July 9, 2010 / 8:11 PM / 9 years ago

Fidelity reopens four money-market funds

* Had closed funds in 2008 to protect current investors

* Cites expectations for higher yields

BOSTON, July 9 (Reuters) - Fidelity Investments has begun allowing clients to put fresh cash into four money market funds that had been partly off limits since 2008, as the fund firm anticipates higher interest rates.

Fidelity the mutual fund industry’s largest money-market fund operator, reopened the portfolios on July 1, 18 months after having closed them to new investors at the height of the financial crisis.

Money market operators such as Fidelity were forced to close funds to new investments in 2008 because short-term rates had dropped so close to zero that managers had to waive most or all of their fees to prevent fund yields from going negative.

Although the Federal Reserve is still keeping rates low to help boost growth, some interest rates have recently ticked higher, making it feasible to reopen funds and put new cash to work.

“Treasury yields are beginning to rise and, with an improved rate outlook over time, we believe that new inflows can be invested at the higher rates,” Fidelity spokesman Vincent Loporchio said.

The reopened funds include Fidelity U.S. Treasury Money Market Fund, Fidelity Cash Management Fund and two institutional funds. In all their assets total around $23 billion. They had remained available to existing shareholders and new investors in company retirement plans. Those clients were subject to a $5 million purchase limit, but that was also removed on July 1, Loporchio said.

The decision to reopen the funds also coincides with fresh demand for these types of portfolios because market tumult has kept investors away from stock funds. Money funds traditionally have been seen as safer than equity funds, with holdings that typically include treasury notes and commercial debt.

But even money funds proved volatile in 2008, leading to new rules for the securities. Fidelity is among the largest fund companies in the world, with $1.5 trillion in assets. (Reporting by Ross Kerber; editing by Andre Grenon)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below