Fidelity Adds to Menu of Institutional Money Funds

it offers to institutional investors through banks. The Boston-based fund company, which manages $340 billion in assets, is offering three different share classes with varying fees that a bank can charge corporate clients. The different share classes, which are being offered on six portfolios, give bankers more pricing options in their trust and capital markets operations, said Michael Mathison, vice president of institutional cash products at Fidelity's distribution arm. Previously, some bankers could not use all of Fidelity's money market portfolios. For example, pension plan managers, who already charge a percentage of assets, could not use funds with fees attached. On the other hand, the bank's capital markets operations want to charge fees because they make far more trades than a pension plan manager. So, up to now, they have avoided offering the funds that don't carry fees. The three share classes Fidelity has established include one without a charge. A second class charges 0.15% of assets invested in a fund, and a third charges 0.25% of assets. The distribution unit of Fidelity, known as Fidelity Investments Institutional Services Co., owns 14% of the institutional market, with $36.4 billion in assets, he said. About half of the institutional money market fund assets comes from banks, he said. In addition to the new share classes, Fidelity has introduced a new fund, Triple A-Rated Money Market Fund. This fund invests in U.S. domestic and dollar-denominated foreign securities, along with government bonds, repurchase agreements, and bank and corporate debt.