T-bills…Treasury Direct vs Fidelity

[Lynneandjim]

I am brand new here, and have two questions. First, when I check the US Treasury’s daily listing of rates they pay it appears that Fidelity, on a purchase of new 13 week bills at auction, are predicted to pay less (5.1 vs 4.9%). Does Fidelity take a cut on these auction sales? Second, I want to roll a substantial amount over every quarter. Fidelity says they charge $1 per bond. Do they charge that $1 every time?

[LookinAround]

Fidelity $1 fee applies to corporate bonds not treasuries. You should get the same auction price buying from TD or Fidelity. At TD you can buy treasuries in multiples of $100 vs Fidelity it's multiples of $1,000.

I keep my iBonds at TD but prefer Fidelity for Treasuries so money is all in one spot and if you use money management software (as I use Quicken) transactions and price changes automatically recorded (they don't interface with TD)

[secondopinion]

For Fidelity, they do not make money on auctions or even the buy/sell of treasuries. It is a great free service for cash accounts.

If one has a margin account, it helps them have higher quality collateral if you borrow.

[Katietsu]

First, when I check the US Treasury’s daily listing of rates they pay it appears that Fidelity, on a purchase of new 13 week bills at auction, are predicted to pay less (5.1 vs 4.9%).

This is the key. For a new bill to be purchased at auction, no one knows the rate. I do not use Fidelity myself, but I have heard their predictions trend on the low side of actual results. Maybe they are just trying to avoid complaints from clients whose purchased bill ends up with a rate lower than the prediction.

[brockmari]

I keep my iBonds at TD but prefer Fidelity for Treasuries so money is all in one spot and if you use money management software (as I use Quicken) transactions and price changes automatically recorded (they don't interface with TD)

I know this is an old post, but the topic is pertinent so thought I would take a shot to ask. I also use Quicken and a year or so ago set up some T-bill ladders at Fidelity. I actually do not like that every time a T-bill rolls, it creates a new security. I don't really care about the daily price changes as I always hold T-bills until maturity. Just wondering if anyone has come up with a cleaner way to track these in Quicken when you don't care about the daily valuations? Yesterday I got the idea of setting up a rule so that anytime Quicken sees a Treasury while downloading, it will rename it to "13-week T-bill". I'm hoping that will avoid creating all the new securities and if I buy some other duration I can change the name manually. I am currently changing the names manually after the new T-bills are downloaded but that does not prevent Quicken from creating new securities at every reinvestment. And sometimes Quicken gets confused and the cusip shows up again in my account along with the generic named T-bill. I also have T-bill ladders at Treasury Direct which I track in Quicken completely manually. It does not appear possible to have Quicken download only the mutual fund data while ignoring the T-bills within the same brokerage account. I suppose I could create a separate brokerage account to hold the T-bills, but then there's not much benefit over just keeping them all at TD.

[LilyFleur]

I like the new Fixed Income Dashboard at Fidelity and find it useful. You can get there from the "Positions" screen.

[Pocanutin]

Second this..Fixed income Dash Board Fidelity

[Cautious Investor]

I keep my emergency fund in rolling 4 week T-bills and hold them through my brokerage (in my case Vanguard, in your case Fidelity) because they are much more accessible. Through my brokerage I can buy/sell the day of the transaction and transfer sales to my bank account as soon as they settle.

I do buy T-bills on TD with excess cash since I can transact smaller amounts but nothing that I may need imminently. On TD, once you have made a purchase, you must wait until the auction occurs which can be weeks after the transaction, and if you sell before maturity you must transfer the money to a brokerage which can take weeks to months.

