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Money market mutual fund assets leapt $49.9 billion to a record $6.059 trillion after inching lower the previous two weeks, according to ICI's latest weekly "Money Market Fund Assets" report. After their phenomenal $1.15 trillion increase in 2023, MMF assets are up by another $172 billion, or 3.6%, year-to-date in 2024 (through 2/28/24), with Institutional MMFs up $93 billion, or 3.0% and Retail MMFs up $79 billion, or 4.7%. Over the past 52 weeks, money funds have risen a massive $1.165 trillion, or 23.8%, with Retail MMFs rising by $556 billion (30.7%) and Inst MMFs rising by $609 billion (19.8%). (Note: Register soon for our Bond Fund Symposium, March 25-26 in Philadelphia. We hope to see you in Philly!)

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The Investment Company Institute published its latest monthly "Trends in Mutual Fund Investing" and "Month-End Portfolio Holdings of Taxable Money Funds" for January 2024 on Wednesday. ICI's monthly Trends shows money fund totals jumping $82.4 billion in January to a record $6.002 trillion (after a jump in 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 surged $34.5 billion to $4.779 trillion and bond ETF assets broke the $1.5 trillion level for the first time ever. (Note: Register and make hotel reservations soon for our Bond Fund Symposium, which is March 25-26 in Philadelphia. We hope to see you in Philly next month!)

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A press release titled, "FSB review finds uneven implementation of money market fund reforms, tells us, "The Financial Stability Board (FSB) ... published its "Thematic Review on Money Market Fund (MMF) Reforms." The review takes stock of the measures adopted or planned by FSB member jurisdictions in response to the 2021 FSB report, Policy Proposals to Enhance MMF Resilience. The review does not assess the effectiveness of those policy measures in addressing risks to financial stability, as this will be the focus of separate follow-up work by the FSB in 2026." The Financial Stability Board is "an international body that monitors and makes recommendations about the global financial system" comprised primarily of bank regulators. (Note: Register and make hotel reservations soon for our Bond Fund Symposium, which is March 25-26 in Philadelphia. We hope to see you in Philly!)

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Federated Hermes filed its latest "10-K Annual Report" with the SEC last Friday, and the 105-page document contains a wealth of information on money market mutual funds, including lengthy discussions on "Regulatory Matters". The report tells us, "Federated Hermes ... is a global leader in active, responsible investing with $757.6 billion in assets under management (AUM or managed assets) at December 31, 2023. Federated Hermes has been in the investment management business since 1955 and is one of the largest investment managers in the United States.... Federated Hermes provides investment advisory services to 180 Federated Hermes Funds as of December 31, 2023.... Of the 180 Federated Hermes Funds, Federated Hermes' investment advisory subsidiaries managed 24 money market funds with $406.2 billion in AUM, 41 equity funds with $42.5 billion in AUM, 56 fixed-income funds with $43.9 billion in AUM, 54 alternative/private markets funds with $12.4 billion in AUM and five multi-asset funds with $2.7 billion in AUM. As of December 31, 2023, Federated Hermes provided investment strategies to $249.9 billion in Separate Account assets. These Separate Accounts represent assets of government entities, high-net-worth individuals, pension and other employee benefit plans, corporations, trusts, foundations, endowments, sub-advised funds and other accounts or products owned or sponsored by third parties." (Note: Register and make hotel reservations soon for Bond Fund Symposium, Crane Data's ultra-short bond fund conference, which will take place March 25-26 in Philadelphia. We hope to see you next month in Philly!)

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A second U.S. money market mutual fund attempting to use blockchain technology launched recently, while the first European money fund to be "tokenized" has also gone live. The $5 million WisdomTree Government Money Market Digital Fund (WTGXX) joins the $333 million Franklin OnChain US Govt Money Fund, which launched in 2019, in what appears to be another experiment attempting to take advantage of the buzz surrounding digital assets and currencies. WisdomTree says on its website, "Why WTGXX? Provide investors a high level of current income consistent with the preservation of capital and liquidity and the maintenance of a stable net asset value through investments in short-term government securities. It has a 0.25% expense ratio and only a $1 minimum to invest. Shares will be secondarily recorded using on-chain recordkeeping on the Stellar or Ethereum blockchain. The Fund will not directly or indirectly invest in any assets that rely on blockchain technology, such as cryptocurrencies. The Fund uses blockchain technology to maintain a secondary record of its shares. The Fund will be available exclusively through the WisdomTree Prime financial app."

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Money market mutual fund assets inched lower for the second week in a row, declining $5.3 billion to $6.009 trillion. ICI's latest weekly "Money Market Fund Assets" report shows MMF assets down slightly after jumping to break $6.0 trillion for the first time ever three weeks ago. Assets remain up by $122 billion, or 2.6%, year-to-date in 2024, with Institutional MMFs up $46 billion, or 1.5% and Retail MMFs up $76 billion, or 4.5%. Over the past 52 weeks, money funds have risen a massive $1.188 trillion, or 24.7%, with Retail MMFs rising by $576 billion (32.1%) and Inst MMFs rising by $613 billion (20.2%). (Note: Register and make hotel reservations soon for Bond Fund Symposium, Crane Data's ultra-short bond fund conference, which will take place March 25-26 in Philadelphia. We hope to see you next month in Philly!)

