Press Releases Archives: December, 2015

The Weekend Wall Street Journal writes "Money-Fund Yields Are Rising After the Fed Move. It says, "The yields on money-market mutual funds already are starting to tick up in the wake of the Federal Reserve's boost to short-term interest rates on Wednesday. The average one-day yield for the 100 largest taxable money funds was 0.10% as of Thursday, up from 0.08% the prior day and 0.06% a week earlier, according to Crane Data LLC, a Westborough, Mass., firm that tracks money funds. Money funds buy very short-term government and corporate debt and aim to maintain a steady $1 share price. Investors in the funds "have been starving on zero yield for eight years now," said Peter Crane, president of Crane Data. It should take a little more than a month for higher rates to be fully reflected in fund yields, as it takes that long for the average money fund to turn over its portfolio, Mr. Crane said. But money-fund investors won't necessarily see an increase in yield matching the Fed's quarter-point boost in its short-term rate target.... [I]nvestors in some money funds may not see the full increase in market interest rates because of the continued unwinding of fee waivers that mutual-fund companies had put on their funds in the low-rate environment.... Across the industry, "my wild guess is that half of the first rate hike might flow through to investors," Mr. Crane said.... Money funds will decide on a fund-by-fund and day-by-day basis how much of the rate increase to pass through to investors, Mr. Crane said. The rate increase "may cause a flurry of interest" in money funds by some savers, and some fund companies may choose not to remove fee waivers right away because they won't want to be left behind in that initial investor interest, he said. That will depend on their customer base and competitive position, he added. That calculus won't apply if money funds have particularly low expenses and already have been able to restore their charges to the full usual levels." In other news, Bloomberg wrote Friday, "Day 1 After Fed Liftoff Shows Move Catapults Money Market Rates."