​

A press release sent out yesterday entitled, "Fitch Updates Global Money Market Fund Criteria, Core Ratings Framework Unchanged," says, "Fitch Ratings has published updated global criteria for rating money market funds (​MMFs). The core analytical framework remains unchanged, and Fitch does not expect any ratings changes as a result of the updated criteria. The updated criteria makes one notable change in relation to Fitch'​s treatment of highly-​rated sovereign, government agency and supranational securities with respect to repurchase agreement collateral and portfolio liquidity."

The release adds, "​Other and more marginal criteria adjustments include clarification on how Fitch treats MMFs' direct and collateralized exposures to a fund'​s sponsor or parent, which is mostly relevant for European MMFs, more detailed guidelines on investments denominated in a currency other than that of the fund'​s base currency and related currency hedging, as well as guidelines on the fund'​s custodian bank. Fitch'​s global MMF criteria focuses on MMFs that seek to achieve principal preservation and provide shareholder liquidity through active management of credit, market, and liquidity risks."

Fitch adds, "MMF ratings are assigned to MMFs that operate as constant net asset value (​CNAV) funds as well as certain European variable net asset value (​VNAV) funds." The full report is entitled, "Global Money Market Fund Rating Criteria."

In other news, Reuters released an article entitled, "​Big US money funds' fees outpace investor returns", which features a relatively detailed discussion on fee waivers, revenues and industry consolidation. It says, "The biggest U.​S. money market funds have done a better job of preserving their management fees than many realize, a development that may surprise investors whose dividends have plummeted 96 percent from peak levels five years ago."

The article explains, "​Investors collected $​5.​24 billion in total dividends from money funds in 2011, a 72 percent decline from $​18.​6 billion two years earlier and a huge plunge from the $​127.​9 billion gained back in 2007, before the Federal Reserve chopped short-​term rates to near zero. In contrast, the fees collected by money fund sponsors declined to $​4.​7 billion last year, a 57 percent drop from 2009 and a 52 percent decline since five years earlier, according to data from the Investment Company Institute, the trade group for the fund industry."

Reuters adds, "The big players have demonstrated plenty of resiliency in even the most trying market conditions, said Pete Crane, who runs research firm Crane Data. Large funds, which generate far more in fees than are needed to pay for their managers, credit analysts and other expenses, have enormous economies of scale, he said."

They quote Crane, "The money fund industry has yet to see any real consolidation or the exodus of a major player. If the pressure were that acute, you would see fees being introduced."

Your Name:
Your Email:
Recipient Email(s):

Use a comma or a semicolon to separate

Please retype symbols from the image:

Optional Message

Press Release Archive