MFI Daily Data
Northern Institutional Funds filed to liquidate its $1.7 billion Northern Prime Obligations Portfolio earlier this week, we learned from Bloomberg. The filing says, "The Board of Trustees (the 'Board') of Northern Institutional Funds (the 'Trust') has determined, after consideration of a number of factors, that it is in the best interests of the Prime Obligations Portfolio (the 'Portfolio') and its shareholders that the Portfolio be liquidated and terminated on or about July 10, 2020 (the 'Liquidation Date') pursuant to a plan of liquidation approved by the Board. The Liquidation Date may be changed at the discretion of the Trust's officers. The pending liquidation of the Portfolio may be terminated and/or abandoned at any time before the Liquidation Date by action of the Board of the Trust. As of the date of this supplement, Williams Capital Shares of the Portfolio have not commenced operations and are not offered for purchase." (The fund's assets are down from $3.8 billion on Feb. 28, 2020.)
The Bloomberg piece, "Northern Trust to Shutter Money-Market Fund After Redemptions," tells us, "Northern Trust Corp. is shutting down a money-market mutual fund after volatility in March spurred redemptions that sent it below a regulatory threshold for maintaining liquidity. The $1.7 billion Northern Institutional Prime Obligations Portfolio will stop accepting new investments next month and start selling its holdings under a liquidation plan set for July 10, according to a filing."
Reuters, in a March 23 article,"Fed's Money Market Move Lifts Northern Trust Fund Above Key Threshhold," wrote, "Liquidity at a $2.2 billion prime money-market fund run by Northern Trust Corp fell below the key 30% U.S. regulatory threshold twice last week, but rebounded above that level after the U.S. Federal Reserve shored up the industry. As the coronavirus roils the global economy and squeezes Wall Street for cash, money-market reforms put in place after the 2007-2009 financial crisis are weathering a major test."
They explained, "Several institutional prime funds, whose investors include large corporations, were at risk of falling below the 30% threshold before the Fed took extraordinary steps reminiscent of the last financial crisis to backstop the money-market industry." The Northern Prime Obligations Portfolio disclosed that its weekly liquidity level fell to 27% of assets twice last week, according to the fund's website -- reducing its buffer for quickly converting assets into cash to meet investors' redemptions. However, Chicago-based Northern Trust, a bank and wealth manager, said on Monday the latest weekly liquidity level for the fund was nearly 41%."
In other news, The Federal Reserve Bank of New York published an update on the "The Primary Dealer Credit Facility" via its Liberty Street Economics blog. They write, "On March 17, 2020, the Federal Reserve announced that it would re-establish the Primary Dealer Credit Facility (PDCF) to allow primary dealers to support smooth market functioning and facilitate the availability of credit to businesses and households. The PDCF started offering overnight and term funding with maturities of up to ninety days on March 20. It will be in place for at least six months and may be extended as conditions warrant. In this post, we provide an overview of the PDCF and its usage to date."
The NY Fed writes, "Lending rose quickly after the PDCF's launch, and the weekly average of outstanding loans peaked at over $35 billion for the week ending April 15.... Outstanding loans remained in the $30-35 billion range for a few weeks, before decreasing recently, as market conditions improved. The vast majority of value-weighted PDCF loans have a maturity longer than overnight.... The bulk of the assets financed in the PDCF to date have been corporate and municipal debt, as well as asset-backed securities and commercial paper. These are asset classes that were experiencing considerable volatility and pressure in early March. Market conditions have improved markedly since the introduction of a variety of Fed interventions, including the PDCF."
They explain, "The Federal Reserve initially established the PDCF in March of 2008, following severe strains in the tri-party repo market, associated in part with Bear Stearns' troubles.... Following its inception in March 2008, usage of the original PDCF increased to approximately $40 billion, before decreasing to zero by mid-2008.... This $40 billion level is roughly comparable to the peak usage of today's PDCF. Usage of the original PDCF increased to over $140 billion in September 2008, following the bankruptcy of Lehman Brothers. This peak is much higher than the current use of today's PDCF. However, the range of collateral eligible for the PDCF post-Lehman was much broader than the range of eligible collateral at the PDCF today, making comparisons difficult."
The piece adds, "The PDCF is one of many facilities introduced by the Federal Reserve to support the U.S. economy in the face of the coronavirus pandemic. The PDCF helps primary dealers support smooth market functioning and facilitate the availability of credit to businesses and households in their capacity as market makers for corporate, consumer, and municipal obligations." For more, see these previous Liberty Street Economics blogs: "The Money Market Mutual Fund Liquidity Facility" and "The Commercial Paper Funding Facility."
Finally, Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics Tuesday, which track a shifting subset of our monthly Portfolio Holdings collection. The most recent cut (with data as of May 15) includes Holdings information from 80 money funds (up two from two weeks ago), which represent $2.664 trillion (up from $2.568 trillion) of the $5.123 trillion (52.0%) in total money fund assets tracked by Crane Data. (Note that our Weekly MFPH are e-mail only and aren't available on the website. For our latest monthly Holdings, see our May 12 News, "May MF Portfolio Holdings: Treasuries Skyrocket, Repo Plunges in April.)
Our latest Weekly MFPH Composition summary again shows Government assets dominating the holdings list with Treasury totaling $1.344 trillion (up from $1.209 trillion two weeks ago), or 50.4%, Repurchase Agreements (Repo) totaling $635.7 billion (down from $706.4 billion two weeks ago), or 23.9% and Government Agency securities totaling $470.7 billion (up from $470.4 billion), or 17.7%. Certificates of Deposit (CDs) totaled $70.7 billion (up from $48.7 billion), or 2.7% and Commercial Paper (CP) totaled $59.2 billion (up from $58.7 billion), or 2.2%. A total of $46.9 billion or 1.8%, was listed in the Other category (primarily Time Deposits), and VRDNs accounted for $37.6 billion, or 1.4%.
The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.344 trillion (50.4% of total holdings), Federal Home Loan Bank with $289.3B (10.9%), Fixed Income Clearing Co with $99.9B (3.7%), Federal Farm Credit Bank with $69.9B (2.6%), BNP Paribas with $69.5B (2.6%), Federal National Mortgage Association with $57.5B (2.2%), Federal Home Loan Mortgage Corp with $51.3B (1.9%), JP Morgan with $49.5B (1.9%), RBC with $46.8B (1.8%) and Mitsubishi UFJ Financial Group Inc with $30.0B (1.1%).
The Ten Largest Funds tracked in our latest Weekly include: JP Morgan US Govt ($228.4B), Goldman Sachs FS Govt ($217.0B), Fidelity Inv MM: Govt Port ($194.3B), BlackRock Lq FedFund ($175.5B), JPMorgan 100% US Treas MMkt ($142.3B), Wells Fargo Govt MM ($138.6B), Goldman Sachs FS Treas Instruments ($133.3B), Morgan Stanley Inst Liq Govt ($109.3B), State Street Inst US Govt ($105.4B) and BlackRock Lq T-Fund ($86.4B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary, or our Bond Fund Portfolio Holdings data series.)
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MFI Daily Data News
May 07
The May issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Tuesday morning, features the articles: "Goldman Latest Prime Inst Exit; CP/CDs Should Be Okay," which covers the continued exodus from Prime Institutional MMFs; "Corporate Treasurers Leaning Away from Prime, to SMAs," which quotes from recent TEXPO 2024 & NEAFP conferences; and, "NY Fed Says Money Funds in Europe Reflect Rates Fast Too," which reviews an article from The Federal Reserve Bank of NY. We also sent out our MFI XLS spreadsheet Tuesday a.m., and we've updated our Money Fund Wisdom database with 4/30/24 data. Our May Money Fund Portfolio Holdings are scheduled to ship on Thursday, May 9, and our May Bond Fund Intelligence is scheduled to go out on Tuesday, May 14. (Note: Register soon for our Money Fund Symposium next month in Pittsburgh, June 12-14. We hope you'll join us!)
MFI's "Prime Exit" article says, "The hits keep coming to the Prime Institutional MMF sector, as Goldman Sachs becomes the latest fund firm to announce an exit. A filing for the $1.6 billion Goldman Sachs Financial Square Money Market Fund and the $2.9 billion Goldman Sachs Financial Square Prime Obligations Fund, including its Administration, Capital, Institutional, Preferred, Select, Service, and Drexel Hamilton Class shares, explains, 'At a meeting held on April 16-17, 2024, upon the recommendation of Goldman Sachs Asset Management, the Board ... approved a proposal to liquidate the Goldman Sachs Financial Square Money Market Fund and Goldman Sachs Financial Square Prime Obligations Fund.'"
It continues, "This brings the total of Prime Institutional money funds declaring either pending conversions to Government or pending liquidations to 5 funds to date, representing $229.3 billion in assets, or 34.9% of the $657.0 billion total in Prime Inst MMFs (assets as of 3/31/24)."
We write in our Treasurers Leaning Away article, "Over the past month, a number of money fund providers (as well as Crane Data) attended and spoke at a series of regional corporate treasury events, shedding light on the recent dramatic growth of money funds and the current shifts and changes in money fund lineups. We attended TEXPO 2024, the Texas treasury event in Houston (4/14-16) and New England AFP in Boston (4/25-26), and sat through almost a dozen sessions involving money funds, liquidity and short-term investing. We quote from some of the sessions and highlights below."
It tells us, "TEXPO includes a presentation titled, 'Regulatory, Rate and Regime Changes: A Perfect Storm for Liquidity Investors?' with Jeff Jones of Twisted X, Wes Rager of Invesco, and Brittany O'Shea of Texas Capital. Rager explains, 'So, for us we’re just very defensive. We're trying to stay nimble. Typically in the rate environment that we're in, where we've seen what we think is the last rate hike, you want to start extending your portfolio. But if you extend to soon, you're locking in lower rates for a longer period of time."
Our "NY Fed" piece says, "The Federal Reserve Bank of New York's Liberty Street Economics featured the article, 'Monetary Policy and Money Market Funds in Europe.' It states, 'As shown in a past [post], the yields of money market fund (MMF) shares respond to changes in monetary policy rates much more than the rates of bank deposits; in other words, the MMF beta is much higher than the deposit beta. Consistent with this, the size of the U.S. MMF industry fluctuates over the interest rate cycle, expanding during times of monetary policy tightening. In this post, we show that the relationship between the policy rates of the European Central Bank (ECB) and the size of European MMFs investing in euro-denominated securities is also positive -- as long as policy rates are positive; after the ECB introduced negative policy rates in 2015, that relationship broke down, as MMFs received large inflows during this period.'"
It continues, "The piece explains, 'Similar to their U.S. counterparts, European MMFs can be divided into government funds ... and prime funds based on their portfolio holdings <b:>`_.... European MMFs are regulated under Regulation (EU) 2017/1131 of the European Parliament and of the Council of the European Union (EU), which was adopted in 2017 in response to the 2008 run experienced by MMFs.'"
MFI also includes the News brief, "MMF Assets Fall on Tax Payments." It states, "Money fund assets fell by $17.6 billion to $6.387 trillion in April (after falling $68.5B in March). Outflows from the long Good Friday weekend last month-end and April 15 tax payments have temporarily paused MMFs record run. Over 12 months, money funds have risen by $694.5 billion, or 12.2%, with Taxable Retail MMFs jumping $490.2 billion (26.4%) and Taxable Inst MMFs rising by $186.1 billion (5.0%)."
Another News brief, "The Wall Street Journal's CFO Journal Writes, 'Companies Belly Up to Cash Buffet, in Five Charts.' The article tells us, 'Companies are socking away cash at the fastest rate since the onset of the pandemic. Four years ago, companies boosted their cash holdings to weather economic uncertainty stemming from virus-related lockdowns. Now, with interest rates hovering at two-decade highs, they are allocating more of their portfolios to high-yielding cash ... investments, getting a welcome boost from yields that top 5% on money-market funds.'"
A third News brief, "Barron's Says, 'Money-Market Funds Look Like a Tempting Place for Your Cash.' They write, 'Most of the time, money-market mutual funds are about as exciting as watching paint dry. That's what they're designed to be: boring and reliable. But these days, money funds have gotten interesting. And tempting. Maybe overly tempting.'"
A sidebar, "Payden Limited Maturity 30," says, "A release, 'Payden & Rygel Celebrates 30 Years of the Limited Maturity Fund (PYLMX) Amidst Four Decades of Investment Excellence' states, 'Payden & Rygel is proud to announce the 30-year anniversary of its Limited Maturity Fund (PYLMX).... Payden & Rygel has cemented its reputation as a leader in short-duration strategies.... The short duration strategy team has worked together for 15 years and currently oversees $70 billion in assets.'"
Our May MFI XLS, with April 30 data, shows total assets decreased $17.6 billion to $6.387 trillion, after decreasing $66.7 billion in March, increasing $50.0 billion in February, $87.0 billion in January, $24.5 billion in December and $219.8 billion in November. Assets decreased $39.3 billion in October, but increased $77.8 billion in September, $104.2 billion in August, $21.0 billion in July, $20.3 billion in June and $152.7 billion in May."
Our broad Crane Money Fund Average 7-Day Yield was unchanged at 5.03%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was down 1 bp to 5.13% in April. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 averaged 5.40% and 5.40%, respectively. Charged Expenses averaged 0.37% and 0.26% for the Crane MFA and the Crane 100. (We'll revise expenses on Wednesday once we upload the SEC's Form N-MFP data for 4/30/24.) The average WAM (weighted average maturity) for the Crane MFA was 35 days (down 2 bps from previous month) and the Crane 100 WAM was down 3 bps at 35 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
Apr 05
The April issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Friday morning, features the articles: "Pending Reforms Trigger Prime Shift: Federated, Vanguard Go," which covers the budding exodus from Prime Institutional MMFs; "Bond Fund Symposium '24: Ultra-Shorts Look for Bounce," which quotes from our recent ultra-short bond fund conference; and, "Worldwide MF Assets Break $10 Trillion in '23; US Leads," which reviews ICI's latest global money fund statistics. We also sent out our MFI XLS spreadsheet Friday a.m., and we've updated our Money Fund Wisdom database with 3/31/24 data. Our April Money Fund Portfolio Holdings are scheduled to ship on Tuesday, April 9, and our April Bond Fund Intelligence is scheduled to go out on Friday, April 12.
MFI's "Prime Shift" article says, "Federated Money Market Trust is the first Prime Institutional MMF to announce its liquidation ahead of the latest round of SEC MMF Reforms. Vanguard and American Funds filed to convert two large internal money funds as well, and we'll no doubt see more moves over the next several months. The SEC's asset totals ... show Prime MMFs representing $1.4 trillion (as of 2/29/24), or 21.5%, of the $6.5 trillion in total MMFs, with Inst Public totaling $342 billion, Inst Nonpublic totaling $332 billion and Prime Retail totaling $733 billion."
It continues, “A Prospectus Supplement filing for the $1.2 billion Federated Hermes Money Market Obligations Trust, including the Inst (MMPXX), Capital (MMLXX) and Eagle Shares (MMMXX), tells us, 'On Feb. 15, 2024, the Board of Trustees of Federated Hermes Money Market Obligations Trust approved a Plan of Liquidation for the Federated Hermes Institutional Money Market Management pursuant to which the Fund will be liquidated on or about July 12, 2024.... In approving the Liquidation, the Board determined the Liquidation is in the best interests of the Fund and its shareholders. Accordingly, the Fund's investment adviser will take all action necessary to liquidate, dissolve, and wind up the affairs of the Fund.'"
We write in our Bond Fund article, "We recently hosted our latest Crane's Bond Fund Symposium in Philadelphia. Below, we quote from the 'Senior Portfolio Manager Perspectives,' which featured J.P. Morgan Asset Management's Dave Martucci, UBS A.M.'s Dave Rothweiler and PIMCO's Jerome Schneider. (Thanks again to those who supported BFS. Crane Data subscribers may access the recordings and conference materials at the bottom of our 'Content' page or via our 'Bond Fund Symposium 2024 Download Center.')"
It tells us, "Rothweiler comments, 'Looking back to 2022-2023, you had competition from the money funds with higher yields [and] stable NAVs, ... and people pushing to go longer duration. So you were getting hit from both ends.... The Street just doesn't have the balance sheet they used to have. [When] everyone runs out the door at the same time, liquidity is of the utmost importance.'"
Our "Worldwide" piece states, "The Investment Company Institute published, 'Worldwide Regulated Open-Fund Assets and Flows, Fourth Quarter 2023,' recently, which shows that money fund assets globally jumped by $497.0 billion, or 5.1%, in Q4'23 to $10.441 trillion. The increases were led by a sharp jump in money funds in U.S., while Ireland, Luxembourg, France and China also rose. Meanwhile, money funds in Argentina and Belgium were lower. MMF assets worldwide increased by $1.585 trillion, or 19.1%, in the 12 months through 12/31/23, and money funds in the U.S. now represent 56.7% of worldwide assets."
It continues, "ICI's release says, 'Worldwide regulated open-end fund assets increased 8.6% to $68.85 trillion at the end of the fourth quarter of 2023, excluding funds of funds.... [ICI] compiles worldwide regulated open-end fund statistics on behalf of the International Investment Funds Association (IIFA).... The collection for the fourth quarter of 2023 contains statistics from 45 jurisdictions.'"
MFI also includes the News brief, "MMF Assets Dip in March, Rebound to Record $6.538 Trillion on April 2." It states, "Money fund assets fell by $66.7 billion to $6.407 trillion in March, but they've soared by $140.3 billion in the first 2 days of April. Over the past 12 months, money funds have risen by $778 billion, or 13.8%, with Retail MMFs jumping $531.5 billion (29.2%) and Inst MMFs rising by $236.7 billion (6.4%)."
Another News brief, "BlackRock Launches Tokenized MF," comments, "A release entitled, 'BlackRock Launches Its First Tokenized Fund, BUIDL, on the Ethereum Network,' says, 'BlackRock unveil[ed] its first tokenized fund issued on a public blockchain, the BlackRock USD Institutional Digital Liquidity Fund (BUIDL). BUIDL will provide qualified investors with the opportunity to earn U.S. dollar yields by subscribing to the Fund through Securitize Markets, LLC.'"
A third News brief, "ICI: MMF Expense Ratios 0.22% in '23," says, "The Investment Company Institute published, 'Trends in the Expenses and Fees of Funds, 2023,' which tells us, 'Average expense ratios of hybrid and bond mutual funds, as well as money market funds, have ... declined meaningfully since 1996.' A table shows expense ratios by type from 1996 to 2023 and shows bonds fund averages falling from 0.84% to 0.37% over this period and money fund ratios falling from 0.52% to 0.22%. (Note: Crane Data shows the average expense ratio for money market mutual funds at 0.26% as of 2/29/24 as measured by our Crane 100 Money Fund Index.)"
A sidebar, "WSJ on Wall of Cash Bulls," says, "The Wall Street Journal writes, 'Sorry Stock Bulls, the 'Wall of Cash' Isn't All Headed Your Way.' They explain, 'Trillions of dollars are seemingly available to move out of cash funds and be put to work in the stock market. That possibility has had stock-market bulls salivating, but they are probably in for disappointment. Despite the expectation that the Federal Reserve's next move is to cut rates, money-market-fund assets have continued to grow at a fast pace. They are now around $6.5 trillion, according to industry tracker Crane Data. While the S&P 500 is up 8% year to date, total money funds added more than $150 billion in assets through the first two months of 2024, or about $50 billion more than they did in the same period last year, according to Crane.'"
Our April MFI XLS, with March 31 data, shows total assets decreased $66.7 billion to $6.407 trillion, after increasing $50.0 billion in February, $87.0 billion in January, $24.5 billion in December and $219.8 billion in November. Assets decreased $39.3 billion in October, but increased $77.8 billion in September, $104.2 billion in August, $21.0 billion in July, $20.3 billion in June, $152.7 billion in May and $56.5 billion in April."
Our broad Crane Money Fund Average 7-Day Yield was down 1 bp to 5.03%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was down 1 bp to 5.14% in March. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 averaged 5.40% and 5.41%, respectively. Charged Expenses averaged 0.37% and 0.26% for the Crane MFA and the Crane 100. (We'll revise expenses on Monday once we upload the SEC's Form N-MFP data for 3/31/24.) The average WAM (weighted average maturity) for the Crane MFA was 37 days (down 1 bp from previous month) and the Crane 100 WAM was down 2 bps at 38 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
Feb 07
The February issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Wednesday morning, features the articles: "MMF Assets Jump in January; Hitting Record $6.4 Trillion," which reviews the continued inflows into MMFs; "Federated Money Market Celebrates 50th; Q4 Earnings," which covers Federated Hermes' most recent earnings and their 50th year in MMFs; and, "BlackRock, Schwab Shed Light on MMF Shifts in Q4 Earnings," which reviews the latest earnings calls mentioning MMFs. We also sent out our MFI XLS spreadsheet Wednesday a.m., and we've updated our Money Fund Wisdom database with 1/31/24 data. Our February Money Fund Portfolio Holdings are scheduled to ship on Friday, February 9, and our February Bond Fund Intelligence is scheduled to go out on Wednesday, February 14.
MFI's "MMF Assets Jump" article says, "Money fund assets continued their record run in January, normally the weakest month of the year, after rising by a record $1.1 trillion in 2024. Our MFI XLS shows assets rising $87.0 billion, or 1.4%, to a record $6.405 trillion in the latest month. Assets continue higher in February too, rising $18.3B in the first 5 days of the new month, according to our MFI Daily."
It continues, "Over the past 12 months through 1/31/24, money fund assets have jumped by $1.200 trillion, or 23.0%. Taxable Retail MMFs increased by $591.3 billion, or 34.8% to $2.289 trillion, while Taxable Inst MMFs increased by $601.7 billion, or 17.8% to $3.990 trillion. Tax Exempt MFs inched up $7.4 billion, or 6.2% to $126.5 billion <b:>`_."
We write in our Federated 50th article, "Federated Hermes announced the 50th anniversary of Money Market Management, the company's first and one of the industry's oldest money market mutual funds. A press release entitled, 'Federated Hermes, Inc. celebrates 50 years of money market innovation' explains, 'Federated Hermes, Inc. (FHI), a global leader in active, responsible investing, today celebrates 50 years of money market innovations focused on improving client experiences and investment outcomes. Over five decades, Federated Hermes has maintained a steadfast dedication to products and services that are vetted through diligent credit analysis and broad diversification -- providing clients with competitive yields and daily liquidity.'"
It tells us, "President & CEO J. Christopher Donahue comments, 'For 50 years, through seasons of volatility and calm, Federated Hermes has confidently managed money market funds as the ballast in our ship. Our team of investment management professionals has maintained an unwavering focus on providing sound and innovative cash management solutions for our clients. With an average of 25 years of investment experience, the investment professionals on our liquidity team have provided rigorous money market management through a variety of interest-rate environments, regulatory changes, bull and bear economies and changing geopolitical conditions.'"
Our "BlackRock, Schwab" piece states, "BlackRock and Schwab both discussed money funds on their latest earnings calls, and show that 'cash sorting,' or the shift into money funds from bank deposits, remains alive and well. On BlackRock's latest earnings and earnings call, CFO Martin Small explains, 'BlackRock's cash management platform saw $33 billion of net inflows in the fourth quarter and $79 billion of net inflows in 2023. We're pleased with the continued strong growth in our cash and liquidity business. With year-end AUM up 14%, or over $90 billion year on year, we're leveraging our scale and integrated cash offerings to engage with clients who are using these products not only to manage liquidity but also to earn attractive returns.'"
It continues, "During the Q&A, one analyst asked about fixed income inflows, and President Rob Kapito responds, 'I wake up every morning salivating about the $7 trillion that's sitting in money market accounts that's waiting to move. And in order for it to move, you have to have a wide plate of products.... ETFs are becoming the investor's preferred vehicle with access to investments.... So, I think there's a huge, huge runway for fixed income.... The wind is right behind our back for that.'"
MFI also includes the News brief, "American Funds Central Cash to Convert to Govt to Avoid Liquidity Fees." which says, "Capital Group's $144.4 billion American Funds Central Cash fund, the largest Prime Inst money market fund, has filed to convert to a Government MMF, making it the first major casualty of the latest round of the SEC's pending Money Fund Reforms. Its Form N-1A filing tells us, 'On or about June 7, 2024, the fund intends to operate as a government money market fund pursuant to rule 2a-7 under the 1940 Act.'"
Another News brief quotes, "Investors' Business Daily on 'How The Best Online Brokers Boost Your Cash Holdings.' They state, 'Online brokers face stiff competition when it comes to paying clients to park their idle cash. They've had to up the ante as interest rates have risen and investors had plenty of cash ... options to choose from. Cash management options are a priority for online investors.'"
A third News brief, "The WSJ's 'Charles Schwab Just Survived a Year From Hell. The Trouble Isn’t Over Yet,' tells us, 'Schwab, founded some 50 years ago, grew from a discount brokerage for Main Street into a personal-finance supermarket.... While Schwab cut fees and made less revenue from trading, it minted money sweeping cash from its brokerage customers into bank deposits that paid out little interest. When rates were low, it worked well for Schwab. Customers were content keeping their money at the bank when there were few alternatives for better yield.'"
A sidebar, "Worldwide MF Assets $9.9T," says, "The Investment Company Institute's, 'Worldwide Regulated Open-Fund Assets and Flows, Third Quarter 2023' shows that money fund assets globally jumped by $225.3 billion, or 2.3%, in Q3'23 to $9.944 trillion. The increases were led by a sharp jump in money funds in U.S., while Ireland, Luxembourg, Mexico and Canada also rose. Meanwhile, money funds in China and Australia were lower. MMF assets worldwide increased by $1.639 trillion, or 19.7%, in the 12 months through 9/30/23, and money funds in the U.S. now represent 57.1% of worldwide assets."
Our February MFI XLS, with January 31 data, shows total assets increased $87.0 billion to a record $6.405 trillion, after increasing $24.5 billion in December and $219.8 billion in November. Assets decreased $39.3 billion in October, but increased $77.8 billion in September, $104.2 billion in August, $21.0 billion in July, $20.3 billion in June, $152.7 billion in May, $56.5 billion in April, $345.1 billion in March and $56.0 billion in February."
Our broad Crane Money Fund Average 7-Day Yield was down 2 bps to 5.06%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was down 3 bps to 5.17% in January. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 both averaged 5.43%. Charged Expenses averaged 0.37% and 0.26% for the Crane MFA and the Crane 100. (We'll revise expenses on Thursday once we upload the SEC's Form N-MFP data for 1/31/24.) The average WAM (weighted average maturity) for the Crane MFA was 38 days (up 1 day from previous month) and the Crane 100 WAM was also unchanged at 38 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
Jan 08
The January issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Monday morning, features the articles: "Record '23 for Money Funds: Assets, Revenues & Dividends," which reviews the record-setting year for MMFs in 2023; "Wall Street's Enthralled by $6 Trillion in MMFs, But Mirage," which attempts to debunk the "Wall of Cash" theory; and, "Top Money Funds of 2023; 15th Annual MFI Awards," which reviews the best performing MMFs of 2023. We also sent out our MFI XLS spreadsheet Monday a.m., and we've updated our Money Fund Wisdom database with 12/31/23 data. Our January Money Fund Portfolio Holdings are scheduled to ship on Wednesday, January 10, and our January Bond Fund Intelligence is scheduled to go out on Tuesday, January 16.
MFI's "Record '23" article says, "Money funds had perhaps the best year in their 52-year history in 2023, with assets surging $1.1 trillion to record $6.3 trillion, yields rising to over 5% and revenues jumping to well over $15.0 billion. Money fund investors collected more in dividends this year than they had in the prior 15 years combined (almost $300 billion), and, predictions of Fed cuts and outflows notwithstanding, the party shows no signs of stopping."
It continues, "The Financial Times' article, 'Stampede Into Money Market Funds Sparks Fee Bonanza for Asset Managers' explains, 'Record inflows into US money market funds in 2023 have triggered a multi-billion-dollar fee bonanza for the asset management industry, which for years treated the product as a loss-leader. US money market fund providers -- such as Fidelity, Vanguard and Charles Schwab -- collectively earned $7.6bn in fees in 2023 as assets passed $6.3tn, according to government figures. That was more than $1bn higher than in 2022 and a jump of around 35% from 2021, before US interest rates began to rise, according to the data from the Office for Financial Research.'"
We write in our Wall Street's Enthralled article, "Over the past month, a myriad of articles and financial news shows have cited the $6 trillion in money funds as a reason stocks will go higher. We've been hearing this 'Wall of Cash' theory for decades, and still don't buy it. (They never mention the $17 trillion in bank deposits nor the fact that almost 2/3 of the MMF total is Institutional.) Below, we quote from a number of the recent mentions, and look at whether they have any merit."
It tells us, "One of the few that gets it right is Bloomberg's 'Stock Skeptics Say $6 Trillion Cash Waiting on Sidelines Is a Mirage.' It says, 'One often-made argument in favor of stocks says investors should dive in before roughly $6 trillion of money-market cash gets redeployed into equity assets globally. But buying the theory requires a big leap of faith -- there's significantly less out there to actually fund riskier gambles. So say a pack of stock skeptics who, while not counseling selling out of the market, warn that some of the bull cases going around suffer from some optimistic framings.'"
