The September issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Friday morning, features the articles: "MF Assets Break $6.0 Trillion; Retail Still Driving, Inst Next?," which reviews the dramatic growth in retail assets; "Dechert on Recent Reforms; Deep Dive Into Liquidity Fees," which excerpts from a recent webinar; and, "15-Years Ago: A Look Back at Reserve 'Breaking the Buck'," which reviews the events that occurred in September 2008. We also sent out our MFI XLS spreadsheet Friday a.m., and we've updated our Money Fund Wisdom database with 8/31/23 data. Our September Money Fund Portfolio Holdings are scheduled to ship on Tuesday, September 12, and our September Bond Fund Intelligence is scheduled to go out on Friday, September 15. (Note: register ASAP for our European Money Fund Symposium, which is Sept. 25-26, 2024 in Edinburgh. We look forward to seeing you in Scotland!)

MFI's "Assets Break $6.0 Trillion" article says, "Money fund assets broke the $6.0 trillion level for the first time ever, according to our monthly Money Fund Intelligence XLSAssets rose $104.2 billion in August to a record $6.007 trillion; it was the 11th straight monthly increase. Retail money funds continue to drive the flows, though Institutional MMFs now account for about 40% of increases. The inflows show no signs of stopping either as we approach the fourth quarter, seasonally the strongest period of the year for money fund inflows. Given the expected seasonal boost, MMFs could even break the $7.0 trillion level by yearend."

It continues, "Total assets tracked by Crane Data have increased by $965.4 billion, or 19.1%, over the 12 months through 8/31/23, and YTD assets have risen by $838.3 billion, or 16.2%. Taxable Inst MMFs have increased by $378.4 billion, or 10.9%, to $3.851 trillion, while Taxable Retail MMFs have jumped by $575.9 billion, or 39.5%, to $2.034 trillion the past year. Tax Exempt MMFs rose $11.1 billion, or 10.0%, to $122.2 billion."

We write in our Recent Reforms article, "Dechert LLP recently hosted a webinar, 'Navigating the Recent SEC Rulemakings: Money Market Fund Reforms' featuring Partners Brenden Carroll, Stephen Cohen & Megan Johnson. The summary states, 'The SEC approved amendments to Rule 2a-7 and other rules that govern money market funds under the Investment Company Act of 1940, representing the most substantial effort by the SEC to reform the money market fund industry since the series of reforms it adopted following the 2007-2008 financial crisis. The amendments will have a significant effect on money market funds and will likely have commercial implications for institutional prime and institutional tax-exempt MMFs that price at multiple times per day and/or offer same-day settlement. In this webinar, Dechert panelists reviewed the amendments and discussed the impact on money market funds and their advisers, boards of directors, compliance officers, service providers, intermediaries and investors.' Our excerpts from the webinar follow."

It continues: "Carroll comments, 'Today, we'll be discussing the SEC's long awaited Money Market Fund Reforms.... [L]ast month, after a fairly lengthy comment period, the SEC adopted its reforms. Specifically, the SEC adopted a mandatory liquidity fee framework for institutional money market funds instead of swing pricing. The SEC removed redemption gates from rule 2a-7. But they preserved the discretion to impose liquidity fees for non-government funds. Now, these discretionary fees are uncoupled from liquidity levels. Next, the SEC increased liquidity requirements for all funds just as proposed. And in a departure from the proposal, the SEC is now permitting stable NAV funds to use certain share cancellation measures in a negative interest rate environment to maintain a stable $1 share price.'"

Our "Look Back" piece states, "Fifteen years ago, the money market mutual fund industry, and the world economy, were irrevocably changed as Reserve Primary Fund 'broke the buck' following the bankruptcy of Lehman Brothers. This event triggered a panic in the money markets and an unprecedented level of government intervention and support. Below, we look back and excerpt from Crane Data's Sept. 2008 News Archives, and the week which will live in infamy, Sept. 15-19."

