Fintech News | Fintech Zoom

Money market fund yields are dropping, prompting fee waivers

Good news for investors: Some large firms such as Fidelity and Vanguard are waiving some fees on money market funds.

The bad news: That’s because yields are so low on money market funds that without a fee waiver, the returns might drop below zero.

Blame the Federal Reserve for this conundrum, as yields fall below expenses of running a money market fund, said Jeffrey DeMaso, co-editor of a Vanguard newsletter.

With its most recent round of interest rate cuts, in March, the central bank threw an anchor into the market, pulling down yields.

The Federal Reserve set the target range for federal funds at 0.00% to 0.25%. Yields on money market mutual funds tend to follow short-term rates set by the Fed.

For the Vanguard Pennsylvania Municipal Money Market Fund, for example, Vanguard said expenses of the fund are being “temporarily reallocated” to other funds within Vanguard. Effectively, it’s a fee waiver.

Vanguard said in a securities filing that it made the change “to maintain a zero or positive yield for the fund.”

“This is not a ‘break the buck’ scenario, like we saw during the Great Financial Crisis,” DeMaso said. That was when money market funds’ net asset value fell below the $1.00 per share floor.

Instead, yields have dropped. “It’s more akin to 2011 period when money market yields were heading down because of what the Fed did cutting rates. The Fed Funds rate is near zero as well. So that’s the gravity that’s the pull on yields again today” in money market funds, DeMaso said.

As an alternative, he prefers to hold Vanguard Short Term Tax Exempt Fund, saying, “I get a little bit of income with about the same risk.”

Will bond funds be next for fee waivers?

Vanguard’s Short-Term Treasury Fund (symbol: VFISX) has also seen its yield drop sharply. After fees, the fund’s yield actually fell to a negative yield, -0.01% last month.

And it’s not just Vanguard waiving fees. Roughly half of Wall Street firms are cutting fees temporarily, according to trade publication

READ  Are Some Corporations Nonetheless Too Large to Fail? | Stock Market Information

Fidelity in March began waiving fees on Fidelity Treasury Money Market Fund, Fidelity Government Money Market Fund and the FIMM Treasury Portfolio, due to falling interest rates.

Alternatives? Keep your money in the stock market — which was the Fed’s goal all along. Another option: an exchange-traded fund, iCASH, run by BlackRock.

rn//Load jQuery library using plain JavaScriptrn(function()document.getElementsByTagName(‘body’)[0]).appendChild(newscript2);rn)();rn/********TEST CODE for METER SNOW PLOW ANALYTiCS*******************/rnvar meter = ;rn$(document).ready(function()rn // console.log(“this loads well”);rn $(‘.js-optimizely-click-goal’).click(function()rn // console.log(this);rn meter[‘type’] = $(“input[name=”offer”]”).val();rn if(meter[‘type’] = 131)meter[‘type’] = “Premium Digital Access”;rn else if(meter[‘type’] = 130)meter[‘type’] = “Sunday Print + Digital”;rn else if(meter[‘type’] = 129)meter[‘type’] = “7-Day Print + Digital”;rn else if(meter[‘type’] = 128)meter[‘type’] = “Sunday Print”;rn meter[‘date’] = new Date().toLocaleString();rn // console.log(meter[‘type’]);rn // console.log(meter[‘date’]);rn var json_meter_cookie = JSON.stringify(meter);rn Cookies.set(‘meter_sign_up’, json_meter_cookie); rn rn );rn);rn/************************************************************************/rn // FACEBOOK TRACKING PIXEL #1rn !function(f,b,e,v,n,t,s)rn if(f.fbq)return;n=f.fbq=function()n.callMethod?rn n.callMethod.apply(n,arguments):n.queue.push(arguments);rn if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version=’2.0′;rn n.queue=[];t=b.createElement(e);t.async=!0;rn t.src=v;s=b.getElementsByTagName(e)[0];rn s.parentNode.insertBefore(t,s)(window,document,’script’,rn ‘’);rn fbq(‘init’, ‘590074241155998’); rn fbq(‘track’, ‘ViewContent’);rn rnrn% endblock %”},”start”:””},”id”:”limit-signup”,”count”:12,”action”:”ignore”,”mute”:true,”action_config”:”template”:”% extends “grid” %rnrn% block heading_text %Youu2019ve read your 10 free articles for this 30 day period. Sign up now for local coverage you wonu2019t find anywhere else, special sections and your favorite columnists. StarTribune puts Minnesota and the world right at your fingertips. % endblock %rnrn% block last %rn parent() rn# limit Krux pixel from #rnrnrn% endblock %”,”start”:””,”id”:”meter-desktop-331″,”count”:10,”action”:”ignore”,”mute”:false,”action_config”:false,”start”:””,”id”:”PDA991499opt”,”count”:9,”action”:”ignore”,”mute”:true,”action_config”:false,”start”:””,”id”:”limit”,”count”:8,”action”:”inject”,”mute”:false,”action_config”:”template”:”rn.o-overlay,rn.o-overlay * rn display: block;rn box-sizing: border-box;rnrnrn.o-overlay rn position: fixed;rn top: 0;rn left: 0;rn width: 100%;rn height: 100%;rn font-size:14px;rn background: rgba(0, 0, 0, 0.8);rn z-index: 999999;rn opacity:1;rn transition:all .01s;rnrn.o-overlay h1 rn font-family:popular-bold, ‘Popular’;rn font-size:28px;rnrnrn.o-modal rn width: 100%;rn max-height: 100vh;rn overflow: auto;rn position: absolute;rn top: 50%;rn left: 0;rn -webkit-transform: translateY(-50%);rn transform: translateY(-50%);rnrn.o-modal-middle rn padding:5px 5px;rn position:relative;rn background:#F6E463;rn text-align:center;rn border-top:1px solid rgb(246, 228, 99);rn -webkit-box-shadow:0px 0px 0px rgba(0,0,0,0);rn box-shadow:0px 0px 0px rgba(0,0,0,0);rnrn.o-modal-inner rn background: #ffffff;rn margin: 0 auto;rn width: 100%;rn max-width: 600px;rn position: relative;rnrnrn.o-button rn display: inline-block;rn font: bold 18px/1 Whitney, sans-serif;rn margin: 0;rn padding: 0;rn border: none;rn text-decoration: none;rn color: #fff;rn background: #00824A;rn padding: 15px 20px;rn border-radius: 4px;rn border: 2px solid rgba(0, 0, 0, 0.1);rn -webkit-transition: all .1s;rn transition: all .1s;rn cursor: pointer;rn text-shadow: 0 1px rgba(0, 0, 0, 0.2);rnrn.o-button:hover