Our "Top Money Funds" piece states, "This issue recognizes the top performing money funds, ranked by total returns, for calendar year 2023, as well as the top funds for the past 5‐year and 10‐year periods. We present the funds below with our annual Money Fund Intelligence Awards. These are given to the No. 1‐ranked funds based on 1‐year, 5‐year and 10‐year returns, through Dec. 31, 2023, in each of our major fund categories -- Prime Institutional, Government Institutional, Treasury Institutional, Prime Retail, Government Retail, Treasury Retail and Tax‐Exempt."
It continues, "The Top-Performing Prime Institutional fund (and fund overall) was BlackRock Cash Inst MMF SL (BISXX), which returned 5.38% <b:>The Top-Performing Prime Institutional fund (and fund overall) was BlackRock Cash Inst MMF SL (BISXX), which returned 5.38%. Excluding private and internal funds, the best performer in 2023 was Western Asset Prem Inst Liquid Res Capital (WAAXX) with a return of 5.35%. Among Prime Retail funds, Allspring Money Market Fund Premier (WMPXX) had the best return in 2023 (5.28%). (Our Crane 100 Money Fund Index returned 4.90% in 2023.)"
MFI also includes the News brief, "MF Assets Continue Record Run," which says, "Our MFI XLS shows assets rising $24.5 billion, or 0.4%, to a record $6.312 trillion in December. For 2023, MMFs are up $1.143 trillion (22.1%) with Taxable Retail MMFs up $603.3B (36.9) and Taxable Inst MMFs up $528.0B (15.5%). Assets continue jumping in January too, rising $66.5B to a record $6.367T in the first 4 days of the New Year, according to our MFI Daily."
Another News brief states, "Bloomberg Interviews Wells Fargo's Vanessa McMichael in, '2023 the Year for Money Market Funds.' McMichael says, 'This year has undoubtedly been the year of the money market funds. Right now, money market funds are sitting at about $6 trillion.... At the end of 2019, total money market fund assets were only $3 trillion.... There's been about $1 trillion in cash that has flown into money market funds throughout this year.... You can't deny the value.... Over the past couple of months, money market fund yields have remained stable while the rest of the curve has continued ... to decline.... But ... we think that [corporate] investors do need to think about extending duration.'"
A third News brief, "Dec. Portfolio Holdings: Treasuries Jump Again, Repo Slides," says, "Our latest Money Fund Portfolio Holdings statistics show that Treasury holdings surged again in November while Repo fell. Treasuries jumped by over $250 billion, ranking in the No. 2 spot. Agencies were the third largest segment, CP remained fourth, ahead of CDs, Other/Time Deposits and VRDNs."
A sidebar, "Reuters on $6 Tril. Cash Hoard," says, "Reuters' 'A $6 trillion cash hoard could fuel more U.S. stock gains as Fed pivots,' explains, 'Investors wondering whether markets can continue their torrid rally are eyeing one important factor that could boost assets: a nearly $6 trillion pile of cash on the sidelines. Soaring yields have pulled cash into money markets and other short-term instruments.... Total MMF assets hit a record $5.9 trillion on Dec. 6, according to ICI.'"
Our January MFI XLS, with December 31 data, shows total assets increased $24.5 billion to $6.312 trillion, after increasing $219.8 billion in November, decreasing $39.3 billion in October, increasing $77.8 billion in September, $104.2 billion in August, $21.0 billion in July, $20.3 billion in June, $152.7 billion in May, $56.5 billion in April, $345.1 billion in March, $56.0 billion in February and $22.5 billion in January."
Our broad Crane Money Fund Average 7-Day Yield was unchanged at 5.08%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was unchanged at 5.20% in December. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 both averaged 5.46%. Charged Expenses averaged 0.37% and 0.26% for the Crane MFA and the Crane 100. (We'll revise expenses on Tuesday once we upload the SEC's Form N-MFP data for 12/31/23.) The average WAM (weighted average maturity) for the Crane MFA was 37 days (up 2 days from previous month) and the Crane 100 WAM was also up 3 at 38 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)