Fidelity Investments, the largest manager of money market mutual funds with over $490 billion (according to Crane's Money Fund Intelligence XLS as of 2/28), mailed its annual "2009 Shareholder Update" earlier this week. The mutual fund behemoth says it ended 2009 with $1.502 trillion in assets under management; money funds represented almost $488 billion, or 32.5% of this total. We excerpt from the annual report, which contains a number of comments and statistics on money funds, below.
Chairman Edward C. Johnson 3d writes in his annual letter, "In 1974, we started offering money market funds to retain assets when the stock market was floundering. We were among the first to offer a stable $1 net asset value (NAV), and we added a check-writing feature to our money funds, figuring that if we made it easy for people to get their money out, they'd be more likely to put it in."
Johnson says, "Today, we believe -- unlike the views of some competitor institutions -- that money market mutual funds perform a critical function in the U.S. economy. Having an intelligently managed and competitive marketplace for the investment savings of institutions and individuals -- which comprises more than just the banking industry -- should lead to a healtier investment environment and better serve the financial interests of the country."
He continues, "The right amount of intelligent regulation of money market mutual funds can only be a major help to both investors and those responsible entities that need cash. A healthy marketplace leads to a fair marketplace, and Fidelity is generally supportive of industry and regulatory efforts aimed at improving the overall safety and liquidity of money market funds. However, we also believe that regulatory changes should be carefully weighed so as not to undermine the potential benefits of money market funds."
Finally, in its "Money Market Funds" commentary, the annual report says, "Fidelity's money market funds outpaced at least 80% of their competition for the 14th consecutive year. Liquidity demands, interest rate volatility and rcredit quality improved in 2009, creating a more stable environment for Fidelity's money market fund managers. The group once again successfully achieved its two primary goals -- preserving the $1 net asset value and maintaining shareholder liquidity."
