Many investment firms are waiving their charges on money funds to keep the yields that investors earn from dropping below zero.
Money-management giant BlackRock Inc. is waiving costs typically borne by customers for certain money-market funds to prop up investor yields, said people familiar with the matter. Fidelity Investments, Federated Hermes Inc. and J.P. Morgan Asset Management are also ceding some fees to stave off negative yields.
The moves are the latest sign of how a roughly $5 trillion piece of the financial system is bracing for new pressure as interest rates plummet. Fee waivers will hit the revenues of firms that shoulder the costs. All types of investors—from individuals and corporations to pensions and hedge funds—use money-market funds to park cash safely while earning some pocket change. If an investor deposits money with a brokerage, for example, that money can sit in a money-market fund until the investor decides what to buy.
But investment firms don’t just hold those funds. They buy highly rated debt with the money, passing on some of the returns to investors. As this industry has grown, money funds have become a critical source of short-term funding for the U.S. government, companies and municipalities.
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