Fidelity Investments closed three of its money market funds to new investors Tuesday following the recent reduction in the Federal Reserve rates and record-low yields on U.S. Treasury securities.
The funds, Fidelity Treasury Only Money Market Fund, FIMM Treasury Only Portfolio and FIMM Treasury Portfolio, were closed to new investors because Fidelity believes "restricting inflows will help reduce the number of new Treasury securities that the funds will need to purchase," the manager said in a statement, emailed by spokesman Adam Banker.
Fidelity noted that the restriction of inflows will also positively affect the funds' ability to deliver positive net yields since newer issues generally have lower yields than current holdings.
New investments in the funds that are currently investment options in most defined contribution plans are still allowed, and the funds will remain available for plans currently evaluating the funds as potential options, the statement said.
As of March 31, FIMM Treasury Only Portfolio had $43.8 billion in assets, the FIMM Treasury Portfolio had $36.8 billion and the Fidelity Treasury Only Money Market Fund had $5.1 billion.
