The February issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Friday morning, features the articles: "Money Market Supply to Slow in '20 Says JPM's Ho at MFU," which features one of the highlights from our recent Money Fund University; "Cohen, Gershkow Review MMF Regs, Reforms at MFU," which excerpts from the "Money Fund Regulations: 2a-7 Basics & History" MFU session; and, "Social Gets Hotter, But What Exactly Is an ESG MMF?," which writes about the growing but confusing ESG Money Fund space. We've also updated our Money Fund Wisdom database with Jan. 31 statistics, and sent out our MFI XLS spreadsheet Friday a.m. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our February Money Fund Portfolio Holdings are scheduled to ship on Tuesday, Feb. 11, and our Feb. Bond Fund Intelligence is scheduled to go out Friday, Feb. 14.

MFI's "Money Market Supply" article says, "Crane Data recently hosted its Money Fund University in Providence, R.​I. While MFU is meant to be our 'basic training' conference, there are usually discussions of hot topics and always a wealth of statistics of interest even to veterans in the space. We excerpt some of the highlights below and in the article to the right."

It explains, "J.P. Morgan Securities' Teresa Ho presented the 'Instruments of the Money Markets Intro,' giving an overview of the types of money market securities owned by money funds. She tells us, 'Borrowers use [the money markets] as a way to finance their short-term expenses, and investors use [it] as a way to temporarily invest their cash.... As long as there's a demand for liquidity and a mismatch between cash inflows and cash outflows, there is a need for money markets." (Note: Crane Data Subscribers and Money Fund University Attendees may access the Powerpoints and recordings for MFU in our 'Money Fund University 2020 Download Center.')"

Our "Cohen, Gershkow Review" piece reads, "Our recent MFU event also always contains a segment on 'Money Fund Regulations: 2a-7 Basics & History,' which featured Dechert's Steve Cohen & Stradley Ronon's Jamie Gershkow. The two reviewed regulations governing money funds and recent reforms, and also touched on some topics like ESG and ETFs. Cohen tells us, 'Money market funds were developed in the 1970s as an option for investors to purchase essentially a pool of short-term securities that gave them higher returns than banks were providing at the time.'"

He continues, "Initially funds had to get exempted from the SEC in order to operate money market funds using amortized cost, that was up until 1983. In 1983, the SEC adopted Rule 2a-7 in a much more basic form than today. It codified those exempted borders and allowed all money market funds to operate with a stable NAV, using amortized cost, or the penny-rounding method.... Amortized cost allows a fund to take the acquisition cost of its security and adjust for amortization of the premium or accretion of the discount."

Our "Social Gets Hotter" piece says, "ESG and Social money market funds keep getting hotter, but it still remains to be seen whether the strategy makes sense in the money markets. The latest events in the space include webinars from fund ratings firm Fitch Ratings and online money fund trading portal Institutional Cash Distributors (​ICD), the launch of another social or 'impact' share class and separate deposit program, and the debut of UBS Select ESG Prime (which appears in the rankings this month)."

This week's "ESG in Money Market Funds" webinar (see yesterday's Crane Data News, which featured Fitch's Alastair Sewell and SSGA's Will Goldthwait, discussed ESG Money Market Funds and their definition problems in detail. Sewell comments, "Certain high profile investors, both in Europe and ... in the U.S., have indicated an interest in having ESG exposure in the cash element of their portfolio. So, what does that mean for money market funds? We can see that the number of ESG money market funds has increased sharply.... We now count a total of 34 explicit, dedicated ESG money market funds globally. The question presumably on everyone's minds then is, 'What exactly is an ESG money market fund?'"

The latest MFI also includes the News brief, "SEC Stats: MMF Assets Break $4.0 Trillion, Up 18th Month; Prime Dips," which writes, "The Securities & Exchange Commission’s latest 'Money Market Fund Statistics' showed that total money fund assets rose by $37.2 billion to a record $4.021 trillion in December, the 18th straight month of gains. Prime MMFs decreased $26.5 billion to close at $1.095 trillion, while Govt & Treasury funds rose by $64.7 billion to a record $2.783 trillion. Tax Exempt funds fell by $1.0 billion to $142.8 billion. Yields fell for Prime MMFs and Govt MMFs, while Tax-Exempt MMFs increased rates."

A second News piece titled, "Federated Renamed Federated Hermes," explains, "J. Christopher Donahue, president and CEO, comments in their earnings release, 'Federated reached new records across all three major asset classes -- equity, fixed income and money market -- with the latter increasing by $94 billion in 2019 as Federated's diverse lineup of liquidity products offered competitive yields for investors seeking cash-management solutions.’ The release explains, ‘As announced earlier this month, Federated will change its name to Federated Hermes.'"

Our February MFI XLS, with Jan. 31 data, shows total assets fell by $7.8 billion in January to $3.950 trillion, after rising $72.7 billion in December, $40.9 billion in November and $85.2 billion in October. Our broad Crane Money Fund Average 7-Day Yield fell to 1.29% during the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) was down 4 basis points to 1.42%.

On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA fell 3 basis points to 1.69% and the Crane 100 fell to 1.69%. Charged Expenses averaged 0.40% (down one basis point from last month) and 0.27% (unchanged from last month), respectively for the Crane MFA and Crane 100. The average WAM (weighted average maturity) for the Crane MFA and Crane 100 was 30 (down three days) and 33 days (down four days), respectively. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)

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