Fidelity Investments on Wednesday confirmed a report from National Public Radio that it was no longer holding U.S. Treasury notes that mature in October.
A spokesman for the mutual fund and investment giant – which reported nearly $4.2 trillion in assets under administration on June 30 – emphasized that the firm expected Congress would resolve the current legislative impasse in time to prevent any significant default, but added that it had made adjustments to its investment mix.
“We’re actively monitoring the ongoing debt ceiling discussions, and expect that Congress will take the steps needed to increase the debt ceiling and avoid default,” wrote Fidelity spokesman Steve Austin in a response to an emailed question.
“While we have confidence that the U.S. will make payments on all U.S. Treasuries, to avoid even the remote possibility of minor delays in payment, we have made small adjustments to our money market fund portfolios,” Austin said.
“Fidelity’s money market funds do not own any securities issued by the U.S Treasury that mature in late October and we have increased the amount of cash in our U.S. Treasury funds,” he wrote, adding: “These changes affect only a very brief period of time and a small percentage of our U.S. Treasury holdings.”
Austin reported that executive at Boston-based Fidelity – which manages 545 mutual funds – had started discussing the sale of October-maturing Treasury notes last week, but he said the firm does share details of the trades it makes for its funds.
He also pointed out that the firm has stress tested its money market mutual funds and found them sufficiently strong.
“Stress testing is an ongoing process, which we review and update as part of our portfolio management strategies. In those tests, we take into account a variety of potential market scenarios and outcomes,” he said.