What is TFDXX?
TFDXX, or BlackRock Liquidity FedFund Institutional, is a money market fund that seeks to provide current income with liquidity and stability of principal. The fund invests in U.S. treasury bills, notes, and other obligations issued or guaranteed by the U.S. government, its agencies, or instrumentalities
Money market funds are mutual funds that invest in short-term debt securities that have low credit risk and high liquidity. Money market funds aim to maintain a stable net asset value (NAV) of $1 per share and pay dividends to shareholders. Money market funds are regulated by the Securities and Exchange Commission (SEC) under Rule 2a-7 of the Investment Company Act of 1940.
TFDXX is a government money market fund, which means that it invests at least 99.5% of its total assets in cash, government securities, and/or repurchase agreements that are collateralized fully by government securities or cash. Government money market funds are exempt from the liquidity fees and redemption gates that may apply to other types of money market funds under certain circumstances.
What are the features and benefits of TFDXX?
TFDXX is a fund that offers several features and benefits for investors who are looking for a safe and liquid place to park their cash. Some of these features and benefits are:
- High credit quality: TFDXX invests in securities that are issued or guaranteed by the U.S. government, which have the highest credit rating and the lowest default risk. The fund has received the highest ratings from Moody’s (Aaa-mf) and S&P (AAAm) for its credit quality.
- Low interest rate risk: TFDXX invests in securities that have short maturities, which means that they are less sensitive to changes in interest rates. The fund has a weighted average maturity (WAM) of 21 days and a weighted average life (WAL) of 55 days as of August 9, 2023. WAM measures the average time until the securities in the fund mature or are repriced, while WAL measures the average time until the securities in the fund mature or are redeemed.
- High liquidity: TFDXX invests in securities that have high liquidity, which means that they can be easily bought or sold in the market without affecting their price. The fund has a high percentage of daily liquid assets (83.6%) and weekly liquid assets (90.7%) as of August 8, 2023. Daily liquid assets are cash, U.S. treasury securities, or securities that mature or are subject to a demand feature within one business day. Weekly liquid assets are cash, U.S. treasury securities, certain other government securities, or securities that mature or are subject to a demand feature within five business days.
- Competitive yield: TFDXX pays dividends to shareholders on a daily basis, based on the income earned by the fund. The fund has a 7-day SEC yield of 5.20% as of August 9, 2023. The 7-day SEC yield is an annualized measure of the net income earned by the fund over the past seven days, after deducting expenses.
- Low cost: TFDXX has a low expense ratio of 0.17% as of August 9, 2023. The expense ratio is the percentage of the fund’s assets that are used to pay for its operating expenses, such as management fees, administrative fees, and distribution fees.
Conclusion
TFDXX is a money market fund that invests in U.S. treasury bills, notes, and other obligations issued or guaranteed by the U.S. government, its agencies, or instrumentalities. The fund seeks to provide current income with liquidity and stability of principal. The fund offers several features and benefits for investors who are looking for a safe and liquid place to park their cash, such as high credit quality, low interest rate risk, high liquidity, competitive yield, and low cost. TFDXX is a fund that you should consider if you want to invest in U.S. government securities with minimal risk and maximum convenience.
