By Andrew Welsch
Fidelity and Charles Schwab have long blocked customers from investing in money-market mutual funds from third-party providers. Now, they have extended that policy to third-party money-market exchange-traded funds.
"This decision is consistent with Schwab's longstanding approach of only making available Schwab affiliate money market mutual funds as part of its cash management solutions," a Schwab spokesperson says.
A representative for Fidelity said it "has generally restricted third-party money market mutual funds on our platform, and this is an extension of that policy."
The policy changes, which were enacted earlier this year, affect two ETFs from BlackRock and one ETF from Texas Capital. Both Schwab and Fidelity offer customers proprietary money-market funds in addition to other cash management products, such as certificates of deposit and savings accounts.
A Texas Capital spokesperson called it "unfortunate and surprising" that its ETF wasn't on the platforms. A representative for BlackRock didn't respond to a request for comment.
Money-market funds invest in short-term securities such as government bonds. They have become quite popular in recent years with investors seeking high yields and safety. Assets in money-market funds hit a record-breaking $7.03 trillion earlier this month, according to new data from the Investment Company Institute, an asset management industry trade group.
Bloomberg reported the Schwab and Fidelity policy changes on Monday.
A representative for Schwab confirmed it isn't making money-market ETFs from third-party providers available to either retail investors or registered investment advisors.
"We are always evaluating what we make available based on client needs," the representative said. "Currently, we have a broad array of competitive cash management options, including money market mutual funds advised by our affiliate Schwab Asset Management, for our clients."
Earlier this month, Schwab's asset management arm filed with the Securities and Exchange Commission to launch an actively managed money-market fund, Schwab Government Money Market ETF.
Both Fidelity and Schwab are among the nation's largest brokerage and wealth management companies, serving millions of retail investors as well as thousands of registered investment advisory firms. Because of Fidelity and Schwab's enormous reach, asset managers like to have their funds on the brokerages' platforms.
In February, the giant asset manager launched two money-market ETFs: the iShares Prime Money Market ETF (ticker: PMMF) and the iShares Government Money Market ETF $(GMMF)$.
A representative for Texas Capital, a Dallas-based bank, said its Texas Capital Government Money Market ETF $(MMKT.AU)$ is available through other brokerage platforms. MMKT launched in September 2024.
"Texas Capital believes investors should retain the choice as to where to invest," the representative said. "MMKT remains an important tool for investors to manage their cash, one we believe should be available in the same way that investors can purchase any NYSE-listed security. Texas Capital remains committed to serving our clients with thoughtful advice, innovative products, and extensive financial services, delivered with integrity."
MMKT has a 30-day SEC yield of 4.49% as of Feb. 28 and an expense ratio of 0.2%. It has $45.1 million in total assets, according to Morningstar data.
BlackRock's PMMF has a 30-day yield of 4.26% as of March 25 and an expense ratio of 0.2%. It has $145 million in total assets. BlackRock's GMMF has a 30-day yield of 4.15% and an expense ratio of 0.2%. It has $33 in total assets.
Schwab and Fidelity each offer multiple money-market funds, with yields as high as 4.3% for the "Ultra" shares of the Schwab Value Advantage Money Fund (SNAXX).
For investors, the firms' latest policy changes may have limited impact on returns. "It might not matter as much because there isn't a huge difference between funds in terms of what they are paying, but for advisors it's annoying because you want to have choices," says John Bell, financial planner and owner of Free State Financial Planning in Maryland.
Write to Andrew Welsch at andrew.welsch@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 26, 2025 14:24 ET (18:24 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
Comments