Money Market News
J.P. Morgan's last "Short-Term Market Outlook And Strategy discusses, "A deep dive into weekly MMF holdings and Treasury repo clearing." It a section entitled, "MMF holdings update special edition: tax season flows," they write, "In a departure from our usual monthly MMF holdings update, we took a look at Crane's weekly MMF holdings data to see how their portfolios evolved around tax season -- a time period when MMFs tend to see larger outflows. [A table] shows the composition of their portfolios as of March month-end, 4/11 or 4/12, and 4/18 or 4/19. This is based on 42 taxable MMFs with reported holdings data as of at least 4/18, representing close to 40% of the entire MMF universe." (Note: Let us know if you'd like to see our latest Weekly Money Fund Portfolio Holdings data set, which is a shifting subset of our monthly Money Fund Portfolio Holdings collection.)
The Investment Company Institute, the trade group for the mutual fund industry, published its latest monthly "Trends in Mutual Fund Investing" and "Month-End Portfolio Holdings of Taxable Money Funds" for March 2024 earlier this week. ICI's monthly Trends shows money fund totals falling $73.0 billion in March to $5.984 trillion (after a jump in February, January, December and November, a decrease in October, and increases in September, August, July, June, May and April). Prior to this, the March 2023 jump (a $371.0 billion increase) was the third largest monthly increase ever and the largest in history if you exclude 2 coronavirus lockdown panic months in March and April 2020. Bond fund assets increased $63.8 billion to $4.846 trillion, and bond ETF assets increased and remain above the $1.5 trillion level (after passing it for the first time ever 3 months ago).
The SEC published its latest quarterly "Private Funds Statistics" report recently, which summarizes Form PF reporting and includes some data on "Liquidity Funds," or pools which are similar to but not money market funds. The publication shows overall Liquidity fund assets were higher in the latest reported quarter (Q3'23) at $346 billion (up from $319 billion in Q2'23 and up from $331 billion in Q3'22). We also again briefly review the part of the SEC's MMF Reforms which addresses "Amendments to Form PF Reporting Requirements for Large Liquidity Fund Advisers" and which go into effect in coming months, below.
Federated Hermes, the 6th largest manager of money funds, reported Q1'24 earnings and hosted its Q1'24 earnings call late last week. On the call, President & CEO J. Christopher Donahue, comments, "We ended the first quarter with record assets under management of $779 billion, driven by record money market assets of $579 billion.... In Q1, we reached another record high for money market fund assets, money market separate account assets and total money market assets.... Total money market assets increased by $19 billion during the first quarter from year end. Money market strategies continue to benefit from favorable market conditions for cash as an asset class, elevated liquidity levels in the financial system, and attractive yields compared to cash management alternatives, like bank deposits and direct investments in money market instruments like T-bills and commercial paper. In the long-expected, upcoming period of declining short term interest rates, we believe that market conditions for money market strategies will continue to be favorable compared to direct market rates and bank deposit rates."
ICI's latest "Money Market Fund Assets" report shows money market mutual fund assets rebounding after falling sharply the prior week due to tax payments. MMF assets are up by $91 billion, or 1.9%, year-to-date in 2024 (through 4/24/24), with Institutional MMFs down $20 billion, or -0.6% and Retail MMFs up $111 billion, or 6.6%. Over the past 52 weeks, money funds have risen by $715 billion, or 13.6%, with Retail MMFs rising by $502 billion (26.4%) and Inst MMFs rising by $262 billion (7.9%). (Note: Thanks to those who visited with us at the `The New England AFP Annual Conference!)
With less than 2 months to go until Crane's Money Fund Symposium will be held in Pittsburgh, June 12-14, we are also starting preparations for our 10th Annual European Money Fund Symposium. The preliminary agenda has been released and registrations are now being taken for this year's European event, which will take place Sept. 19-20 at the Hilton London Tower Bridge in London, England. We provide more details on both shows below, and feel free to contact us for more information. (Note: If you haven't registered yet for the U.S. Money Fund Symposium, you can still do so via www.moneyfundsymposium.com. Note too: For those attending The New England AFP Annual Conference, April 25-26 in Boston, we hope to see some of you at the show!)
We wrote in our April 19 Link of the Day on a press release titled, "Austrian, French, Italian and Spanish financial market authorities give their key priorities for a macro-prudential approach to asset management," but today we quote from the full publication, "A macro-prudential approach to asset management." It says, "The risks stemming from non-bank financial intermediation (NBFI) have been subject to scrutiny from regulators worldwide since the Global Financial Crisis. The banking regulation tightening that followed, the desire to reduce the economy's dependency on bank financing in a number of jurisdictions, as well as the low (including negative) interest rates policy, have resulted in an increase of the share of NBFI in the global financial system. In addition, several recent events have illustrated the fact that shocks that either spread through or originate from the NBFI world may have a potentially significant negative effect on the real economy, which amounts to say that they are of potential systemic relevance."
The Securities and Exchange Commission's latest monthly "Money Market Fund Statistics" summary shows that total money fund assets fell by $68.5 billion in March to $6.457 trillion, after hitting a record $6.525 trillion the month prior. The SEC shows Prime MMFs rising $8.1 billion in March to $1.415 trillion, Govt & Treasury funds decreasing $78.8 billion to $4.914 trillion and Tax Exempt funds increasing $2.2 billion to $128.3 billion. Taxable yields inched lower in March after dipping in February. The SEC's Division of Investment Management summarizes monthly Form N-MFP data and includes asset totals and averages for yields, liquidity levels, WAMs, WALs, holdings, and other money market fund trends. We review their latest numbers below. (Month-to-date in April through 4/19, total money fund assets decreased by $61.9 billion to $6.336 trillion, according to our separate, and slightly smaller, MFI Daily series.)
The hits keep coming to the Prime Institutional money fund sector, as Goldman Sachs becomes the latest fund firm to announce an exit from the space. A Prospectus Supplement filing Friday 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, L.P., the Board of Trustees of Goldman Sachs Trust approved a proposal to liquidate the Goldman Sachs Financial Square Money Market Fund and Goldman Sachs Financial Square Prime Obligations Fund, each a series of the Trust. After careful consideration of a number of factors, the Board concluded that it is advisable and in the best interest of the Funds and their shareholders to liquidate the Funds. The Funds are expected to be liquidated on or about September 16, 2024, pursuant to Plans of Liquidation approved by the Board. The Liquidation Date may be changed without notice at the discretion of the Trust's officers." 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). (For more, see these Crane Data News stories: "Federated Liquidating Money Mkt Trust" (4/1/24), "Vanguard Market Liquidity Fund Files to Go Government, Joins American" (3/20/24) and "American Funds Central Cash to Convert to Govt to Avoid Liquidity Fees" (2/6/24).)
ICI's latest "Money Market Fund Assets" report shows money market mutual fund assets falling sharply again to $5.968 trillion as April 15 tax payments hit hard. MMF assets are still up by $82 billion, or 1.7%, year-to-date in 2024 (through 4/17/24), with Institutional MMFs down $29 billion, or -0.9% and Retail MMFs up $111 billion, or 6.6%. Over the past 52 weeks, money funds have risen by $760 billion, or 14.6%, with Retail MMFs rising by $507 billion (26.8%) and Inst MMFs rising by $253 billion (7.6%).
Asset managers, brokerages and banks continue to report first-quarter earnings, but the calls and press releases have been relatively light on money fund and "cash sorting" comments. On the "Charles Schwab Corporation 2024 Spring Business Update Monday, CFO Peter Crawford comments, "The important point is that we sit here today a year removed from the events surrounding the regional banking crisis, we are in a very strong position with nearly all key business and financial indicators improving, in some cases substantially. We have seen meaningful progress back to historical ... organic growth, a continued moderation of client cash realignment activity with the pace slowing even faster than expectations [and] further reduction in the use of supplemental borrowing." Schwab's money fund assets rose to an average of $499.9 billion in Q1'24 from $316.4 billion a year earlier, an increase of $183.5 billion, or 58.0%. Deposits fell from $343.1 billion a year ago to $274.4 billion in Q1, a decline of $68.7 billion, or -20.0%. according to their quarterly earnings release.
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 April 12) includes Holdings information from 70 money funds (up 9 from two weeks ago), or $3.129 trillion (up from $2.941 trillion) of the $6.407 trillion in total money fund assets (or 48.8%) tracked by Crane Data. (Our Weekly MFPH are e-mail only and aren't available on the website. See our latest Monthly Money Fund Portfolio Holdings here and our April 10 News, "April Money Fund Portfolio Holdings: Repo Rises, Treasuries, TDs Fall.")
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