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

Edward Jones announces C-suite shakeup with eye toward next chapter
Edward Jones announces C-suite shakeup with eye toward next chapter

The leadership changes coming in June, which also include wealth management and digital unit heads, come as the firm pushes to offer more comprehensive services.

Harvard muni bonds a buy amid battle with Trump White House, Barclays says
Harvard muni bonds a buy amid battle with Trump White House, Barclays says

Strategist sees relatively little risk of the university losing its tax-exempt status, which could pose opportunity for investors with a "longer time horizon."

The great wealth transfer demands a wealth management revolution
The great wealth transfer demands a wealth management revolution

As the next generation of investors take their turn, advisors have to strike a fine balance between embracing new technology and building human connections.

Independent Financial Group taps industry veteran Keefe as new president, COO
Independent Financial Group taps industry veteran Keefe as new president, COO

IFG works with 550 producing advisors and generates about $325 million in annual revenue, said Dave Fischer, the company's co-founder and chief marketing officer.

Net Positive Consortium gains momentum with new members, first strategic partner
Net Positive Consortium gains momentum with new members, first strategic partner

Five new RIAs are joining the industry coalition promoting firm-level impact across workforce, client, community and environmental goals.

SPONSORED Compliance in real time: Technology's expanding role in RIA oversight

RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.

SPONSORED Advisory firms confront crossroads amid historic wealth transfer

As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.