| Fidelity Inst MM Port Inst (FNSXX) | 0.25 |
| Touchstone Institutional MMF (TINXX) | 0.24 |
| Fidelity Inst MM Port I (FMPXX) | 0.21 |
| Highmark Diver MMF Fid (HMDXX) | 0.21 |
| DWS Daily Assets Instit (DAFXX) | 0.19 |
| Dreyfus Money Market MM (DMIXX) | 0.10 |
| Fidelity Select MM Portfolio (FSLXX) | 0.10 |
| Schwab Cash Reserves (SWSXX) | 0.08 |
| Highmark Diversif MMF Ret (HMVXX) | 0.07 |
| Western Asset Money Mkt A (SBCXX) | 0.07 |
| Marshall Tax-Free MMF I (MFIXX) | 0.46 |
| Marshall Tax-Free MMF Y (MTFXX) | 0.21 |
| Ridgeworth Inst Muni Cash I (CMRXX) | 0.18 |
| Federated Muni Obligs IS (MOFXX) | 0.13 |
| Federated NY Muni Cash IS (NISXX) | 0.13 |
In a just-published "Credit FAQ piece, "What Effect Will The Certificate Of Deposit Accounts Registry Service Program Have On Fund Ratings?, S&P writes, "The recent market turmoil has prompted portfolio managers, investment managers, and treasury professionals to look for investments that add value without sacrificing yield or diversification. Recently, Standard & Poor's Ratings Services has received numerous inquiries regarding how we view the liquidity and credit quality of the Certificate of Deposit Accounts Registry Service (CDARS) program in regards to principal stability fund ratings (PSFRs), fund credit quality ratings (FCRs), and liquidity assessments."
The FAQ explains, "We have criteria regarding our assessment of certificates of deposit (CDs) and collateralized CDs for taxable and tax-exempt PSFRs, FCRs, and liquidity assessments.... Our responses to the following questions provide an indication of how we assess the risks of these securities in relation to our analysis of PSFRs, FCRs, and liquidity assessments. This Credit FAQ should be considered in conjunction with previously published criteria."
Among the Frequently Asked Questions are: "What is the CDARS program?" S&P says, "CDARS is a program offered by nearly 3,000 member financial institutions of the CDARS network and is designed to provide investors the benefit of Federal Deposit Insurance Corp. (FDIC) insurance for deposits up to $50 million. Generally, investors place large deposits with a member, who then places the investors' deposits into CDs issued by participating banks. CDs issued through CDARS generally are in amounts less than the FDIC insurance maximum so that each CD's principal and interest remains eligible for full FDIC insurance. Currently the FDIC insurance maximum is $250,000 per depositor through Dec. 31, 2013. After the extension date, the maximum amount is scheduled to return to $100,000 per depositor.... CDARS CDs' maturities generally range from four weeks to five years.... Typically, early breakage penalties exist and generally vary based on the CD's maturity."
They also ask, "How does Standard & Poor's treat noncollateralized CDs compared to CDARS CDs?" S&P answers, "In PSFRs and FCRs, noncollateralized CDs that do not qualify for FDIC insurance take on the same credit rating as was assigned to the issuing bank. Portfolio exposures no greater than 5% per issuing bank are consistent with our investment-grade PSFR criteria.... For both PSFRs and FCRs, to the extent the underlying deposits fall within FDIC coverage amounts, we classify CDARS equivalent to the U.S. sovereign credit rating. How does Standard & Poor's view the credit risk associated with CDs issued by CDARS? In our opinion, because CDARS-issued CDs are FDIC insured, we view the credit risk as equal to the U.S. government sovereign credit rating (currently 'AAA')."
Another question is, "How does Standard & Poor's view the liquidity risks associated with CDARS CDs?" S&P says, "In our opinion, potential areas of liquidity risk in CDARS CDs include: Inherent illiquidity: CDARS CDs are nonnegotiable, not DTC eligible, and are not traded in an active secondary market; Payment delays: When the FDIC has to make a payment on deposits, it pays the insured amount to the participating bank, and the participating bank pays the investors; Custodian bank failure: Another potential liquidity risk may occur where the investor's money is in the custody of a network member that has failed."
