Angular Material md-autocomplete with md-chips doesn't clear search if blank

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I am using md-autocomplete inside an md-chips. If I type 'a' and then select from the list, the control works correctly.

however, if i don't type any search string and simply select from the list (because i want min-length=0), then the control shows the chip and also shows the contents as my new search string??

http://jsfiddle.net/3t715vLw/

<md-autocomplete md-min-length="0" 
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Babajide Fowotade On BEST ANSWER

In your code take this part out md-item-text="item" jsfiddle