Group 1 - The total scale of money market funds in China exceeded 14.6 trillion yuan by the end of July 2025, while the average 7-day annualized yield of these funds has been declining, currently at only 1.1% as of September 17, 2023 [1] - A significant number of money market funds are experiencing yields below 1.2%, with 251 funds dropping below 1.2%, 182 below 1.1%, and 78 below 1% [1] - The decline in yields is closely linked to the "moderately loose" monetary policy implemented in China, which is expected to continue throughout the year, affecting the yields of underlying assets such as bank deposits and short-term government bonds [1] Group 2 - The phenomenon of money market fund yields dropping below 1% is not unique to China, as developed markets like the US and Eurozone have experienced similar trends during economic downturns and low policy interest rates [2] - In the US, money market funds entered the "sub-1%" era during three distinct periods, coinciding with interest rate cuts in response to economic challenges [2] - Despite the declining yields, the overall scale of domestic money market funds continues to grow, driven by strong demand for low-risk asset allocation and the attractiveness of products like Yu'ebao, which integrate payment and investment functions [2]

Core Viewpoint - The article discusses the recent trend of fee reductions in money market funds, particularly focusing on Tianhong Yuerbao, which has lowered its custody fee for the first time since its inception, reflecting the pressure on fund yields and the competitive landscape in the market [3][4][5]. Fee Reduction in Money Market Funds - Tianhong Yuerbao has reduced its custody fee from 0.08% to 0.07%, which is expected to save investors nearly 80 million yuan annually based on its current scale of 793.219 billion yuan [4][5]. - The average 7-day annualized yield of money market funds has dropped to 1.24%, down 0.38 percentage points from the previous year, with Tianhong Yuerbao's yield hitting a record low of 1.02% [3][8]. - Over 50 money market funds have joined the fee reduction trend, with regulatory bodies also pushing for lower sales service fee caps [3][5]. Reasons for Fee Adjustments - The fee reductions are aimed at better meeting investors' needs and reducing their investment costs, as the overall yield of money market funds has declined [5][6]. - Regulatory guidance has played a significant role in prompting these fee adjustments, with new regulations suggesting a reduction in the maximum sales service fee for money market funds [5][6]. Market Trends and Impacts - There has been a significant decrease in the number of high-yield money market funds, with only 9 funds maintaining yields above 2%, compared to 69 last year [8]. - The decline in yields has led to some funds triggering contractual clauses for automatic fee reductions, impacting their operational strategies [9][10]. - As of June, over 40% of money market funds experienced a decrease in scale, indicating a shift in investor preferences and market dynamics [9][10]. Future Outlook - Analysts predict that the downward trend in money market fund yields may continue, potentially slowing growth in fund sizes as the yield advantage over deposits diminishes [10]. - Fund managers are advised to enhance their research capabilities and improve customer engagement to maintain competitiveness in a challenging market environment [10].

Core Viewpoint - The recent fee reduction by Tianhong Yuerbao, the largest money market fund in China, marks a response to the ongoing pressure on fund yields, with the average annualized yield for money market funds dropping to 1.24% as of September 23, down 0.38 percentage points from the previous year [1][5]. Fee Reduction Actions - Tianhong Yuerbao has announced a reduction in its custody fee from 0.08% to 0.07%, effective September 23, which is expected to save investors nearly 80 million yuan annually based on its current scale of 793.219 billion yuan [1][2]. - The comprehensive fee rate for Tianhong Yuerbao has decreased from 0.63% to 0.62%, indicating a limited overall reduction [2]. - Over 50 money market funds have joined the fee reduction trend, with regulatory bodies also pushing for lower sales service fee caps [1][3]. Market Context - The average 7-day annualized yield for money market funds has decreased significantly, with only 9 funds maintaining yields above 2%, compared to 69 funds from the previous year [5]. - The decline in yields has led to a larger number of funds experiencing reduced investor interest, with 154 out of 363 funds showing a decrease in scale this year [6]. Regulatory Influence - The recent fee reductions are partly driven by regulatory changes aimed at lowering costs for investors, with new proposals suggesting a cap on sales service fees for money market funds [3][4]. - The ongoing regulatory push is expected to continue influencing fee structures across the industry, with many fund companies indicating they will adjust fees in line with regulatory requirements [4]. Future Outlook - Analysts predict that the trend of declining yields may persist, potentially leading to slower growth in money market fund scales as the yield advantage over deposits diminishes [7]. - Fund managers are advised to enhance their investment research capabilities and improve customer engagement to maintain competitiveness in a challenging market environment [7].

Group 1 - Multiple money market funds have announced fee reductions to lower investment costs for investors [3] - E Fund has reduced the management fee from 0.20% to 0.15% and the custody fee from 0.08% to 0.05% for its money market fund starting September 26 [3] - Guoxin Guozheng has adjusted its management fee from 0.30% to 0.20% and custody fee from 0.10% to 0.07% effective September 23 [3] - Huabao Fund is offering a promotional service fee reduction from 0.25% to 0.20% for its cash management fund from September 23 to December 23 [3] Group 2 - The average 7-day annualized yield of 358 money market funds is 1.12%, with 22% of funds yielding below 1% [4] - Funds with yields below 1% are primarily those with assets under 10 billion, but there are also 21 funds exceeding 10 billion in this category [4] - The demand for cash management is shifting towards low-risk and flexible options due to declining deposit rates and increased market volatility [4] - Money market funds remain a key choice for cash management due to their low risk, high liquidity, and convenience [4]

Core Viewpoint - The continuous decline in the yield of money market funds has become a new normal in the industry, with the average annualized yield approaching or even falling below 1% [1][2][7]. Group 1: Current Yield Trends - As of September 17, 2023, the average 7-day annualized yield of 359 money market funds was only 1.1%, with 251 funds falling below 1.2% and 78 below 1% [1]. - The average 7-day annualized yield for money market funds was 2.34% at the end of 2023 and is projected to drop to 1.46% by the end of 2024 [2]. Group 2: Sources of Yield - Money market funds primarily generate income from four sources: bank deposit interest, bond investment returns, bill income, and reverse repos [3]. - As of the second quarter of 2025, the asset allocation of money market funds was 54% in bonds, 27% in bank deposits, and 18.6% in reverse repos [3]. Group 3: Monetary Policy Impact - China's monetary policy has maintained a loose stance, with multiple interest rate cuts leading to a significant drop in policy interest rates [4][6]. - The LPR (Loan Prime Rate) has seen several reductions since 2024, with the 1-year LPR dropping to 3.10% by October 2024 [5]. Group 4: Regulatory Influence - Regulatory policies have also impacted the yield space for money market funds, with initiatives introduced to optimize non-bank interbank deposit rate management [6]. Group 5: Market Positioning - Despite declining yields, the net asset value of money market funds reached 14.23 trillion yuan by the end of July 2023, indicating robust growth [7]. - Money market funds remain a preferred choice for managing idle cash due to their liquidity and relatively higher yields compared to bank deposits [7].

Report Summary 1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Core Viewpoints - The scale of money market funds rebounded seasonally in Q2 2025, and the growth rate picked up due to the increased yield advantage over deposits [2][13][18]. - The yield of money market funds may continue to decline, and the scale growth may slow down in the future [6]. 3. Summary by Relevant Catalogs 3.1 Money Market Fund Scale Changes - In Q2 2025, the net asset value of money market funds reached 14.21 trillion yuan, an increase of 904.6 billion yuan from the previous quarter and 205.9 billion yuan more than the same period last year. The scale rebounded seasonally [2][13]. - The year-on-year growth rate of the net asset value of money market funds rose from 6.7% in March to 7.9% in June. The average seven-day annualized yield of all money market funds decreased from 1.45% in March to 1.34% in June, a decrease of 11.17 bps. The decline in the listed deposit rates in Q2 was about 5 - 25 bps. The yield advantage of money market funds over deposits increased, driving the scale growth [2][18]. - In Q2, the spread between the yields of funds, certificates of deposit, and money market funds fluctuated and declined. Considering the tax advantages of money market funds, the motivation for institutional investors to subscribe for money market funds may have increased [3][21][22]. 3.2 Money Market Fund Yield Interval Distribution - The yield distribution interval of money market funds continued to shift downward. In Q2, more money market funds had yields below 1.4%, accounting for 40%, an increase of 5 percentage points from the previous quarter. The average yields of all money market funds in April - June were 1.42%, 1.35%, and 1.34% respectively. The easing of funds in Q2 accelerated the decline in money market fund yields [4][26]. 3.3 Money Market Fund Institutional Behavior Changes - In Q2, money market funds significantly increased their holdings of deposits, and the deposit ratio rebounded significantly. They also increased their bond holdings, but the bond ratio decreased. The proportion of bonds decreased by 2.52% to 54.05%, and the deposit ratio rebounded by 5.62% to 26.97%. Among the bond structure, money market funds increased their holdings of certificates of deposit by 34.59 billion yuan, and the proportion of inter - bank certificates of deposit held by money market funds in the market value of bond investments increased to 85.15% [4][29]. - In Q2, with the easing of funds, money market funds extended their durations and increased leverage. The average remaining maturity of the investment portfolio at the end of Q2 was 83.16 days, 7.50 days longer than the previous quarter, and the average leverage ratio was 105.81%, an increase of 1.85% from the previous quarter. The duration returned to a high level, and the leverage was at a neutral level [5][34]. 3.4 Inter - bank Certificate of Deposit Fund Scale Changes - In Q2 2025, the scale of inter - bank certificate of deposit funds increased slightly by 640 million yuan to 125.8 billion yuan. The number increased to 101, and the average scale per fund decreased from 2.149 billion yuan at the end of 2023 to 1.246 billion yuan in Q2 [42].

