Bloomberg on Fidelity Fee Waivers
Bloomberg writes "Fidelity's Largest Money Market Fund Waives $247 Million of Fees." The article explains, "Fidelity Investments has waived nearly $250 million in fees and expenses for its largest money market fund, a sign of how low yields pressured the products in an unprecedented year. The Fidelity Government Money Market Fund reported the figure for the six months ended Oct. 31 in a filing last week. Without the waivers, investors in the $212 billion fund would have faced negative yields on their holdings." (See the full filing for SPAXX here.) The piece tells us, "Retail money market funds struggled this year as the U.S. Federal Reserve tamped down interest rates in response to the Covid-19 pandemic crisis. That made it difficult to generate enough interest income to cover expenses and still pay shareholders, leading to the fee waivers. As a result, managers face earning less revenue to oversee more assets." Bloomberg quotes our Peter Crane, "The question is not 'Are you waiving fees,' but 'how much are you waiving fees and how badly are you hurt.' ... "Clearly, if the number is in the hundreds of millions, the answer is 'ouch'." Crane Data shows the average money fund expense ratio declining by almost half, from 0.27% to 0.14% in 2020
