Investing in money market funds can seem like a safe harbor for your cash, but it’s crucial to understand the potential risks involved, especially with Fidelity Money Market Funds. Before you decide if these funds are the right choice for your investment strategy, it’s essential to be aware of key factors that differentiate them from typical bank accounts.
One of the most important points to remember is that you could lose money by investing in a money market fund. While Fidelity money market funds aim to maintain a stable $1.00 per share value, this is not guaranteed. Market fluctuations and various economic pressures can impact the fund’s net asset value, meaning your investment is subject to potential losses.
Furthermore, it’s vital to recognize that an investment in Fidelity money market funds is not a bank account. This distinction is critical because money market funds do not carry the same protections as bank deposits. Specifically, Fidelity money market funds are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. This lack of FDIC insurance means that your investment is not protected by the government in the event of fund losses.
Another important consideration is the role of Fidelity Investments, the fund’s sponsor. While Fidelity is a reputable financial institution, it’s important to understand that Fidelity Investments and its affiliates are not required to reimburse the fund for losses. You should not rely on the expectation that Fidelity will step in to provide financial support to the fund, even during periods of significant market stress. It is important to note that while some Fidelity money market funds, specifically government and U.S. Treasury money market funds, will not impose a fee upon the sale of your shares, this is not universally true for all Fidelity money market funds.
To make an informed investment decision, always contact Fidelity for a prospectus, an offering circular, or a summary prospectus if available. These documents contain detailed information about the investment objectives, risks, charges, and expenses associated with Fidelity money market funds. Read it carefully before investing to fully understand the implications and risks involved. Remember, while past performance can be informative, it’s no guarantee of future results, and investment returns and principal value can fluctuate.
