A Smarter Alternative To Money Market Funds
By Paul Lamont
June 10, 2008
Investors are rushing into cash as the financial system is deleveraging. But what form of cash will preserve investor’s wealth? ‘Cash-like’ instruments, such as adjustable rate securities, have become illiquid with the credit markets. Some money market funds, full of asset-backed commercial paper, have had to be supported by their sponsors. Even bank deposits could be unavailable for a time in an FDIC backlog (they expect to be quite busy as their recent hiring suggests).
But what about U.S. Treasury money market funds? We have three reasons why our U.S. Treasury Bill Account is a smarter alternative for your cash than a U.S. Treasury money market fund.
According to Lipper, the average expense ratio for U.S. Treasury Money Market funds is currently 0.76%. Our annual management fee is 0.50%. It is always important to keep costs down, but more especially in a low rate environment. However cheaper does not always mean better. That’s why we have also simplified and improved the structure for holding U.S. Treasury Bills.
When you buy a U.S. Treasury money market fund, you own the fund shares, not the underlying Treasury Bills in the fund. While this is usually a minor detail, in times of financial system stress ownership claim becomes very important. Liquidity problems at a fund company could arise and the fund family could theoretically be forced to halt redemptions. So in this case, simpler is stronger. Instead of having barriers between you and your funds, we purchase U.S. Treasury Bills directly for your account at a conservative wealth management firm. When you open a LTA U.S. Treasury Bill Account, you have a greater claim to a purer form of cash.
Private Wealth Manager
When you place assets in our care, you also gain a personal advisor that is working for you. We are easily accessible (by phone or email, whichever you prefer) to discuss financial trends and offer a historical perspective on the latest economic news. Try calling a Wall Street money market fund manager! As a client, you will also receive our Investment Analysis Report free of charge. In this monthly newsletter, we highlight investments which hedge investors and business owners from the effects of a bear market.
For investors seeking principal protection, the LTA U.S. Treasury Bill Account provides a low cost, simpler option to U.S. Treasury money market fund shares. With the addition of personalized service from a private wealth manager, you will see why our clients have chosen us to assist them in protecting their wealth. If you are interested in a smarter alternative for your cash, please complete our Inquiries form and we will contact you promptly.
At Lamont Trading Advisors, we provide wealth preservation strategies for our clients. For more information, contact us. Our monthly Investment Analysis Report requires a subscription fee of $40 a month. Current subscribers are allowed to freely distribute this report with proper attribution.
***No graph, chart, formula or other device offered can in and of itself be used to make trading decisions. This newsletter should not be construed as personal investment advice. For informational purposes only.
Copyright ©2008 Lamont Trading Advisors, Inc. Paul J. Lamont is President of Lamont Trading Advisors, Inc., a registered investment advisor in the State of Alabama. Persons in states outside of Alabama should be aware that we are relying on de minimis contact rules within their respective home state. For more information about our firm visit www.LTAdvisors.net, or to receive a copy of our disclosure form ADV, please email us at email@example.com, or call (256) 850-4161.