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Good news for investors: Some large firms such as Fidelity and Vanguard are waiving some fees on money market funds.

The bad news: That’s because yields are so low on money market funds that without a fee waiver, the returns might drop below zero.

Blame the Federal Reserve for this conundrum, as yields fall below expenses of running a money market fund, said Jeffrey DeMaso, co-editor of a Vanguard newsletter.

With its most recent round of interest rate cuts, in March, the central bank threw an anchor into the market, pulling down yields.

The Federal Reserve set the target range for federal funds at 0.00% to 0.25%. Yields on money market mutual funds tend to follow short-term rates set by the Fed.

For the Vanguard Pennsylvania Municipal Money Market Fund, for example, Vanguard said expenses of the fund are being “temporarily reallocated” to other funds within Vanguard. Effectively, it’s a fee waiver.

Vanguard said in a securities filing that it made the change “to maintain a zero or positive yield for the fund.”

“This is not a ‘break the buck’ scenario, like we saw during the Great Financial Crisis,” DeMaso said. That was when money market funds’ net asset value fell below the $1.00 per share floor.

Instead, yields have dropped. “It’s more akin to 2011 period when money market yields were heading down because of what the Fed did cutting rates. The Fed Funds rate is near zero as well. So that’s the gravity that’s the pull on yields again today” in money market funds, DeMaso said.

As an alternative, he prefers to hold Vanguard Short Term Tax Exempt Fund, saying, “I get a little bit of income with about the same risk.”

Will bond funds be next for fee waivers?

Vanguard’s Short-Term Treasury Fund (symbol: VFISX) has also seen its yield drop sharply. After fees, the fund’s yield actually fell to a negative yield, -0.01% last month.

And it’s not just Vanguard waiving fees. Roughly half of Wall Street firms are cutting fees temporarily, according to trade publication Ignites.com.

Fidelity in March began waiving fees on Fidelity Treasury Money Market Fund, Fidelity Government Money Market Fund and the FIMM Treasury Portfolio, due to falling interest rates.

Alternatives? Keep your money in the stock market — which was the Fed’s goal all along. Another option: an exchange-traded fund, iCASH, run by BlackRock.