Federated Investors, the third largest money fund manager, reported Q1 earnings last night and revealed "continued flows into money market funds" in the first quarter and relatively minor damage from fee waivers used to maintain zero or positive yields. Earlier this week, BlackRock, the fourth-largest money fund manager, reported large outflows from its money funds in its earnings release. This was surprising given that overall money fund assets continued to increase, albeit barely, in the period. But as April outflows pushes the YTD asset totals negative (see our "Link of the Day"), the current quarter may not be so mixed. Federated will host a conference call at 9am Friday morning.)
Federated's press release says, "Money market assets in both funds and separate accounts were $360.1 billion at March 31, 2009, up $82.6 billion or 30 percent from $277.5 billion at March 31, 2008 and up $4.4 billion or 1 percent from $355.7 billion at Dec. 31, 2008. Money market mutual fund assets were $328.8 billion at March 31, 2009, up $86.5 billion or 36 percent from $242.3 billion at March 31, 2008 and up $1.5 billion from $327.3 billion at Dec. 31, 2008."
The Pittsburgh-based company reported "Increases in revenue of $59.9 million from higher average money market managed assets" and a decrease of "$9.7 million in fee waivers recorded in Q1 2009 on certain money market funds in order to maintain zero to positive net yields." It explains, "These fee waivers were offset by a related reduction in marketing and distribution expenses of $4.6 million such that the net impact on operating income was a decrease of $5.1 million."
Federated, which in Q1 2009 "derived 71 percent of its revenue from money market assets," adds the disclaimer, "Fee waivers to produce positive or zero net yields may increase and such increases could be significant. The specific level of these waivers will be determined by a variety of factors including market yield levels for money market investments, asset levels within money market funds, changes in the mix of money market assets by type of fund, changes in the expense levels of money market funds and the willingness of the fund adviser to sustain these waivers."
Look for comments from Federated and look for our analysis of quarterly asset growth and money fund market share in our quarterly Money Fund Intelligence Distribution Survey publication early next week.