Report Industry Investment Rating No information provided in the content. Core Viewpoints of the Report - In Q2 2025, the scale of money market funds rebounded seasonally, and the growth rate of the scale picked up due to the increase in the relative income advantage over deposits. However, the yield of money market funds is expected to continue to decline, and the scale growth may slow down [2][5]. - In Q2, the yield spread between funds, certificates of deposit, and money market funds fluctuated and declined, which may enhance institutional investors' motivation to subscribe for money market funds [3]. - The yield distribution range of money market funds continued to move down, and the loosening of funds in Q2 accelerated the decline in yields [3]. - In Q2, money market funds significantly increased their holdings of deposits, and the proportion of deposits rebounded significantly. They also increased their holdings of bonds, but the proportion of bonds decreased. In addition, money market funds extended their durations and increased leverage [4]. Summary by Related Catalogs Money Market Fund Scale Changes - In Q2 2025, the asset net value of money market funds reached 14.21 trillion yuan, an increase of 90.46 billion yuan from the previous quarter and a year - on - year increase of 20.59 billion yuan. The scale rebounded seasonally [9]. - The year - on - year growth rate of the asset net value of money market funds rose from 6.7% in March to 7.9% in June. The average seven - day annualized yield of money market funds in the whole market decreased from 1.45% in March to 1.34% in June, a decrease of 11.17 bps. The yield advantage of money market funds over deposits increased, which promoted the rebound of the scale growth rate [12]. - In Q2, the yield spread between funds, certificates of deposit, and money market funds fluctuated and declined. Considering the tax advantages of money market funds, institutional investors' motivation to subscribe for money market funds may have increased [15][18]. Money Market Fund Yield Interval Distribution - In Q2, more money market funds had yields below 1.4%, accounting for 40%, an increase of 5 percentage points from the previous quarter. The average yields of money market funds in the whole market from April to June were 1.42%, 1.35%, and 1.34% respectively. The loosening of funds in Q2 accelerated the decline in yields [22]. Money Market Fund Institutional Behavior Changes - In Q2, money market funds increased their bond holdings by 36.96 billion yuan and their deposit holdings by 1.14 trillion yuan. The bond proportion decreased by 2.52% to 54.05%, and the deposit proportion rebounded by 5.62% to 26.97%. Among the bonds, money market funds increased their holdings of certificates of deposit by 34.59 billion yuan, and the proportion of inter - bank certificates of deposit in the market value of bond investments increased to 85.15% [4][26]. - At the end of Q2, the average remaining maturity of the investment portfolio of money market funds was 83.16 days, 7.50 days longer than the previous quarter; the average leverage ratio was 105.81%, an increase of 1.85% from the previous quarter. The duration returned to a high level, and the leverage was at a neutral level [4][29]. Changes in the Scale of Inter - bank Certificate of Deposit Funds - In Q2 2025, the scale of inter - bank certificate of deposit funds increased slightly by 640 million yuan to 125.8 billion yuan. The number increased to 101, and the average scale per fund decreased from 2.149 billion yuan at the end of 2023 to 1.246 billion yuan in Q2 [33].