Huntington won't waver on fee waivers for money funds

Firm plans to reinstate charges when yields rise; for now, asset manager will 'forgo profitability'
JAN 07, 2011
Despite low yields on money market funds, Huntington Asset Advisors Inc. plans to continue waiving the management and shareholder fees on its four money market funds indefinitely. Huntington began waiving the 40-basis-point management fee and 25-basis-point shareholder administration fee on its four money market funds in late 2008 and will continue to do so until yields rise, according to Randy Bateman, the firm's president and chief investment officer. “Huntington has chosen to forgo profitability on its money fund complex,” he said. “While there is a temptation to take more risk to increase yields, we aren't going to do that.” Huntington expects to be able to reinstate the shareholder administration fee and the management fee on its money market funds, assuming interest rates, and thus yields, rise, Mr. Bateman said. Money fund yields have been close to zero for several months, but most firms, like Huntington, are bearing down and waiting for better times, said Pete Crane, president and chief executive of Crane Data LLC. “Sticking with the business is seemingly contrarian, but that's what firms seem to be doing,” he said. One firm that did get out of the money fund business this year is Ridgewood Capital Asset Management Inc. For banks such as Huntington, keeping money market funds makes sense because they can use them as sweep vehicles for other mutual funds, such as bond funds, which are very popular right now, Mr. Crane said. “Banks make more on bond funds than they do on money funds,” he said. And there isn't much opportunity for money funds to take on additional risk, Mr. Crane said. The Securities and Exchange Commission passed rules this year that restrict money funds' holdings of lower-quality securities and require them to keep at least 30% of assets in securities that mature within seven days. “Money funds are basically glorified index funds,” Mr. Crane said. “You take what the Fed gives you.” It is easier for Huntington to maintain the fee waivers indefinitely because many of its processes, such as its transfer agency and its accounting, are all in-house, Mr. Bateman said. “We don't have to pay third parties to do those things,” he said. Huntington has $1.1 billion in assets in its four money market funds, and the total operating expenses for the funds is 32 basis points with the waivers. The firm has $13.29 billion in assets under management.

Latest News

Advisor moves: Raymond James lands $1.25B team as Merrill loses two
Advisor moves: Raymond James lands $1.25B team as Merrill loses two

Iowa's Greenwood Wealth Partners exits D.M. Kelly as UBS and Ameriprise win Merrill Lynch recruits in California and Florida

Never a losing day: CFTC alleges $950 million forex Ponzi scheme
Never a losing day: CFTC alleges $950 million forex Ponzi scheme

Less than 1% of pool funds went to actual trading, CFTC says

Fintech bytes: Northwestern Mutual picks Jump for enterprise AI
Fintech bytes: Northwestern Mutual picks Jump for enterprise AI

Plus, SEIA builds a governed data foundation for its in-house AI and Snappy Kraken debuts a read-only marketing coworker for advisors.

People moves: AllianceBernstein names Onur Erzan as next CEO
People moves: AllianceBernstein names Onur Erzan as next CEO

Broadridge, Wedbush and Alaris Acquisitions have also filled senior wealth management roles with hires from J.P. Morgan, Osaic and SageView.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains