The Financial Times writes on, "'​The return of cash': money market fund sector perks up on rising rates." They tell us, "Rising interest rates are turning the $​4.​6tn money market fund sector from a drag on profits into a source of earnings in a rare piece of good news for asset managers whose fees have been hit hard by falling equity and debt markets. Average fees for money market funds shrank by three quarters over the past 25 years and fell to 12 basis points in 2021, their lowest level in decades, according to the Investment Company Institute. That left asset managers covering day-​to-​day costs to keep returns for customers in positive territory. But rising returns have allowed fund managers to start charging more just in time to profit as customers fleeing turbulent markets move their holdings into cash." The removal of fee waivers "will provide a significant tail wind because rising rates mean fund providers will finally be able to stop subsidising money market funds", Capital Group CEO Tim Armour tells the paper. The piece continues, "BlackRock and State Street, two of the biggest global money fund providers, touted increases in their revenue from these funds and other cash management products when they published second-​quarter earnings on Friday. BlackRock, which waived more than $​500mn in fees on money funds in 2021, said it is now charging all its customers the full amount. Quarterly revenue from cash products rose 155 per cent year on year to $​232mn. The world'​s biggest money manager also reported $​21bn in net cash inflows, bringing total cash assets under management to $​740bn.... State Street Global Advisors has seen inflows of $​35bn into its cash funds this year including $​15bn in the second quarter. It now has $​403bn in cash assets under management, including $​211bn in money market funds. After forgoing $​80mn in fees last year and $​10mn in the first quarter, it eliminated money market fee waivers in the three months to June 30, chief financial officer Eric Aboaf said." The FT adds, "Charles Schwab reported Monday that net interest revenue was up 31 per cent year on year in the second quarter.... Though big providers are reporting inflows to their cash management services, money market funds as a whole are not seeing an increase. There was $​4.​6tn parked in money market funds on July 13, basically the same as February, ICI data show. That is partly because ... institutional investors are finding other vehicles for their cash such as short-​term Treasury bills or commercial paper and are opting for separately managed accounts."

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