The website RIABiz writes, "Schwab Chases BlackRock Out of the Gate with Money Market ETF." The article states, "Charles Schwab & Co. just filed with the SEC to launch a money market fund (MMF) ETF, which could undercut BlackRock's similar launch six weeks ago -- but not without possibly validating the brazen interloper in the bargain. The Westlake, Texas brokerage is seeking Securities and Exchange Commission (SEC) approval to launch the Schwab Government Money Market ETF (SGVT), by May 28. It's a fairly carbon-copy move of BlackRock's two Feb. 4 ETF releases." (Note: For those attending our Bond Fund Symposium later this week, March 27-28, in Newport Beach, Calif, attendees and Crane Data subscribers may access the BFS Conference Materials here.)
It continues, "Schwab's ETF, following the world's largest asset manager's play for money market assets, makes sense, says Peter Crane, president and CEO of fund data firm Crane Data, in an email exchange. 'Schwab is so big in money markets that they can't afford to ignore BlackRock's experiment in the money market ETF space,' he explains. Yet, Schwab also had plenty of reasons why it might have held fire -- not least that it lends legitimacy to the BlackRock money market funds inside an ETF, according to Zachary Evens, Morningstar analyst for passive strategies."
They write, "Indeed, investors might pose a threat to Schwab by prioritizing ETFs for cash management rather than the classic in-house mutual funds that Schwab offers, according to Matt Apkarian, associate director for product development at Cerulli Associates in Boston. BlackRock's two money market ETFs -- iShares Prime MMF (PMMF) and the iShares Government MMF (GMMF) –- grew by 34% in the past month, managing a combined $174.4 million, up from $130.2 million on Feb. 21.... 'Advisors [could] prefer ETFs so they can consider even cash positions 'equity,' and thus, levy their fees on this portion,' says Crane."
RiaBiz also commentz, "All three of the currently available MMF ETFs, including BlackRock's iShares Prime Money Market ETF (PMMF), its iShares Government Money Market ETF (GMMF), and Texas Capital's Government Money Market ETF (MMKT) charge 0.2%. Both Vanguard Group, which manages $580.7 billion of MMF assets through six funds, and Fidelity Investments, which manages over $1 trillion of MMF assets in 59 funds declined to answer whether they intend to launch their own MMF ETFs."
In related news, Bloomberg writes that, "Fidelity, Schwab Block Orders of BlackRock and Texas Capital ETFs," which tells us, "Fidelity Investments and Charles Schwab Corp. are prohibiting clients from investing in money-market ETFs on their trading platforms, an unusual move for the financial powerhouses who typically permit easy access to funds that already trade on an exchange. The two firms are blocking purchases of three exchange-traded funds offered by BlackRock Inc. and Texas Capital, the first to track money—market securities such as Treasury bills and other government-backed debt in an ETF structure. The new funds serve as a direct challenge to mutual-fund providers, who have long been big, established players in money-market products."
The piece says, "Fidelity and Schwab alone manage trillions of dollars in money-market assets, and this month, Schwab filed plans to launch its own government money-market ETF. A Schwab spokesperson said its decision is consistent with the firm's 'long-standing approach' of only making available Schwab affiliate money-market mutual funds, while a Fidelity spokesperson said this is an extension of the company's policy to 'generally restrict' third-party money-market mutual funds. Yet, the move stands out because trading platforms like Schwab and Fidelity typically don't restrict exchange-traded funds, even if those funds are in competition with existing in-house offerings."
Bloomberg comments, "The restriction underscores how the growth of the ETF and race to put even more novel strategies into the fund is creating more competition throughout the asset management world and introducing wrinkles for issuers seeking to distribute funds.... The ease of listing is changing, though, as ETFs grow. Last year, Fidelity imposed new fees on some ETF firms, in return for listing and maintaining the products on its massive platform. The latest move has taken some investors by surprise."
They add, "A BlackRock spokesperson noted that the firm's iShares money-market ETFs 'unlock access to professional grade cash management strategies in the convenience of the ETF wrapper, providing additional choice and flexibility for investors'.... `Investors have flocked to money markets over the last several years, in large part due to the Federal Reserve's aggressive rate-hiking cycle that sent short-term rates above 5%. While the US central bank has begun to ease monetary policy, these rates are still high enough to keep pulling cash toward money-market funds, which saw their assets rise to an all-time high of more than $7 trillion recently."
For more, see these Crane Data News articles: "Schwab Files for Govt Money Mkt ETF" (3/17/25), "BlackRock Money Market ETFs Go Live; Ondo Finance on Tokenized MMFs" (2/6/25), "VettaFi Discusses Money Market ETFs" (12/11/24), "Dec. MFI: Assets Break $7.0 Tril; Top 10 of 2024; BlackRock MM ETFs" (12/6/24), "BlackRock Debuts First Euro MM ETF" (12/5/24), "FT on BlackRock Money Market ETFs" (11/18/24), "November BFI: Bond Funds Hit by Election; ETF Trends MM Substitutes" (11/15/24), "BlackRock Files for Money Market ETFs" (11/12/24) and "Texas Capital Launches Govt MM ETF" (9/26/24).
In other news, Investment News published the brief, "BNY Pershing's new cash sweep charge to hit RIAs first." They explain, "BNY Pershing's plans to create a new charge on client cash held in accounts of RIAs that custody with Pershing and broker-dealers that use it for clearing are taking shape, with senior industry executives saying the clearing and custody giant is planning to roll out the new charge first to registered investment advisors."
The piece says, "InvestmentNews reported in February that BNY Pershing was evaluating plans to create a new charge, akin to a tax, on cash held by its broker-dealer clients. BNY Pershing was discussing with broker-dealers that use its platform plans to get first dibs on cash -- up to $10,000 -- held in their customers' accounts. In all likelihood, BNY Pershing will introduce the new cash sweep plan initially with registered investment advisors that use its platform and then roll out the charge to broker-dealers at some point in the future, said those industry executives, who spoke confidentially to InvestmentNews about the matter."
It adds, "BNY Pershing's intention is to sweep the first $10,000 held in a broker-dealer or RIA's customer's account into a money market fund or similar cash product that it controls. The interest rate for the customer's cash -- as currently discussed by Pershing -- will be 2.25 percent annually. BNY Pershing, however, would not rebate, meaning share, any additional interest it receives from borrowers when it lends the cash, potentially eating into a broker-dealer's profitability. Clearing firms give broker-dealer rebates for cash sweep accounts in the range of 50 basis points to 100 basis points, which is credited back to the broker-dealer."
Finally, they write, "Toward the end of last year, Fidelity told registered investment advisors it would begin to default all non-retirement cash to an in-house option in 2025. Brokerage firms in particular have been criticized for having low rates in their sweep options while benefiting from margin loans they make and the spreads they retain from that cash. There have been numerous lawsuits filed over the issue, and companies have responded to the pressure by increasing the rates they pay clients for those cash positions."
