Reuters Says MF Fees Rising
Reuters writes "U.S. money-market funds raise fees after years of cutting them. The article says, "U.S. money-market funds, which have lost billions of dollars in revenue since the height of the financial crisis, are raising fees after years of cutting them, according to industry executives and analysts. The $2.7 trillion industry has lost some $30 billion in revenue since 2009, according to the Investment Company Institute. Money funds reduced fees to ensure that investors did not actually lose money in an era of rock-bottom interest rates. But in recent months, top money-market fund sponsors including No. 1 Fidelity Investments, Federated Investors Inc and Charles Schwab Corp, have been charging higher fees as they recognize slightly better yields on the securities they buy for their funds." Reuters quotes our Peter Crane, president of money fund research firm Crane Data LLC, "Fund companies see the light at the end of the tunnel." The piece adds, "With expectations that the U.S. Federal Reserve will raise interest rates, yields on the securities that money-market funds purchase, such as short-term corporate debt and bank certificates of deposit, have risen slightly. To be sure, no major money-fund repricing is expected until the Fed actually makes a move.... That uptick in charged expenses continued into August, according to senior executives at two large money-fund sponsors. They declined to be named because they were not authorized to speak about fee trends. Analysts at Jefferies recently raised their outlook for Federated Investors, the No. 4 money-fund sponsor with $206 billion in assets, because of an expected reduction in waived expenses. In recent weeks, executives at Northern Trust Corp, T. Rowe Price Group Inc and Charles Schwab also have discussed rising fee trends during conference calls with analysts and investors. Meanwhile, a number of smaller money-market sponsors have been consolidated or they have liquidated fund assets amid low fees and more regulation. Profit margins have been crushed, according to Crane."
