Brokerage Sweep Rates Inch Down
Brokerage sweep and money fund yields inched lower in the latest week, though they were mostly flat. This follows several weeks of big moves -- Fidelity's brokerage sweep rate jumped from 0.79% to 1.07% two weeks ago -- while a number of brokerages cut their rates. (See our August 8, 9 and 12 Links of the Day, "Fidelity Now Sweeps to Money Fund," "WSJ on Fidelity: Cash's Sweeping Giant" and Barron's Clarifies Fidelity Sweep Push.") Money market mutual fund yields, which fell below 2.00% for the first time in a year. Our Crane 100 Money Fund Index had been 2.18% at the end of June, but feel below 2.00% on August 9 and is now at 1.95%, while our broader Crane Money Fund Average has inched down to 1.82%. (It fell below 2.00% just prior to the Fed cut on July 25.) Our latest weekly Brokerage Sweep Intelligence publication shows that two brokerages out of 11 cut just some of their sweep rates in the latest week. (two cut rates last week.) Ameriprise and Morgan Stanley both lowered rates on selected tiers in the past week. Ameriprise cut rates on $100K to under $250K balances from 0.20% to 0.15% and on the $500K to under $1 million tier from 0.35% to 0.30%. Morgan Stanley cut rates on their $500K to under $1 million tier from 0.35% to 0.10%. Our Crane Brokerage Sweep Index, an average of the 11 largest brokerage firms' "sweep" rates, is currently showing a rate of 0.26% for balances of $100K to under $250K, the same as the previous week. The average FDIC sweep rate is now 0.25% for balances under $100K, 0.31% for balances under of $250K to under $500K, 0.35% for balances of $500K to under $1 million, 0.54% for balances of $1 million to under $5 million and 0.65% for balances over $5 million. Fidelity is by far the highest FDIC-insured sweep rates among the $100K balance tier, with a yield of 1.07% as of August 23. (Note: This is comparing the FDIC sweeps; Fidelity also has an even higher yielding money fund sweep for new accounts.) RW Baird occupies the No. 2 spot in the weekly survey, paying out 0.57% on its $100K tier. Raymond James rank third with rates of 0.25% at the $100K tier, followed by Schwab , with a 0.18% rate. Wells Fargo was fifth, yielding 0.17% on balances of $100K, with Ameriprise and UBS in sixth yielding 0.15%. Morgan Stanley offers 0.10%, while E*Trade follows with 0.08%. Ameritrade pays 0.07% and Merrill ranks last with a rate of just 0.05%. (Contact us if you'd like to see our latest Brokerage Sweep Intelligence product.)
