Gyroscopic Investing

This might be a topic for Other Discussions but I decided to post it here as it is relevant to buying PRPFX at Fidelity. I rarely read my consolidated Fidelity statements (kudos to PP), but today I did and I'm glad I did.

Here's a quote from the fine print at the bottom of the statement:

1. Customers are no longer required to hold an NTF fund for 180 days in order to avoid a short-term trading fee. For new and existing positions in NTF funds, you will now only be charged the fee when you sell or exchange shares held less than 60 days.

2. Customers that have exceeded 15 short-term trades in NTF funds within a 12-month period will no longer be charged a transaction fee on future trades in NTF funds. This fee has also been eliminated for any customers who are currently being charged.

For more information, please refer to the revised Fee Schedule, which can be found at https://www.fidelity.com/welcome/pricing-fees.


I use PRPFX as an accumulation tool in my IRAs. I also use it as a short/medium-term saving bucket in my taxable account (think downpayment, vacations, etc.). Not that I often experienced a need to sell PRPFX often, but from the money management standpoint it's nice that now I don't have to wait 6 months until I can sell a position and invest cash (or withdraw it). 60 days is quite reasonable, not that different from the 30-days requirement for Fidelity funds. Since PRPFX, with all it's drawbacks, is "PP-like" it's great to be able to save in a PP rather than keeping money in the core MMF earning 0.

As a side note, it really looks like Fidelity is trying to promote trading. Although the customers don't pay when they buy/sell NTFs I think Fidelity is getting some sort of kickback from the fund providers every time a fund is bought.

I bought into PRPFX in January of last year and then have been buying in spots through the year.

I went to sell some last month and they popped up and told me I would have to pay the fee because it hadn't been held for 60 days. Apparently when you sell with them it's LIFO (last share in, first share out). Okay, so I cancelled the order, getting the message loud and clear. I do like Fidelity but I can also see that they play the same "Heads we win, tails you lose" game as everybody else so beware.

jackh wrote: I bought into PRPFX in January of last year and then have been buying in spots through the year.

I went to sell some last month and they popped up and told me I would have to pay the fee because it hadn't been held for 60 days. Apparently when you sell with them it's LIFO (last share in, first share out). Okay, so I cancelled the order, getting the message loud and clear. I do like Fidelity but I can also see that they play the same "Heads we win, tails you lose" game as everybody else so beware.

It depends on the type of account: by default Fido uses Average Cost - Single Category cost basis accounting method for mutual funds, which basically means the oldest shares would be sold first. For IRA it doesn't matter, but in a taxable account you can (and should!) choose Specific Shares method which allows to choose specific tax lots when selling.

Here's the help section:
https://scs.fidelity.com/webxpress/help ... ml#methods

I guess the TF in NTF stands for Traded Fund.  I assume the N means not a Fidelity fund but what does it stand for?

dualstow wrote: I guess the TF in NTF stands for Traded Fund.  I assume the N means not a Fidelity fund but what does it stand for?

NTF means "No Transaction Fee". These funds are non-Fidelity funds that can be bought and sold without fee. But you should hold them for 60 days, otherwise a short-redemption fee will be charged at the time of sale. For most Fidelity funds the minimum holding period is 30 days, although some funds (Spartan index funds, real estate etc.) have 90-days holding period.

Regular non-NTF funds are assessed $75 purchase fee (no fee for selling).

ah, of course. Thank you!

Thanks. Learn something new every day.

Will be getting out of PRPFX in January any way though so it'll be a non-issue from now on.

foglifter wrote: It depends on the type of account: by default Fido uses Average Cost - Single Category cost basis accounting method for mutual funds, which basically means the oldest shares would be sold first. For IRA it doesn't matter, but in a taxable account you can (and should!) choose Specific Shares method which allows to choose specific tax lots when selling.

Here's the help section:
https://scs.fidelity.com/webxpress/help ... ml#methods