ThinkAdvisor on MMF Fee Waivers
Website ThinkAdvisor asks "Should You Fear Money Market Fee Waivers?" They write, "Advisors and their investor client don't need to worry about the fact that the country's largest asset managers and other firms are waiving fees on money market funds so they can maintain positive yields in a near-zero rate environment." The article quotes our Peter Crane, "president of Crane Data, which follows money markets and mutual funds," who tells them, "All of them are waiving fees ... [but] just some of their fees." The article continues, "'Clients should not be concerned,' Crane explained, adding that the fee cuts don't threaten the safety of their funds but do mean less income for asset managers.... Vanguard says it has 'temporarily limited certain expenses' on some of its money market funds 'to maintain a zero or positive yield,' said a spokesman. The limits are unrelated to the liquidation of two muni money market funds in November, he notes. Those funds -- the Vanguard Pennsylvania Municipal Money Market Fund and the Vanguard New Jersey Municipal Money Market Fund -- were closed due to 'the short supply of certain types of municipal securities,' which reduced the 'the market-depth needed to prudently provide these state-specific products in all market conditions,' according to a statement from Vanguard in September." ThinkAdvisor adds, "Fee waivers on money market funds are nothing new for asset managers during periods of near zero short-term interest rates. Many waived fees between 2009 and 2015 when rates were also 'pinned to zero' and 'made it through,' said Crane. 'Return is risk,' said Crane. 'If you're not making any money in money market funds you're safe.... Anything else is too dangerous for any 'cash' allocation.' Crane doesn't expect to see more fee waivers even as short-term rates remain near zero. 'The threat of negative yields has receded and rates have inched higher in recent weeks,' he explained."