[LookinAround]

I keep my iBonds at TD but prefer Fidelity for Treasuries so money is all in one spot and if you use money management software (as I use Quicken) transactions and price changes automatically recorded (they don't interface with TD)

I know this is an old post, but the topic is pertinent so thought I would take a shot to ask. I also use Quicken and a year or so ago set up some T-bill ladders at Fidelity. I actually do not like that every time a T-bill rolls, it creates a new security. I don't really care about the daily price changes as I always hold T-bills until maturity. Just wondering if anyone has come up with a cleaner way to track these in Quicken when you don't care about the daily valuations? Yesterday I got the idea of setting up a rule so that anytime Quicken sees a Treasury while downloading, it will rename it to "13-week T-bill". I'm hoping that will avoid creating all the new securities and if I buy some other duration I can change the name manually. I am currently changing the names manually after the new T-bills are downloaded but that does not prevent Quicken from creating new securities at every reinvestment. And sometimes Quicken gets confused and the cusip shows up again in my account along with the generic named T-bill. I also have T-bill ladders at Treasury Direct which I track in Quicken completely manually. It does not appear possible to have Quicken download only the mutual fund data while ignoring the T-bills within the same brokerage account. I suppose I could create a separate brokerage account to hold the T-bills, but then there's not much benefit over just keeping them all at TD.

My understanding is Quicken uses the CUSIP to try and determine whether it's a new security or matches one that already exists. I don't know if a renaming rule will work.

In practice, each time Fidelity does a rollover and issues a new Tbill, Quicken presents a screen asking if the Tbill is a new security or matches one already created in Quicken. I'm guessing you can rename an existing Tbill to a generic name, then tell Quicken it's the existing match when asked. If you bring up the Security List screen, uncheck "Download Quote" for the generic Tbill so it doesn't try to update it with a quote. Don't know if that will work.. just my best guess

[brockmari]

My understanding is Quicken uses the CUSIP to try and determine whether it's a new security or matches one that already exists. I don't know if a renaming rule will work.

In practice, each time Fidelity does a rollover and issues a new Tbill, Quicken presents a screen asking if the Tbill is a new security or matches one already created in Quicken. I'm guessing you can rename an existing Tbill to a generic name, then tell Quicken it's the existing match when asked. If you bring up the Security List screen, uncheck "Download Quote" for the generic Tbill so it doesn't try to update it with a quote. Don't know if that will work.. just my best guess

Thanks for the response!

What I have found was that by the time the Quicken screen is presented asking if the CUSIP is new, the new CUSIP security has already been created in my security list even if I match it to the existing generic T-bill. I was looking to avoid that since it creates additional maintenance tasks, as you mentioned having to uncheck "download quotes" and hiding the CUSIP in the security list which was getting quite cluttered with all the T-bills. And sometimes when the T-bills are sold for the reinvestment the CUSIP returns again in my Quicken account as a sale while the associated generic T-bill remains as a lot with the original purchase date under my generic T-bill security. I can fix that by editing the sale and renaming the CUSIP to the generic security again, but I'd rather not have to do that.

At any rate, I am in the midst of an experiment with a renaming rule where anything that gets downloaded that contains "...TREAS BILLS ZERO CPN..." gets automatically renamed to my generic 13 week T-Bill security. I bought some new T-Bills and looks like it worked so far and no new securities were created. Will see if that continues when the T-bills are sold. The limitation with this is that I still have to rename some of the T-bills if they are a different duration than my generic T-bill, since there is nothing in the CUSIP or description that distinguishes the duration. So I will be watching to see if my 4 week T-bill gets sold as a 13-week T-bill. Even if it does I will at least have stopped the explosion of my securities list with new CUSIPs.

[LookinAround]

Thanks for the response!

What I have found was that by the time the Quicken screen is presented asking if the CUSIP is new, the new CUSIP security has already been created in my security list even if I match it to the existing generic T-bill. I was looking to avoid that since it creates additional maintenance tasks, as you mentioned having to uncheck "download quotes" and hiding the CUSIP in the security list which was getting quite cluttered with all the T-bills. And sometimes when the T-bills are sold for the reinvestment the CUSIP returns again in my Quicken account as a sale while the associated generic T-bill remains as a lot with the original purchase date under my generic T-bill security. I can fix that by editing the sale and renaming the CUSIP to the generic security again, but I'd rather not have to do that.

At any rate, I am in the midst of an experiment with a renaming rule where anything that gets downloaded that contains "...TREAS BILLS ZERO CPN..." gets automatically renamed to my generic 13 week T-Bill security. I bought some new T-Bills and looks like it worked so far and no new securities were created. Will see if that continues when the T-bills are sold. The limitation with this is that I still have to rename some of the T-bills if they are a different duration than my generic T-bill, since there is nothing in the CUSIP or description that distinguishes the duration. So I will be watching to see if my 4 week T-bill gets sold as a 13-week T-bill. Even if it does I will at least have stopped the explosion of my securities list with new CUSIPs.

