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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: upanddown who wrote (83265)4/19/2007 11:29:20 AM
From: Wyätt Gwyön  Read Replies (1) of 206326
 
the currency ETFs are not a good comparison to the MMF because the main determinant of ETF return will be currency fluctuations, not interest--it is for the currency hedge (not yield) that one buys things like CHF, JPY.

FDRXX is no better than the 90-day UST yield and worse than the 6-month yield ustreas.gov

what's more, FDRXX yield fluctuates constantly, whereas USTs lock in a rate for the period. if Bernanke starts cutting because he is scared of a housing cr*sh, FDRXX yield will plummet immediately. this is what happened when Greenspan started lowering rates in the early 2000s.

more importantly, you should ask how Futility can provide a 5% yield on FDRXX and still afford to pay itself 45bps. they do it because they invest in assets which are inferior to USTs. my general attitude is to either go for it or not go for it. i.e., invest in a manifestly risky asset and receive a handsome return for it (or at least have a handsome prospective return, because it might not work out), OR be in an absolutely safe investment. Buffett, who is someone we should all pay attention to, has said repeatedly that he either goes for USTs or risk assets. i don't see Buffett putting billions into toxic waste just to squeeze 20bp above USTs. but that's what these MMFs seem to do.
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