skip to main content
Close Icon We use cookies to improve your website experience.  To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy.  By continuing to use the website, you consent to our use of cookies.
Global Search Configuration
From Money Fund Report®: Charged-expense levels for all money-market funds continued in the third quarter to move away from all-time record lows and fee forgiveness by fund sponsors to benefit shareholders was less in evidence as fund yields recovered further from a long period of near-zero levels, iMoneyNet data revealed.

The use of fee waivers among all taxable money-market funds surveyed by Money Fund Expense Report™ in the third quarter plunged to 90.9 percent from 97.3 percent during third-quarter 2015. The use of fee waivers offered by all money-market funds was 90.3 percent, down from 98.0 percent during the year-ago quarter. The tax-free sector reported a drop to 88.3 percent of funds waiving fees, down from 100.0 percent of tax-free funds absorbing at least some fees one year ago.

By category, fee-waiver offers among Government Retail funds declined to 94.8 percent as of Sept. 30, compared to 99.3 percent during third-quarter 2015. Prime Retail fund-waiver use slipped to 88.0 percent from 99.1 percent last year.

Government Institutional fund fee-waiver use during the third quarter was 89.7 percent versus 99.7 percent of funds waiving fees one year ago. Use of fee waivers by Prime Institutional funds was 90.5 percent, down minimally from 91.1 percent during the year-ago quarter, an apparent attempt to hold onto investor assets flooding out of the funds for government-fund options as the Oct. 14 conversion to floating-NAV structures loomed on the horizon.

Quarterly earnings reports issued last week by State Street and Federated Investors included references to the costs of providing waivers to fund customers. State Street simply mentioned that "lower money-market fee waivers" were partly behind increases in management fees. Federated, the fourth-largest MMF complex with reported assets of $199.05 billion as of Sept. 30, noted that its year-to-date revenue increased by $170.5 million or 25 percent compared to year-ago numbers "primarily due to a decrease in voluntary yield-related fee waivers" (to maintain positive or zero net yields in certain money-market funds) though its operating expenses also rose by 25 percent during the period "primarily due to an increase in distribution expenses as a result of a decrease in voluntary yield-related fee waivers."

Charged-Expense Levels

The average unweighted charged-expense ratio for all MMFs was 0.35 percent in the third quarter, compared to 0.13 percent one year ago. The unweighted charged-expense ratio for all Taxable funds was 0.33 percent, more than double the 0.15 percent average recorded during the year-ago quarter. Tax-Free funds on average charged investors 0.42 percent, six times more than the 0.07 percent assessed during third-quarter 2015; a level that matched the all-time low for the category established in March 2015. Other record lows of 0.11 percent for both all Taxable funds and all MMFs were set during the January-to-March 2014 time frame.

At the other end of the scale, all-time highs for Taxable (All) funds’ charged expenses were set at 0.65 percent in the third quarter of 1989; highest charged-expense averages for Tax-Free (All) funds of 0.62 percent occurred during 2001. Average charged expenses for all MMFs peaked at 0.63 percent during the second half of 1989, as reported in Money Fund Report® #1977 (Nov. 1, 2013).

The third-quarter average charged-expense ratio for all funds on an asset-weighted basis was 0.25 percent on Sept. 30, the same as the previous quarter and up from 0.14 percent as of September 2015.

Recommended Articles

  • iMoneyNet - Money Market Fund Analysis

    The Pandemic’s Slippery Slope for T-F Funds

    By Paul Adams 28 Jun 2021

    The 2020 pandemic, and the policy response it generated from the U.S. Federal Reserve, greased an already slippery slope for U.S. tax-free (T-F) and municipal money-market funds. Over the following 16 months, such funds saw both their number and the assets they hold drop to historic lows. From January 2020 – just prior to the global COVID outbreak – to May of this year, the number of tax-free funds tracked by iMoneyNet declined 14%, from 187 to 162. During the same period the assets they manage declined from $141 billion to $92.4 billion, a 35% slump.

    Topics Industry News

  • iMoneyNet - Money Market Fund Analysis

    iMoneynet Monthly Fund Report

    By Paul Adams 22 Jun 2021

    The pandemic-fueled volatility of 2020 had the effect of driving total, taxable, government, and retail U.S. money-market fund assets higher, but it had the opposite effect on the already-struggling tax-free and municipal-fund sector of the industry, reducing the number of tax-free funds by nearly 15 percent since January 2020 and assets in those funds over the same period by 41.7 percent to the lowest levels since iMoneyNet began tracking tax-free fund data in 1981. As of end-May 2021, total assets in tax-free funds stood at $92.4 billion, down from $107 billion in early January and from $141.0 billion in January 2020, just prior to the outbreak of the COVID pandemic, as the table above shows. Similarly, the number of funds fell to 162 on May 31 of this year, a reduction from 185 as the year began and from 187 in early 2020. Read more...

    Topics Industry News


Any questions? Speak to a specialist

Would you like to request sample data or analysis from Informa Financial Intelligence? 

See how our tailored solutions can help you gain a competitive advantage: