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① As of December 11, the seven-day annualized yields of 73 money market funds have fallen below 1%, accounting for nearly 20%; ② Multiple money market funds have recently adjusted their management fees multiple times, which is a normal adjustment in accordance with the provisions of the fund contract and not an active manipulation of fees by the manager; ③ Despite this, the scale of money market funds has grown by 1.43 trillion yuan this year, reflecting that such assets still possess investment value.
Cailian Press, December 12 (reported by Li Di) — Currently, the downward trend in yields of money market funds continues.
As of December 11, the seven-day annualized yields of 73 money market funds have fallen below 1%, accounting for nearly 20%. Against the backdrop of declining yields, some money market funds have made multiple adjustments to their management fees recently.
Despite the continued decline in yields of money market funds, their scale has achieved a counter-trend increase. As of the end of October, the total scale of money market funds reached 15.05 trillion yuan, growing by 1.43 trillion yuan compared to the end of last year.
Industry insiders analyzed that although yields are declining, the cash management attributes of money market funds remain irreplaceable at present, and in the long term, there is still room for growth in the scale of money market funds. Moreover, against the backdrop of declining interest rates, bank deposit rates are at even lower levels, highlighting the cost-performance advantage of money market funds, attracting inflows of deposit funds.
Over 70 money market funds see their seven-day annualized yields fall below 1%
According to Tonghuashun data, as of December 11, among money market funds with available data in the market, a total of 73 funds had their seven-day annualized yields fall below 1% (various share classes combined), accounting for nearly 20%. At the end of last year, only 28 money market funds had their seven-day annualized yields fall below 1%.
Due to the decline in yields, some money market funds have made multiple adjustments to their management fees recently. For example, CICC Jujinli Money Market Fund lowered its management fee rate to 0.3% per annum starting from December 8 because it triggered the condition where “the provisional seven-day annualized yield calculated based on a 0.90% annual management fee rate is less than or equal to twice the benchmark interest rate of current deposits.” However, since this condition was eliminated on December 9, the product’s management fee rate was restored to 0.90% per annum.
In addition to CICC Jujinli Money Market Fund, other money market funds such as Changjiang Huobigua Money Market Fund and Zhongtai Jinquan Huijin Money Market Fund have also made multiple adjustments to their management fees recently.
Industry insiders pointed out, “The recent multiple adjustments to fees by various money market fund products are primarily due to the decline in yields, which have entered a volatile range, causing conditions triggering a reduction in management fees to repeatedly appear and then disappear within a short period. Adjustments to management fees are all carried out in accordance with the provisions of the fund contract and are not actively manipulated by the fund managers.”
The scale of money market funds has increased by 1.43 trillion yuan this year instead.
The latest public offering fund market data released by the Asset Management Association of China (AMAC) shows that as of the end of October this year, the total scale of China’s money market funds was approximately 15.05 trillion yuan, an increase of 1.43 trillion yuan compared to 13.62 trillion yuan at the end of last year.
Notably, in October alone this year, the total scale of China’s money market funds grew by nearly 400 billion yuan. According to AMAC data, as of the end of October, the total scale of China’s money market funds reached 15.05 trillion yuan, an increase of 385.536 billion yuan compared to the end of September.
In this regard, industry insiders pointed out that although the yield of money market funds continues to decline, their nature as a cash management tool is irreplaceable. Additionally, against the backdrop of falling interest rates, bank deposit rates are at even lower levels, and the ‘deposit migration’ effect further enhances the attractiveness of money market funds.
A senior public offering distribution channel professional also told reporters, “Recently, stock market volatility has intensified, prompting many investors to seek safer options by redeeming equity assets and switching to more stable products. Considering the increasing volatility in the bond market, money market funds remain a prudent choice, with inflows continuing despite declining returns.”
Despite the decline in yields, the scale of money market funds has grown against the trend, reflecting that they still hold investment value.
Zhu Yanqiong, a fixed-income investment fund manager at Taiping Fund, believes that money market funds linked to payment functions via internet platforms or tied to brokerage margin accounts have specific application scenarios. Meanwhile, money market funds possess high liquidity and minimal return fluctuations, which continue to attract individual investors.
Zhu Yanqiong also pointed out that for institutional investors, the convenience of subscription and redemption, unaffected by new redemption regulations, makes money market funds an important tool for liquidity management. On the other hand, under the People’s Bank of China’s monetary policy framework, aimed at maintaining stability in the financial system, the probability of extreme negative interest rates occurring in China remains low. Whether for individuals or institutions, the demand for liquidity management will not disappear, so money market funds still hold value.