Although credit markets are improving, money market funds are struggling to deliver positive returns, and as a result, since late last year, nearly all money funds, perhaps as many as 90%, have been waiving fees to avoid breaking the buck, The Wall Street Journal reports.

As long as the Fed overnight rate stays between zero and 25 basis points, this tenuous situation will continue. As Connie Bugbee, managing editor of iMoneyNet, put it, what other alternative do the funds have?

Four large fund companies that figure big in the money market fund industry that have waived their fees are DWS, Fidelity, Federated Investors and BlackRock.

Mayura Hooper, a spokeswoman for DWS, explained: “We have been waiving fees for money market funds where the gross expense ratio is greater than total gross performance.”

Alexi Maravel, a spokesman for Fidelity, gave a similar explanation: “As is consistent with much of the rest of the industry in the current low-rate environment, we are waiving fees or reimbursing expenses on some of our Treasury-only and government money market funds.”

The struggle is more difficult for smaller fund shops that “don’t have the economies of scale” to absorb the fees, and they might exit the business, Bugbee said.

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