Thanks for the update! Please post another update sometime in the future. I may follow in your footsteps and try the same at some point. Thanks!

[Degraw368h]

Fidelity does not take a cut on Treasury auction sales; the rates you see may reflct slight timing differences in updates.

Regarding the $1 fee, Fidelity charges this for each bond in their Auto Roll service, applied every time a bond is rolled over. This fee structure may influence your decision dependng on the size and frequency of your investments.

[brockmari]

Fidelity does not take a cut on Treasury auction sales; the rates you see may reflct slight timing differences in updates.

Regarding the $1 fee, Fidelity charges this for each bond in their Auto Roll service, applied every time a bond is rolled over. This fee structure may influence your decision dependng on the size and frequency of your investments.

That is good to know. I'm now embarrassed for not noticing that earlier. For other reasons I was already going to start moving my T-bill ladders to TD and this reinforces that decision. Unfortunately that is not an option for tax deferred accounts.

[LookinAround]

Fidelity does not take a cut on Treasury auction sales; the rates you see may reflct slight timing differences in updates.

Regarding the $1 fee, Fidelity charges this for each bond in their Auto Roll service, applied every time a bond is rolled over. This fee structure may influence your decision dependng on the size and frequency of your investments.

That is good to know. I'm now embarrassed for not noticing that earlier. For other reasons I was already going to start moving my T-bill ladders to TD and this reinforces that decision. Unfortunately that is not an option for tax deferred accounts.

That's incorrect. Fidelity doesn't charge a fee for its autoroll service. It only applies its standard commission and fee schedule. Its fee for treasuries bought at auction is $0. Fidelity does indicate a $1 markup on corporate bonds.
From the Fidelity Autoroll Agreement

Fees
There are no additional service fees applied through the Auto Roll Service. Automatic reinvestments
completed through the service are subject to the same commission schedule for purchases of new
issue CDs and online U.S. Treasury security reinvestments completed outside the Auto Roll Service.

@brockmari
Personally, I only keep ibonds at TD. If you ever deal with TD by mail (e.g., submitting forms), it can take months to complete. Contacting TD by phone can be lengthy hold times. The one time I had the misfortune of calling TD, I was on hold for just under three hours. On the one hand, I believe it was at the time ibonds were paying 9.6%, so they were experiencing a rush of calls. On the other hand, the number of government workers is being slashed. This can't have a positive affect on TD response times.

If you search, you should find several threads on BH of experience with TD wait times.

[brockmari]

Personally, I only keep ibonds at TD. If you ever deal with TD by mail (e.g., submitting forms), it can take months to complete. Contacting TD by phone can be lengthy hold times. The one time I had the misfortune of calling TD, I was on hold for just under three hours. On the one hand, I believe it was at the time ibonds were paying 9.6%, so they were experiencing a rush of calls. On the other hand, the number of government workers is being slashed. This can't have a positive affect on TD response times.

If you search, you should find several threads on BH of experience with TD wait times.

Thanks, yes I’m aware of all the problems with TD. Personally, I have been using TD for many years. The only time I’ve had to contact them was a few years ago when I wanted to change my main funding source to Fidelity. I wanted to avoid mailing in forms and saw on here that you could also call. I steeled myself for an hours wait but got lucky and got to a person within about 5 minutes who made the change for me. I know that is unusual, but I like some of the things I can do online with TD and hoping that I won’t have much need for forms or phone calls. I wouldn’t purchase any long term treasuries with TD for that reason, because I understand that if you want to sell early it involves forms to transfer them to a brokerage. I don’t expect to ever want to sell a T-bill early. About the only scenario that concerns me is in the event something were to happen to me, my other half will have to deal with the paperwork to move our jointly owned T-bills and I-bonds. At least with the T-bills, the reinvestments are limited to 2 years, so I think after 2 years the T-bills would start showing up in the joint brokerage account as the reinvestment limit is reached.

