By touting its longstanding stability and trusted brand name and gently nudging investors to reassess their risk tolerance last year, Fidelity Investments succeeded in steering investors to its money market funds—and gaining critical market share, The Boston Globe reports.
In fact, $521 billion, or nearly 40% of the $1.358 trillion Fidelity has under management, is in money funds. That’s more than double the money fund assets Fidelity managed in 2005. Put into perspective, Fidelity’s biggest money fund, Fidelity Cash Reserves, has $138 billion under management, nearly three times the $52 billion that Contrafund, the firm’s biggest stock fund, manages.
Competitors, on the other hand, had no such call to action, and as a result, their investors, who have lost a considerable portion of their portfolios, have been a drag on market funds. What’s more, while many money market funds are yielding zero percent, Fidelity is offering some decent returns near 40 basis points and is able to absorb fees far better than smaller fund companies.
“This is a franchise business for Fidelity,” said Charles S. Morrison II, president of the money market group at Fidelity.
Fidelity recently announced that its share of the $3.6 trillion money market fund industry rose from 12.7% at the end of last year to 14.24% as of June 30.