Vanguard shifts expenses on money market fund

BOSTON (Reuters) – Vanguard Group Inc reallocated operating expenses on a $1.9 billion municipal money market fund, a spokesman said, a move called akin to waiving fees as rival fund firms have done amid low interest rates.

Because yields have fallen below expenses on the Vanguard Pennsylvania Municipal Money Market Fund , “expenses of the fund are being temporarily reallocated to other funds within Vanguard,” company spokesman Freddy Martino said via e-mail.

Vanguard, the world’s largest mutual fund manager, said in a securities filing late on Monday made the change “to maintain a zero or positive yield on the fund.” Vanguard is not currently reallocating expenses on other funds, Martino said.

Daniel Wiener, who edits a newsletter for Vanguard investors, in an e-mailed note described the move as “waiving money market fees,” as other firms have done. Vanguard and rivals have also closed some money funds to new investors as a way to protect returns for existing ones.

The yield on the benchmark 10-year U.S. Treasury note, around 2% at the start of the year, has fallen sharply amid the COVID-19 pandemic and was at 0.6709% on Tuesday morning.

(Reporting by Ross Kerber, editing by Louise Heavens)