rn text-decoration: none;rn color: #fff;rn border-color: transparent;rn background: #00824A;rn opacity:0.9;rnrn.o-cta rntfont:bold 38px/1 Whitney, sans-serif;rntcolor:#00824A;rntpadding:5px 0px;rntdisplay:block;rnttext-align:center;rntoverflow:hidden;rntcursor:defaultrnrn.o-block rn text-align: center;rn font-family:’Whitney’,sans-serif;rnrn.o-block img rn width: 150px;rn height: auto;rn display: block;rn margin: 0 auto 10px;rnrn.o-block .text-left rn text-align:left;rnrn.o-block.pad rn padding: 10px;rnrn.o-block.pad-top rn padding-top: 30px;rnrn.o-block.pad-right rn padding-right: 30px;rnrn.o-block.pad-bottom rn padding-bottom: 30px;rnrn.o-block.pad-left rn padding-left: 30px;rnrn.o-block.shadow-out rn box-shadow: 0 0 7px 0 rgba(0, 0, 0, 0);rnrn.o-block.shadow-in rn box-shadow: inset 0 0 7px 0 rgba(0, 0, 0, 0);rnrnrn.o-small rn color: #010101;rn font: italic normal 13px/1 Whitney, sans-serif;rn margin: 10px 0;rnrn.o-small:first-child rn margin-top: 0;rnrn.o-small:last-child rn margin-bottom: 0;rnrn.o-small.left rn text-align: left;rnrnrn.o-small a rn display: inline-block;rn color: inherit;rn text-decoration: underline;rnrn.o-small a:hover rn color: black;rn text-decoration: underline;rnrnrn.o-bg-green rn background:#86cff2;rn color:#ffffff;rnrnrn.o-info rn display:inline-block;rn position:absolute;rn bottom:20px;rn right:20px;rn overflow:visible;rn z-index:1;rnrn.o-info:hover rn padding-left:2em;rn padding-top:2em;rnrn.o-info:hover div rn display:block;rnrn.o-info button rn width:1.5em;rn height:1.5em;rn border-radius:100%;rn font-weight:bold;rn line-height:1.5em;rn padding:0;rn margin:0;rn border:0;rn text-align:center;rn font-size:1em;rn tbackground:#F6E463;rnrn.o-info div rn background:#F5F5F5;rn position:absolute;rn right:1.5em;rn bottom:1.5em;rn box-shadow:0 0 10px rgba(0,0,0,.5);rn padding:20px;rn font-size:12px;rn line-height:1.3;rn display:none;rn width:300px;rn border-radius:7px 7px 0 7pxrnrn.o-info div a rn text-decoration:underline;rn color:#005776;rnrn rnrnrnrnrnrn rn rn rn Premium Digital Access starting at 99u00a2 rn trn SUBSCRIBErn Already a subscriber? Log in.rn rn All Star Tribune readers without a Digital Access subscription are given a limited number of complimentary articles every 30 days. Once the article limit is reached we ask readers to purchase a subscription including Digital Access to continue reading. Digital Access is included in all multi-day paper home delivery, Sunday + Digital, and Premium Digital Access subscriptions. After the 1 month Premium Digital Access introductory period you will be charged at a rate of $14.99 per month. You can see all subscription options or login to an existing subscription herern rn ?rn rn rn rn rnrn”,”start”:””},{“id”:”nag”,”count”:7,”action”:”lightbox”,”mute”:true,”action_config”:{“height”:null,”width”:”630px”,”redirect_on_close”:null,”template”:”% extends “shell” %rnrn% block substyles %rnrn .nag rn padding:0;rn rn .nag-inner rn padding:0 20px 50px;rn rn .nag img rn width:auto;rn margin:0 auto;rn rn .nag h1 rn margin-top:-20px;rn text-transform:uppercase;rn color:#61bf1a;rn text-align:center;rn font:normal 26px/1 ‘Popular bold’, serif;rn rn .nag h2 rn font:bold 28px/1 ‘Benton Sans’, sans-serif;rn font-style:italic;rn text-align:center;rn rn .nag-status rn text-align:left;rn background:#f5f5f5 url(” static_url(‘img-icon-warning.png’) “) 12px 10px no-repeat;rn padding:12px 35px 10px;rn margin-bottom:65px;rn rn .nag-status p rn display:inline-block;rn margin-bottom:0;rn