also used for processing electronic funds transfers (EFTs), Fidelity ATM and Visa Gold Card transactions, and payments made through the Bill Pay service.

The core position is also a way for you to earn interest on uninvested cash balances. Interest is calculated daily and credited to your account on the last business day of the month.

There are a few options for your core position, including:

• Fidelity Government Money Market Fund (SPAXX): A taxable money market mutual fund investing in U.S. Government Agency and Treasury debt, and related repurchase agreements. It is intended for investors seeking a high level of current income, consistent with the preservation of capital and liquidity.
• Fidelity Treasury Fund (FZFXX): A taxable money market mutual fund investing in U.S. Treasury securities and related repurchase agreements. It is intended for investors seeking a high level of current income, consistent with the preservation of capital and liquidity.
• Taxable Interest Bearing Cash Option (FCASH): A free credit balance payable to you on demand by Fidelity. Fidelity may use this free credit balance in connection with its business, subject to applicable law. They may also pay interest on this balance, based on a schedule set by Fidelity, which may change over time.

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