Money market funds cut fees to attract customers; average seven-day annualized yield drops to 1.08%

Securities Times Reporter Zhao Mengqiao

Since the start of the Year of the Horse, a number of money market funds have begun to lower fees to attract investors.

On February 25, several money market funds, including Changsheng Yuan Zengli and Shenwan Lingxin Tian Tian Li, announced reductions in their management fee rates, with significant decreases. Looking at the longer term, fee reductions for money market funds have become a trend, with over 90 similar announcements since the beginning of 2026.

Regarding the yields of money market funds, data shows that as of February 25, the average seven-day annualized yield of 339 money market funds in the market dropped to 1.08%, approaching the 1% threshold.

Concentrated Fee Reductions in Money Market Funds

Recently, multiple money market funds announced lower management fees. On February 25, Changsheng Fund announced a reduction in the management fee for Changsheng Yuan Zengli Money Market Fund from 0.7% to 0.25%. Shenwan Lingxin Fund also announced that starting February 24, the management fee for Shenwan Lingxin Tian Tian Li Money Market Fund would be lowered from 0.9% to 0.3%.

On the same day, funds under Anxin Fund and Nord Fund also disclosed similar fee reduction notices. Data indicates that the fee cuts are related to the ongoing decline in money market fund yields, which may be eroding management fee income.

For example, Changsheng Yuan Zengli Money Market Fund announced that according to relevant agreements: if the estimated seven-day annualized yield calculated with a 0.70% management fee is less than or equal to twice the current deposit rate, the fund manager will adjust the management fee to 0.25% to reduce the risk of negative estimated net income per ten thousand units and avoid overdraft risks for sales agencies. The management fee will be restored to 0.70% once these risks are eliminated.

Over the longer term, Wind data shows that as of February 25, the average seven-day annualized yield of 339 money market funds (based only on initial share data) fell to 1.08%, nearing the 1% mark. Except for a few small funds with highly volatile net values, most money market funds have a seven-day annualized yield below 1.5%, with about 25% of funds yielding less than 1%.

Some larger funds, such as Tianhong Yu’e Bao, have a seven-day annualized yield of 1.002% as of February 25. As of the end of last year, China Construction Bank’s Jianxin Jiashenbao, with a scale of 390 billion yuan, had a seven-day annualized yield of about 1.21%. Additionally, large funds like E Fund Easy Finance, Huaxia Wealth Treasure, and Southern Cash Pass, each with over 200 billion yuan in assets, have seven-day annualized yields below 1.1%.

An industry observer noted that the core reason for the continued decline in money market fund yields is the systemic downward shift in interest rate levels combined with ample market liquidity. On one hand, the central bank maintains a loose monetary policy, driving short-term interest rates down, with yields on interbank certificates of deposit, short-term debt, and bank deposits falling accordingly. On the other hand, persistent liquidity easing has intensified the “asset shortage” phenomenon, forcing fund managers to shorten portfolio durations and reduce leverage to control risk exposure, further suppressing product returns. Additionally, policies such as the optimization of the interbank deposit rate self-regulation mechanism have objectively narrowed the space for yield management in money market funds.

Continued Growth in Scale

It is noteworthy that despite the declining yields, the overall scale of money market funds continues to grow.

Statistics show that, amid record-high public fund sizes, money market funds have played a dominant role, with a net increase of 1.43 trillion yuan in 2025. Research reports indicate that seasonally, the fourth quarter of last year saw higher incremental growth in money market funds compared to 2021–2023, partly benefiting from seasonal increases in wealth management scale and a higher proportion of allocations to public funds.

A public fund manager in North China stated that as a typical liquidity management tool, money market funds are known for their relatively low risk, good liquidity, and stable returns. They can serve as a conservative investor’s idle cash management option, a “ballast” for steady investors’ assets, or a “safe haven” for active investors amid the stock-bond balancing act.

“Recently, the stock market has been volatile, prompting many funds to seek safe havens, redeem equity assets, and shift into more stable products. Given the recent turbulence in the bond market, money market funds are a safer choice, even with declining yields, attracting capital inflows,” the industry insider said.

Additionally, Zhu Yanqiong, fund manager of the Fixed Income Department at Taiping Fund, believes that money funds linked with payment functions on internet platforms and those tied to broker margin accounts have specific application scenarios. With high liquidity and small yield fluctuations, they remain attractive to individual investors.

Still High Allocation Value

Since the start of the year, overall pressure on bank liabilities has eased, with clear structural differentiation. The willingness of banks to absorb interbank liabilities remains weak, and long-term money market rates, represented by one-year interbank certificates of deposit, have slightly declined.

A fund manager overseeing money market funds in North China reviewed this year’s market conditions, noting that although the central bank increased net liquidity injections through MLF (Medium-term Lending Facility) and other tools after the New Year, liquidity in the short-term repo market remains controlled within a “not short, not excessive” range. Banks faced some funding inflow and outflow pressures during the Spring Festival, so they are expected to maintain a certain level of interbank liability absorption. In the non-bank sector, influenced by factors such as the interest rate on demand deposits and frozen funds from new stock issues, repo rates have remained at relatively high levels.

“The expectation is that in February, money market rates will stay relatively flat, possibly even invert. Short-term rates, affected slightly by the Spring Festival, may rise modestly, but long-term rates are unlikely to increase significantly under easing expectations,” the fund manager said.

Du Lei, a researcher at Huashang Fund, believes that policy support for prices remains strong, with CPI and PPI gradually rebounding. Therefore, macroeconomic recovery is expected to continue mildly, with monetary policy likely to stay prudent and moderately loose. Liquidity conditions should remain reasonably ample, making money market funds still valuable for allocation and effective cash management tools.

(Edited by: Wen Jing)