They also ask, "What other concerns does Standard & Poor's have regarding CDARS CDs?" The FAQ responds, "Early breakage penalties: CDARS CDs can have penalties from 50% to 100% of the interest due depending on the CDs' maturity. Typically, the earlier a CDARS CD is broken prior to maturity, the greater the penalty. Because the interest penalty owed may be unearned at the time of the early breakage, the assessed penalty may result in a loss of initial principal. Coverage under relevant guidelines: The FDIC insurance limits are not based solely on the CDARS CD amount, but rather on the total aggregate exposure of an individual investor at a participating bank. We would take into account how investors determine whether their aggregate deposits (including their CDARS CD exposures) are within FDIC insurance limits and CDARS guidelines."
S&P continues, "How will Standard & Poor's evaluate CDARS CDs given your PSFR criteria? We will evaluate CDARS CDs similar to the analysis for other highly rated, short-term instruments.... From a credit perspective, we deem CDs issued through CDARS to be 'AAA/A-1+' equivalent. CDARS CDs count toward our 10% limited liquidity/illiquid basket for PSFRs because these CDs are nonmarketable securities, may impose fees for early withdrawal, and may have a delay in receiving monies from FDIC insurance payments."
Finally, they ask, "How would Standard & Poor's evaluate similar FDIC products?" S&P says, "In evaluating other similar types of FDIC products, such as the Institutional Deposits Corp.'s Insured Deposit Liquidity Account and Insured Network Deposits, we would take a similar approach in applying our criteria to assess such pooled FDIC-insured accounts." Note that Crane Data has yet to see any CDARS or "pooled FDIC insurance" products appear in money market mutual funds, but that some less-regulated pools appear to be dabbling in the sector.
We learned from ignites.com that Eagle Money Market Fund and Eagle Municipal Money Market Fund (formerly named Heritage) have filed to liquidate and that new "Eagle" share classes of JPMorgan funds have been filed. A prospectus supplement filing says, "On February 12, 2010, the Board of Trustees of Eagle Cash Trust approved calling a shareholder meeting to consider approving a plan to liquidate and terminate the Money Market Fund and the Municipal Money Market Fund. The Board approved the Plan, subject to shareholder approval, upon recommendation of Eagle Asset Management, Inc., the manager to the Trust."
It says, "Eagle recommends liquidating and terminating each Fund based on anticipated Fund shareholder redemptions which would reduce each Fund's size and economies of scale. Eagle does not believe that it can continue to conduct the business and operations of the Funds in an economically efficient manner upon the anticipated redemptions, and that the expense ratio of the Funds would no longer be competitive. As such, the Board concluded that it would be in the best interests of each Fund and their shareholders to liquidate and terminate each Fund."
The filing explains, "A financial intermediary whose customers own a substantial majority of the Funds' shares has advised Eagle that the Intermediary will no longer make available to its customers or support investments in the Funds after July 9, 2010 and that it plans to make available to its customers and support investments in a proprietary class (named the 'Eagle Class') of the JP Morgan Prime Money Market Fund and JP Morgan Tax Free Money Market Fund, managed by J.P. Morgan Investment Management, Inc. The Intermediary has advised that its customers may be redeemed from the Funds and reinvested in the New Funds. Eagle and J.P. Morgan will enter into an agreement under which Eagle and its affiliates will be compensated by the New Funds and J.P. Morgan for, among other things, distribution costs, shareholder record-keeping activities, Eagle's ongoing oversight of the services provided, and the coordination and administration of the funds."
The supplement adds, "The Plan is subject to shareholder approval. The Board anticipates holding a shareholder meeting on or about August 12, 2010, to seek approval of the Plan. If the Funds' shareholders approve the Plan, each Fund will liquidate its assets on or about August 27, 2010, and distribute cash pro rata to all remaining shareholders who have not previously redeemed all of their shares. Once the distributions are complete, the Funds will terminate." (See the JPMorgan prospectus filings for the new 'Eagle' classes here.)
The Eagle funds are affiliated with brokerage Raymond James, which recently "implemented an enhanced multibank sweep program that provides greater Federal Deposit Insurance Corporation (FDIC) insurance coverage and offers more competitive interest rates." The company's website says "available cash in your brokerage account will be deposited through [Promontory Interfinancial Network's] Insured Network Deposit service into interest-bearing deposit accounts at one or more banks."
