MarketWatch's Chuck Jaffe writes "What to do when the Fed puts up a fight". It says, "[W]ith many investors now convinced that a rate hike is in the offing, it makes sense to consider what changes, if any, you should make to your portfolio. Truth is, one rate hike -- if and when it happens -- is a headline event, not something that demands immediate reaction. Only after a second move, or maybe a third, will rising rates warrant a response from the average investor.... Indeed, for many investors, the impact of a rate increase will be negligible and temporary. Investors in money-market funds, for example, can expect that fund management will keep the bulk of a rate hike for itself, recapturing fee waivers that have allowed it to deliver positive returns while rates were practically zero." MarketWatch continues, "Peter Crane of Crane Data, which publishes Money Fund Intelligence, said that money fund costs have dropped to 0.25% from roughly 0.4% thanks to waivers that funds put in place in order to keep returns positive. If there is a rate hike, he expects the funds to grab back most of their pay before passing it along to investors." Crane says, "Of a quarter-point hike, investors will probably split that with the fund company. It will take two hikes to remove the fee waivers entirely, assuming quarter-point increases. The Fed has never made just one increase -- they have always taken one step and then another and another -- but investors won't really start to feel a difference in their money-fund returns until you get to the second increase, or maybe the third."