The risk of potential paperwork challenges did drive me to consider moving all our T-bill ladders to Fidelity, but I discovered on another thread that if you use Fidelity’s auto-roll, the order for your new T-bill is placed in advance and additional funds in your money market accounts is frozen until the proceeds of the previous T-bill settles. With auto-roll T-bills maturing weekly, that leaves only a limited window of time each week where you can access any proceeds or interest payments you might want to collect, unless you keep a buffer of cash in the Fidelity account large enough to cover any T-bills that will roll that week. But then I wouldn’t be able to touch the cash buffer. It’s OK for my tax deferred accounts but I prefer easier access to my taxable T-bill ladders. If Fidelity were ever to fix the auto-roll issue then I would switch, but right now it’s a deal breaker for me. The other brokerage that I'd be willing to use does not offer auto-roll for T-bills.

[brockmari]

Duplicate post deleted

[anoop]

First, when I check the US Treasury’s daily listing of rates they pay it appears that Fidelity, on a purchase of new 13 week bills at auction, are predicted to pay less (5.1 vs 4.9%).

This is the key. For a new bill to be purchased at auction, no one knows the rate. I do not use Fidelity myself, but I have heard their predictions trend on the low side of actual results. Maybe they are just trying to avoid complaints from clients whose purchased bill ends up with a rate lower than the prediction.

This is correct. I've been buying for years and just ignore the rate that Fidelity shows in their purchase screen. Instead I check rates at Bloomberg and the purchase usually prices closer to that at whatever the auction value is.
https://www.bloomberg.com/markets/rates ... t-bonds/us

[anoop]

The risk of potential paperwork challenges did drive me to consider moving all our T-bill ladders to Fidelity, but I discovered on another thread that if you use Fidelity’s auto-roll, the order for your new T-bill is placed in advance and additional funds in your money market accounts is frozen until the proceeds of the previous T-bill settles. With auto-roll T-bills maturing weekly, that leaves only a limited window of time each week where you can access any proceeds or interest payments you might want to collect, unless you keep a buffer of cash in the Fidelity account large enough to cover any T-bills that will roll that week. But then I wouldn’t be able to touch the cash buffer. It’s OK for my tax deferred accounts but I prefer easier access to my taxable T-bill ladders. If Fidelity were ever to fix the auto-roll issue then I would switch, but right now it’s a deal breaker for me. The other brokerage that I'd be willing to use does not offer auto-roll for T-bills.

Does it not use the margin account balance for this? I place trades manually and when I place a trade, I get a "margin balance may start to accrue interest if not paid" notice which ends up being a nothing burger (because the original t-bill matures).

[brockmari]

The risk of potential paperwork challenges did drive me to consider moving all our T-bill ladders to Fidelity, but I discovered on another thread that if you use Fidelity’s auto-roll, the order for your new T-bill is placed in advance and additional funds in your money market accounts is frozen until the proceeds of the previous T-bill settles. With auto-roll T-bills maturing weekly, that leaves only a limited window of time each week where you can access any proceeds or interest payments you might want to collect, unless you keep a buffer of cash in the Fidelity account large enough to cover any T-bills that will roll that week. But then I wouldn’t be able to touch the cash buffer. It’s OK for my tax deferred accounts but I prefer easier access to my taxable T-bill ladders. If Fidelity were ever to fix the auto-roll issue then I would switch, but right now it’s a deal breaker for me. The other brokerage that I'd be willing to use does not offer auto-roll for T-bills.

Does it not use the margin account balance for this?

Only if you have no other cash in the account. And it's only for auto-roll, not manual. As soon as there is any cash then it will be frozen up to the amount of the pending T-bill order. There is another informative thread on this topic here: viewtopic.php?p=8293488#p8293488. It's suggested that a workaround is to set up a separate brokerage account just for T-bills. The flaw in that workaround is that you are still limited in any cash transactions involving accessing proceeds, interest, or depositing new money to buy a new T-bill. I had thought of purchasing new T-bills in another account and transferring them over to a dedicated T-bill account, but in that scenario the auto-roll gets cancelled upon transfer and cannot be reactivated. (Per one of the posted comments. I did not try it and don't plan to.)