Fidelity Shuts Three Money Market Funds to Most New Investors
Reuters | 3/31/2020
Because… Fidelity maintains that the influx of money would dilute existing shareholder returns. The soft close can reduce the number of lower-yielding Treasury securities that its money market funds must purchase. Based on FUSE analysis, Fidelity, the largest money market manager, had $717.3 billion in the asset class, more than double the $352.1 billion in assets held by BlackRock, the second largest money fund sponsor. Fidelity, which controls 20% of the market share, is also the top leader in each of the three money market sub-categories: Prime, Tax-Free, and Taxable. According to Crane Data, money market mutual fund assets showed their biggest asset gain in history in March, skyrocketing by $624.9 billion to a record $4.6 trillion. Fidelity’s move may trigger other money market managers to ponder their stance.
ETFs Eke Out Inflow in March Despite Market Collapse
ETF.com | 4/1/2020
Because… Positive ETF sales came as a surprise against the backdrop of the tumbling stock market. U.S. Equity absorbed $21.5 billion in the month and $40.4 billion this year through March, indicating that investors stayed in the asset class and even added their exposure. At the fund level, Vanguard S&P 500 ETF gathered $8.2 billion in March, bringing its YTD inflows to $18.4 billion. It was the second best-seller during the month and the top seller this year. SPDR S&P 500 ETF collected $8.1 billion in March, although its net outflows of $13.3 billion made it the biggest loser during the quarter. iShares Core S&P 500 ETF, on the other hand, suffered net redemptions of $4.8 billion in March, but it ranked #7 among all ETFs with YTD sales of $4.0 billion. The fate of three ETFs that track the same broad market index suggests that investors moved in and out based on their own preference, but in the long run, the cheapest wins.
American Century Investments First to Launch Semi-Transparent Active Exchange Traded Funds
American Century | 4/2/2020
Because… Being the industry’s first active non-transparent ETFs, these two funds will surely be followed closely by ETF sponsors and industry observers. American Century Focused Dynamic Growth ETF (FDG) and the American Century Focused Large Cap Value ETF (FLV) come with expense ratios of 0.45% and 0.42%, respectively, compared to an average of 0.67% for active Large Growth ETFs and 0.61% for active Large Value ETFs in the Morningstar database. American Century’s Large Growth funds experienced net redemptions of $2.2 billion in 2019 and $2.3 billion in 2018, while its Large Value funds parted with $1.1 billion and $2.2 billion during the two respective years. The firm launched these ETFs on the heels of the S&P 500 Index’s worst quarter since 2008. Investor concerns about stock market uncertainties in addition to unfamiliarity with the new investment structure are just a couple of the challenges these ETFs will face.