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Moody's Investors Service recently published a report entitled, "Money Market Funds - Cross Region: Continued asset growth drives stable outlook," which states, "Our global outlook for money market funds (MMFs) is stable, unchanged from last year. Interest rates will likely decline in 2024, and a negative outlook for the global banking sector will weigh on prime MMFs, which invest mainly in bank securities. However, geopolitical uncertainty will likely drive a further increase in MMFs' assets under management (AUM). Regulatory uncertainty has diminished in the US and EU, but the UK has proposed new liquidity rules for MMFs that diverge from the EU's. Tokenization is a promising technology for MMFs, but it will take time for its benefits to filter through."

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The Securities and Exchange Commission's latest monthly "Money Market Fund Statistics" summary shows that total money fund assets jumped by $87.7 billion in January to a record $6.459 trillion. The SEC shows Prime MMFs rising $52.5 billion in January to $1.373 trillion, Govt & Treasury funds increasing $39.7 billion to $4.960 trillion and Tax Exempt funds decreasing $4.5 billion to $126.8 billion. Taxable yields inched lower in January after inching up in December. 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 February through 2/16, total money fund assets have decreased by $914 million to $6.393 trillion, according to our separate, and slightly smaller, MFI Daily series.)

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The Federal Reserve Bank of Kansas City recently published a working paper entitled, "Explaining the Life Cycle of Bank-Sponsored Money Market Funds: An Application of the Regulatory Dialectic." Its "Abstract" states, "In this paper, we present empirical evidence of the regulatory dialectic in the prime institutional money market fund (PI-MMF) industry. The 'regulatory dialectic', developed by Kane (1977, 1981), describes how banks and regulators react to each other. For decades, a cap on commercial deposit interest rates fueled dramatic growth in bank-sponsored PI-MMFs as a form of shadow banking. During the growth period, banks with more commercial deposits were more likely to enter the PI-MMF industry in an effort to keep their commercial customers in affiliated subsidiaries. However, the 2008 crisis and subsequent regulatory changes halted the rapid growth of PI-MMFs. In the post-crisis regulatory regime, bank-sponsored funds were more likely to exit the industry than nonbank-sponsored funds. Simultaneously, the industry shifted from PI-MMFs to government institutional MMFs as substitute products. We conjecture that the collapse of the PI-MMF can lead further to the emergence of substitute products, such as stablecoins as part of the continuing dialectical process."

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Money market mutual fund assets paused their record run in the latest week inching lower by just $4.3 billion to $6.014 trillion. ICI's latest weekly "Money Market Fund Assets" report shows MMF assets roughly flat after jumping to break $6.0 trillion for the first time ever three weeks ago. Assets are up by $128 billion, or 2.7%, year-to-date in 2024, with Institutional MMFs up $55 billion, or 1.8% and Retail MMFs up $73 billion, or 4.3%. Over the past 52 weeks, money funds have risen a massive $1.199 trillion, or 24.9%, with Retail MMFs rising by $582 billion (32.7%) and Inst MMFs rising by $617 billion (20.3%).

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Crane Data's latest Money Fund Intelligence International shows that assets in European or "offshore" money market mutual funds moved higher again over the past 30 days to a record $1.239 trillion, while yields inched lower. Assets for USD & EUR MMFs rose over the past month, while assets for GBP MMFs fell. Last month, European MMF assets broke above last month's previous record high of $1.210 trillion. These U.S.-style money funds, domiciled in Ireland or Luxembourg and denominated in US Dollars, Pound Sterling and Euros, increased by $28.4 billion over the 30 days through 2/13. The totals are up $41.4 billion (3.5%) year-to-date for 2024, they were up $166.9 billion (16.2%) for the year 2023. (Note that currency moves in the U.S. dollar cause Euro and Sterling totals to shift when they're translated back into totals in U.S. dollars. See our latest MFI International for more on the "offshore" money fund marketplace. These funds are only available to qualified, non-U.S. investors and are almost entirely institutional.)

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The February issue of our Bond Fund Intelligence, which was sent to subscribers Wednesday morning, features the stories, "S&P on Bond Index Funds, 'The Hare and the Tortoise'," which features a new study from S&P Dow Jones Indices on bond index funds and "Bloomberg Profiles Capital Group, Bond Fund of America," which reviews how Capital Group is making a name in bond funds. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns jumped again in January while yields plunged once more. We excerpt from the new issue below. (Contact us if you'd like to see our latest Bond Fund Intelligence and BFI XLS spreadsheet, or our Bond Fund Portfolio Holdings data.) (Note: Please join us for our upcoming Bond Fund Symposium, which is March 25-26 in Philadelphia!)

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