By Herbert Lash
NEW YORK, March 31 (Reuters) – Fidelity Investments, one of the world’s largest asset managers, on Tuesday closed three money market funds to new investors to protect the return of existing shareholders after the Federal Reserve this month cut short-term interest rates to near zero.
Restricting the money flow into the three funds will help reduce the number of new Treasury securities paying lower yields that Fidelity will need to purchase and thereby halt the dilution of existing shareholder returns.
“Newer issues generally have lower yields than the funds’ current holdings, and as such they would affect the funds’ ability to continue to deliver positive net yields to shareholders,” Boston-based Fidelity said in a statement.
Fidelity Treasury Only Money Market Fund, FIMM Treasury Only Portfolio and FIMM Treasury Portfolio had a cumulative $85.5 billion as of Monday, said the closely-held asset manager best known for actively managed
Spring is usually the busiest time for the housing market, but the coronavirus has changed that, too, and one listener asks Joel and Matt if they should buy now or wait until later. They’re already under contract, but have been advised that the market could be on a downturn, and if they wait, they could get a better price on the house. Not so fast, Joel says; while it’s true that banks have seen the lowest level of housing loan applications since 2015, that’s no indication that the market will change significantly, since housing inventory is still low. And right now, mortgage rates are incredibly low, so buying now with those rates could actually mean more savings in the long run than waiting for a cheaper price in the future. For that reason, refinancing an existing mortgage could be a good move, too.
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The long-awaited deadline for money market fund reform has arrived, with rules coming into effect on Friday for the $2.7tn market.
The collapse in 2008 of the Reserve Primary Fund, one of the most storied of US money market funds, attracted regulators’ attention to funds that had established a reputation as being as secure as bank deposits but offering better returns.
Money market funds are a primary funding source for the US government, banks and companies, and provide a key investment vehicle for a range of investors.
The Securities Exchange Commission has led the reform effort, which has already seen borrowing costs for a number of debt issuers rise, as investors have flocked out of “prime” funds, or those that can invest in a wider variety of assets, into those limited to government securities.
Government funds eclipsed prime funds in March, according to data from the Investment Company Institute. It