The proportion of money market mutual funds that waived fees for management expenses declined in the second quarter from a record high earlier in the year, according to an industry newsletter.
The Quarterly Report on Money Fund Performance said that 57% of money market funds waived all or a portion of these fees, down from 60.2% in the first quarter, the highest level ever recorded.
There were 997 money market funds with $586.9 billion in assets as of June 30, the report said.
The Quarterly Report did not say how many banks waived fees for money funds they managed. But with $133 billion in their money funds as of June 30, banks are clearly major players in the market.
Walter Frank, the publication's chief economist, said he "hypothesized" that funds were waiving fees in the first quarter to boost yields.
He added, however, that money funds may have felt less pressure to waive fees later in the year, as stock and bond funds lost money, and money funds, by comparison, were more attractive investments.
One bank that chopped money fund fees was Bank of America, San Francisco, which waived fees on its Pacific Horizon Prime Money Market Fund to boost returns. The fund has been stung by redemptions and derivative losses. The fee waivers cost the, fund's distributor, Concord Holding Corp., New York, millions of dollars in revenues, Concord officials have said. The Quarterly Report is published by IBC/Donoghue Inc., Ashland, Mass.