MFI PDF February 2010 Issue |
Largest Taxable MF Portfolios |
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The February 2010 issue of Money Fund Intelligence features: “SEC Passes New Money Market Fund Reforms", which discusses the recently-passed Amendments to Rule 2a-7; "Navigating New Rules: Q&A w/Stephen Keen", an interview with the veteran money fund attorney and Partner of Reed Smith LLP; and "Will Rising Rates Bring Outflows to Inst MMFs?", a look at how institutional assets have fared in past periods of Fed funds rate hikes. Money Fund Intelligence features news, information, and performance on money market mutual funds and other "cash" investments. Money fund statistics include: assets, average maturities, expense ratio, 7-day yield, 30-day yield, 1-month return, 3-mo, YTD, 1-year, 3-yr, 5-yr, 10-yr, and since inception returns, plus gross yields. MFI also contains tables of the top-yielding and largest money funds, as well as our benchmark Crane Money Fund Indexes. Subscriptions are $500 a year and include online access to archived issues and additional features. Bulk discounts and site licenses are available. Write info@cranedata.us or call 1-508-439-4419 to subscribe or to request more information. |
The table below is excerpted from our monthly spreadsheet product, Money Fund Intelligence XLS. It shows the largest taxable money fund portfolios as of January 31, 2010.
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Crane Data LLC is a money market and mutual fund information company founded by Peter G. Crane and Shaun Cutts. We collect money market mutual fund, bank savings, and cash investment performance, statistics, and information and distribute rankings, news, and indexes.
Crane Data publishes Money Fund Intelligence, Money Fund Intelligence XLS, MFI Distribution Survey, the Crane Money Fund Indexes, and a series of products tracking money market mutual funds and cash investments. For a sample issue of MFI, e-mail sample@cranedata.us or call us at 1-508-439-4419.
The more printer-friendly (62-pages) Federal Register version of the SEC's Money Market Fund Reforms was recently posted on the SEC's Final Rules web page. Also, the New York Federal Reserve, which yesterday issued its "Statement Regarding Counterparties for Reverse Repurchase Agreements," added a clarifying document, "RRP Eligibility Criteria for Money Funds: Frequently Asked Questions." A couple of the Q&A's include: "Does the $20 billion net assets requirement apply to the money fund or the fund family? The net asset requirement applies to the RRP counterparty applicant, which is the money market fund itself. As stated in the RRP Eligibility Criteria for Money Funds, to be accepted as a RRP counterparty, an applicant must, among other things, be a money market fund that satisfies the description set forth in Section I(A) and have net assets of no less than $20 billion for six consecutive months (measured at each month-end) prior to the submission of the application.... Will a seven-day put option be provided to money market funds who become RRP counterparties? Yes. As stated in footnote 4 in the RRP Eligibility Criteria for Money Funds, it is contemplated that for RRP with terms exceeding seven days, the RRP counterparty will be permitted to resell the securities to the New York Fed upon seven days prior notice. The specifics of this option will be provided in the New York Fed's Master Repurchase Agreement for money market funds, which the New York Fed expects to publish in about a month."
The Wall Street Journal writes "Money Funds Welcome Repo Shift". It says, "The New York Federal Reserve has at least three -- and probably many more --willing potential partners as it plans to expand the tools used to control liquidity in financial markets. Vanguard Group, Fidelity Investments and Federated Investors on Monday welcomed the New York Fed's announcement that it will expand the counterparties, starting with money funds, with which it conducts reverse-repurchase agreements." The Journal quotes Vanguard Group's David Glocke, "We would enthusiastically want to take a look at these transactions for our portfolios. It's a great alternative to other transactions that we already do." The piece continues, "Money-market funds applying to act as counterparties must have net assets of no less than $20 billion for six consecutive months, have been in existence for at least one year and be a consistent investor in the tri-party repo markets, according to the New York Fed's eligibility criteria.... Others in the $3.1 trillion money-fund industry are likely to be cheered by the prospect of deals with a party as trusted as the Fed. The supply of safe assets in which money-market funds can invest has dwindled during the financial downturn, and plans for tighter rules on just how money-market funds can invest are likely to make liquid assets even more scarce. Access to the 'reverse repos' will actually help money funds comply with the new Securities and Exchange Commission rules, said Peter Crane, president of Crane Data LLC, 'As those go into effect, there's going to be even more of a thirst for liquidity.'" See also, New York Daily News' "Government to institute new standards that may make money-market funds safer for investors".
