U.S. News & World Report writes "Understanding the Ongoing Money Market Crisis", which says, "Turned away by dismal yields, investors are continuing their mass exodus from money market funds. And as a result of a prolonged period of outflows, the money market industry's assets have potentially dipped below $3 trillion for the first time since 2007.... With yields hovering dangerously close to zero, fund providers have been forced to waive management fees to keep even more investors from fleeing. In 2009, for instance, upwards of 95 percent of retail money market funds set aside at least some of their fees, according to the money market research firm iMoneyNet. But even that hasn't been enough to slow outflows, which amounted to $74 billion in the week that ended Wednesday, according to the Investment Company Institute (ICI). According to ICI, that leaves money market funds with $3.02 trillion in assets under management as of Wednesday. IMoneyNet, meanwhile, puts their total assets at $2.99 trillion as of Tuesday." The piece adds, "Peter Crane, the president and chief executive of the money market tracking firm Crane Data, estimates that as recently as a year ago, providers could expect their annual fees to generate $13 billion per year. In the current environment, that number is around $8 billion. Outflows, as opposed to fee waivers, account for the bulk of the reduction, according to Crane. 'Fee waivers hurt, but not as badly as losing assets,' he says. Still, there have been some indications that the situation could turn around in the coming months. For starters, yields are, at least by certain measures, ever so slightly rebounding. According to Crane, for example, the yields of the 100 largest money market funds have crept up to 0.05 percent recently." In other news, see MutualFundWire's "Shapiro Plans to Boost Money Fund Oversight and Mutual Fund Exams" and The Seattle Times' "Money funds fall below $3 trillion for first time in 2 years", which quotes "Institutional investors may purchase Treasurys directly, rather than through money-market funds, when rates rise because the impact on fund yields is delayed by existing, lower-yielding holdings, said Peter Crane, president of fund-tracking Crane Data."
