Money market funds have started to increase fees after cutting them during the days of low returns. Now that the economy is doing well, enough for money market fund yields to rise, funds are pushing up expense fees, according to Bankrate.com.
"It was a temporary phenomenon by some funds to keep from going underwater. I would guess a sizeable portion will reinstate their fees to a point. Some may not reinstate the entire fee; they may see this as an opportunity to gain a shade more yield than their competitors," says Jeff Keil, vice president of Global Fiduciary Review at Lipper.
AIM Investments, for instance, started reinstating fees as soon as the Fed started hiking up interest rates.
Vanguard, known for its low fees, charges an expense ratio of 0.30% on three of its money market funds and only 0.13% on its Admiral Treasury Money Market fund. The average expense ratio for a taxable retail money market fund, according to Lipper, is 0.73%.
"If Vanguard can run a money fund for the cost that they run it - you do incur expenses. But does it need to be 1% or more? Probably not," says Reuben Gregg Brewer, manager of Value Line's mutual fund research.