It explains, "On Sept. 15, 2008, as the unexpected Lehman bankruptcy news hit, we expected to see yet another cluster of routine support actions from money fund advisors. Crane Data wrote (incorrectly, it turns out) early Monday, in 'Fed Moves, Limited Exposure Should Shield Money Mkts From Lehman,' 'The bankruptcy filing of Lehman Brothers has led to a downgrade of the company's short-term debt by Moody's from P-1 to Not Prime. The impact to money market fund is likely to be contained, however, since Lehman had been a minor issuer in the commercial paper (CP) and medium-term note (MTN) marketplace, with about $3 billion in CP.... These issues should be alleviated by the other news -- the Fed's move to expand its liquidity facilities, and the takeover of Merrill Lynch by Bank of America.'"

MFI also includes the News brief, "Barron's: MMFs Yield $300B a Year." It states, "The article, 'The Fed Made Lots of 30,000% Winners,' says, 'The Federal Reserve’s rate increases have raised the income from money-market funds 300 times.... Peter Crane of Crane Data told me that as of February 2022, the average interest earned by money-market fund holders was 0.02%.... But as of July 31 of this year ... the funds' interest yield was 5.08%, and their assets were ... $5.903 trillion. By Crane's math, the funds' yields were running at the rate of $299.9 billion a year.'"

Another News brief, "August Portfolio Holdings: Treasuries Skyrocket; Repo, Agencies Plunge," tells readers, "Our latest Money Fund Portfolio Holdings show that Treasury holdings surged in July while Repo and Agencies plunged. Repo, the largest portfolio segment, fell by nearly $100 billion. Treasuries jumped by over $180 billion but remained in the No. 2 spot. Agencies were the third largest segment CP remained fourth, ahead of CDs, Other/Time Deposits and VRDNs."

A third News brief, "SEC Stats: MMF Assets Hit Record $5.96 Trillion in July, Yields Jump Again," says, "The Securities and Exchange Commission's latest monthly 'Money Market Fund Statistics' summary shows that total money fund assets increased by $28.8 billion in July to a record high of $5.959 trillion. The SEC shows Prime MMFs jumping $28.9 billion in July to $1.240 trillion, Govt & Treasury funds increased $3.1 billion to $4.600 trillion and Tax Exempt funds decreased $3.2 billion to $119.1 billion. Taxable yields jumped again in July after moving higher in June."

A sidebar, "MS Renames ESG MMF," says, "Morgan Stanley is the latest fund company to abandon its ESG Money Market Fund. (See our Sept. 19, 2022 News, 'SSGA to Liquidate State Street ESG Liquid Reserves.') A filing for Morgan Stanley Institutional Liquidity Funds says, 'At a meeting ... April 19-20, 2023, the Board of Trustees of Morgan Stanley Institutional Liquidity Funds approved various changes to the Fund, including changing its name from 'ESG Money Market Portfolio' to 'Money Market Portfolio', modifying its principal investment strategies to remove references to an investment process which incorporates information about environmental, social and governance ('ESG') issues, and eliminating a policy to invest ... in securities whose issuer or guarantor, in the Adviser's opinion at the time of purchase, meets the Fund's ESG criteria, each change effective June 20, 2023.'"

Our September MFI XLS, with August 31 data, shows total assets increased $104.2 billion to a record $6.007 trillion, after increasing $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, $22.5 billion in January, $70.2 billion in December and $55.4 billion in November. MMFs rose $42.2 billion in October and $1.7 billion last September.

Our broad Crane Money Fund Average 7-Day Yield was up 10 bps to 5.04%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was up 8 bps to 5.16% in August. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 both were both higher at 5.31% and 5.24%, 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 8/31/23.) The average WAM (weighted average maturity) for the Crane MFA was 24 days (unchanged from previous month) and the Crane 100 WAM was also unchanged at 23 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)

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