savings

4 questions for money market fund shoppers

Still, a prospectus can be dated and fees may still change from day to day, so check the company website for updates.

Are any expense ratios waived? To guard against negative yields, which can happen when fund expenses are higher than yields, Schwab is waiving its money market expense ratios. For example, its Value Advantage Money Fund has a 0.45 percent expense ratio. That could translate into a negative return without the waiver. The catch is that Schwab waivers can be dissolved at any time.

Are there extra fees? Money market funds aren't good transaction accounts because they may be chock-full of fees, including transaction fees, low-balance fees or check-writing fees.

"Call a rep and ask when you'll be hit with check-writing fees," Synergos Financial's Laura says. "With checking, they may include six checks, but the next one may cost you $2."

Some fund companies also charge a $20 annual account service fee that can chew up yields, Laura says.

Bank money markets also may charge fees when your account goes below a minimum balance. Bank of America charges $12 per month if your money market account dips below $2,500.

What types of securities does your fund hold? Money markets funds have different themes. Some invest in Treasuries, others in municipal bonds or other securities that mature in less than 90 days. So expense ratios can vary widely, depending on the securities held.

"The cheapest funds hold U.S. government Treasuries because they take little research work compared to munis," Malhotra says. Treasuries have one single credit rating, but municipal bond credit ratings vary widely, including from state to state, and take more time to research.

Laura advises investors to stick with money market funds holding Treasuries with low expense ratios. For example, Vanguard's Federal Money Market Fund, which mostly invests in government obligations, doesn't have an expense ratio or redemption fees, which may be charged when you withdraw money from your account.

A redemption fee, or "short-term trading fee," may be charged at the time you sell your shares, just like a back-end load. This is limited, by federal regulation, to 2 percent of your investment. But because it's not included in the expense ratio, remember to add it into your calculations if your fund has one.

"Most people are overly concerned about yield, but that only matters when you're talking about parking hundreds of thousands of dollars," says Peter Crane, publisher of Money Fund Intelligence.

These days, low fees trump yield.

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