"Island Intellectual Property Awarded Additional Patents for FDIC Cash Sweep Technology" says a release posted on DoubleRock's website. It says, "Island Intellectual Property LLC, which owns and manages the intellectual property for Double Rock Corporation, its subsidiaries, and affiliates, is pleased to announce that on March 2, 2010, the U.S. Patent and Trademark Office issued three additional patents relating to its FDIC cash sweep technology.... Adding to its already impressive patent portfolio, Island IP has been awarded five (5) patents thus far in 2010 relating to its innovative expanded FDIC cash sweep programs. The patents awarded on March 2nd apply to FDIC sweep products offered in the broker-dealer, banking and retail markets." A Feb. 23 release, entitled, "Island Intellectual Property Awarded Additional Patents for Innovative FDIC Sweep Technology," said, "Island IP and Intrasweep LLC filed a federal lawsuit on February 23, 2010, in the U.S. District Court for the Southern District of New York, seeking to enforce the ... Patents -- Docket No. 10-cv-1518, ISLAND INTELLECTUAL PROPERTY LLC and INTRASWEEP LLC v. DEUTSCHE BANK TRUST COMPANY AMERICAS, and TOTAL BANK SOLUTIONS, LLC." DoubleRock's patents, listed here, include: U.S. Patent No. 7,672,886, "Systems and Methods for Managing Client Accounts," U.S. Patent No. 7,672,901, "System and Method for Holdback Procedure for After-Hours Transactions," U.S. Patent No. 7,672,902, "System and Method for Pre-Funding Interest for Early Termination of Client Account Having Funding In One or More Aggregated Account," U.S. Patent No. 7,668,771, "System and Method for Allocation to Obtain Zero Activity in a Selected Aggregated Account," U.S. Patent No. 7,668,772, "Systems and Methods for Money Fund Banking With Flexible Interest Allocation," U.S. Patent No. 7,509,286, "Systems and Methods for Money Fund Banking with Flexible Interest Allocation," U.S. Patent No. 7,519,551, "Systems and Methods for Administering Return Sweep Accounts," U.S. Patent No. 7,536,350, entitled "Systems and Methods for Providing Enhanced Account Management Services for Multiple Banks."
Brian Pringle has moved from Columbia Management to Russell Investments as a Portfolio Manager. He reports to Director of Short-Term Investments Kelly Mainelli.
Invesco Fixed Income CEO Karen Dunn Kelley will receive the Women's Bond Club's Merit Award, "presented to a senior woman leader for her career accomplishments in financial services," according to a press release. The Women's Bond Club is "the first organization in New York to focus on the advancement of women in finance."
Mary John Miller was confirmed as Assistant Secretary for Financial Markets. A release says, "Mary John Miller was confirmed today by the United States Senate to serve as the Department of the Treasury's Assistant Secretary for Financial Markets.... Miller will also ... coordinate the inter-agency President's Working Group on Financial Markets." "I am pleased to have Mary on our team and am confident she will be integral to this Administration's efforts to help maintain stability for the financial markets and finish the work of creating a safer, more stable financial system to serve the needs of American households and businesses," said Treasury Secretary Tim Geithner. Miller spent 26 years working for T. Rowe Price Group, Inc., most recently as the director of the Fixed Income Division." Miller is also a former money fund manager and advisor to the ICI's Money Market Working Group.
Crane Data's annual money fund conference, Crane's Money Fund Symposium, will be held July 26-28, 2010, at The InterContinental Boston. Visit our conference website to register or for more details.
Crane Data's new premium database product, Money Fund Wisdom, allows users to build custom queries with money fund peer groups. Wisdom offers users access to the entire suite of Money Fund Intelligence products and historical data.