font:normal 14px/1 ‘Benton Sans’, sans-serif;rn font-style:italic;rn rn .nag-status p:first-child rn color:#ff8200;rn font-weight:bold;rn rn .nag-status p:last-child rn color:#ccc;rn float:right;rn rn .nag-status .btn-link rn color:#61bf1a;rn rn .nag-divider rn border-top:1px solid #e7e7e7;rn text-align:center;rn width:100%;rn max-width:500px;rn margin:40px auto 20px;rn rn .nag-logo rn display:inline-block;rn background:#fff;rn padding:10px;rn margin-top:-24px;rn rn .nag-btn rn display:block;rn font-size:24px;rn padding:20px;rn border-radius:5px;rn margin:20px auto 0;rn rn .log-in rn margin:-40px auto 30px;rn max-width:400px;rn rnrn% endblock %rnrn% block page %rn#rnrn limit – count – 1 rnrn form.flow_form_open(nextAction: ‘firstSlide’, null, null, ‘_top’) rn form.btn(‘Save Now’) rn form.flow_form_close() rnrnrn form.get_general_error_messages([‘authenticate’]) rn form.flow_form_open(nextAction: ‘login’, [‘authenticate’], ‘login-form’, ‘_top’) rn rn form.login rn form.flow_form_close() rnrnrnKeep reading rnu2022 Log inrnrnrnrn#rnrn rn You have limit – count – 1 articles leftrn rn Keep readingrn u00a0u00a0u2022u00a0u00a0rn Log inrn rn rn rn rn form.get_general_error_messages([‘authenticate’]) rn form.flow_form_open(nextAction: ‘login’, [‘authenticate’], ‘login-form’, ‘_top’) rn rn form.login rn form.flow_form_close() rn rn rn Over 70% off!rn rn rn rn rn rn 99u00a2 for first 4 weeksrn form.flow_form_open(nextAction: ‘firstSlide’, null, null, ‘_top’) rn form.button(‘Save Now’, ‘btn nag-btn’) rn form.flow_form_close() rn rnrn% endblock %rnrn% block last %rn parent() rnrn% endblock %”},”start”:””},”id”:”x”,”count”:4,”action”:”ignore”,”mute”:true,”action_config”:false,”start”:””,”id”:”multi-start”,”count”:3,”action”:”fly_in”,”mute”:true,”action_config”:”location”:”bottom_left”,”slide_direction”:”bottom”,”group_id”:null,”display_delay”:”0″,”collapse_delay”:”10″,”template”:”, *, *:before, *:after rn box-sizing:border-box;rn -moz-box-sizing:border-box;rn -webkit-box-sizing:border-box;rn box-sizing:border-box;rn -webkit-text-size-adjust:none;rn margin:0;rn padding:0; rn position:relative;rn width:300px;rn background:#484848;rn box-shadow:0 0 10px rgba(0,0,0,.3); rn width:300px;rn height:70px; rn background:#333333 url(“”) center center no-repeat;rn width:300px;rn height:70px;rn cursor:pointer; rn position:absolute;rn top:0;rn right:0;rn height:20px;rn width:20px;rn display:block;rn color:#FFF;rn font-size:20px;rn line-height:1;rn text-decoration:none;rn cursor:pointer;rn text-align:center; rn color:#E0E0E0; rn text-align:center; p rn color:white;rn font:bold 14px/1 ‘Benton Sans’, sans-serif;rn text-transform:uppercase;rn margin:30px 0 7px 0;rn text-align:center;rn font-style:italic; h2 rn color:#fff;rn font:bold 25px/1 ‘Benton Sans’, sans-serif;rn text-align:center;rn font-style:italic; h2 span rn color: #A4A4A4;rn text-decoration:line-through; rn color:white;rn background:#61bf1a;rn font-family:”Benton Sans”,Helvetica,Arial,sans-serif;rn font-weight:bold;rn line-height:1;rn text-decoration:none;rn text-transform:uppercase;rn border:none;rn -webkit-appearance:none;rn cursor:pointer;rn padding:15px 0 12px;rn display:block;rn margin:10px auto 30px;rn width:130px;rn border-radius:5px;rn font-size:16px; rn background:#333 url(“”) center center no-repeat;rn height:35px;rnrnrnrn rn rn u00d7rn rn rn From justrn $3.79 99u00a2 a weekrn Save nowrn rn rn”,”start”:””]};

READ  John Lewis impressed Black activists to hunt workplace

Yuuma Nakamura


Add comment