Sep 09

 

The September issue of our flagship Money Fund Intelligence newsletter, which will be sent out to subscribers Monday morning, features the articles: "SSGA, Columbia Stick with Prime Inst MMFs; Changes," which breaks down the latest news in the Prime Inst space; "MMFs Hit Record $​6.​68 Trillion; Falling Rates Driving Inflows," which covers the recent (​and pending) asset surge; and, "More Scrutiny on Sweeps; Investment News, UBS," which follows the most recent news on brokerage sweeps. We will also send out our MFI XLS spreadsheet Monday a.​m., and we'​ve updated our Money Fund Wisdom database with 8/​31/​24 data. Our Sept. Money Fund Portfolio Holdings are scheduled to ship on Wednesday, September 11, and our Sept. Bond Fund Intelligence is scheduled to go out on Monday, September 16. (Note: We'​re still taking registrations for our upcoming European Money Fund Symposium, which will be held Sept. 19-​20, 2024 in London, England. See you in London next week!)

MFI'​s "Prime Inst" article says, "State Street Global Advisors (​SSGA) recently confirmed that they'​ll be sticking with their Prime Institutional money fund offering. They published an update titled, 'Money Market Reform 2024,' which reviews the current round of regulatory changes impacting money market mutual funds. It explains, '​During March of 2020 and the onset of the pandemic, there was broader stress in the short‐​term funding markets and significant redemptions of Prime Fund assets. In response, the SEC proposed additional regulations to further strengthen the Institutional Prime Fund space during periods of volatility with the goal to disincentivize any first mover advantage.'"

They continue, "​SSGA writes, 'In October 2024, the final wave of the SEC'​s money market fund reform rule changes will take effect, marking the most substantial shift since the 2016 reforms. These changes are set to redefine the landscape of Institutional Prime Money Market funds. This transition signifies a pivotal moment for the industry, reflecting the evolving regulatory environment and the drive for greater stability and transparency in the financial markets.'"

We write in our MMFs Hit Record $​6.​68 Tril.; Falling Rates Driving Inflows article, "Crane Data'​s Money Fund Intelligence Daily series shows that money fund assets have surged by $​66.​9 billion in the first 5 days of September (​through 9/​5) to a record $​6.​682 trillion. According to our monthly MFI XLS, assets rose by $​105.​6 billion in August (​to a record $​6.​620 trillion), $​16.​6 billion in July, $​15.​​7 billion in June and $​91.​4 billion in May, but they fell $​15.​8 billion in April and $​68.​8 billion in March."

It tells us, "Everyone within the money fund space knows that assets will jump following rate cuts (​though people outside apparently believe the opposite). But the question is by how much? We looked at Institutional money fund assets on a monthly basis compared to the Fed funds effective rate going back to 1990. Money fund assets increased by an average of 3.​79% a month during months with interest rate cuts, which would push assets up a massive $​253.​2 billion in September. (​We of course could already be seeing some of these flows since direct market rates have already begun falling.)"

Our "Sweeps" piece says, "Brokerage sweep accounts using low‐​yielding bank deposit options continue to attract the interest of regulators, lawyers and the financial press. A new posting on the website JDSupra from lawyers at Katten, Muchin, Rosenman, titled, 'SEC Scrutiny into Cash Sweep Programs: What Investment Advisers Need to Know,' explains, 'In recent years, the `​US Securities and Exchange Commission (​SEC) has initiated several probes into how advisory firms manage their cash sweep programs.... While broker‐​dealers also provide cash sweep programs, the SEC probes have been limited to an investment advisor'​s use of cash sweep accounts and potential breaches of an advisor'​s fiduciary duty to its managed accounts.'"

The piece states, "​It continues, '[​T]​he SEC also took a deep interest in disclosures and conflicts related to cash sweep arrangements, with a particular focus on the potential for breaches of fiduciary duties, undisclosed conflicts, and revenue‐​sharing payments received in connection with cash sweep programs. In recent weeks, there have been reports of ongoing probes by the SEC into how advisory firms are managing their bank deposit sweep programs.'"

MFI also includes the News brief, "Cash Investors Digging In. Reuters writes 'Cash‐​loving investors dig in even as US rate cuts threaten payouts,' which tells us, 'A golden era for cash may be winding down as the Federal Reserve gets ready to cut interest rates. Many fans of the investment class are staying put anyway. Assets in U.​S. money markets hit a record $​6.​24 trillion this month, data from the Investment Company Institute showed on Aug. 21, even as markets became increasingly confident that the Fed was gearing up to lower rates.'"

Another News brief, "Barron'​s Writes 'JPMorgan Is Latest Brokerage Hit With Cash‐​Sweep Lawsuit.' They state, 'JPMorgan Chase and its subsidiary J.​P. Morgan Securities are the latest targets of a proposed class‐​action lawsuit involving their interest payments on clients' uninvested cash.'"

A third News brief, "Dreyfus NY Muni MMF Liquidating," tells readers, "​A Prospectus Supplement filing tells us, '​The Board of Trustees of General New York Municipal Money Market Fund has approved the liquidation of Dreyfus New York Municipal Money Market Fund ... effective on or about October 28, 2024.' See also our Jan. 26, 2024 News, 'More Muni MMF Liquidations.'"

A sidebar, "'T‐​Bill and Chill' Still Cool," says, "Bloomberg writes 'T‐​Bill and Chill' Is a Hard Habit for Investors to Break,' which is more about money market funds and cash investing than T‐​bills. They tell us, 'It'​s been the ultimate no‐​brainer for more than a year: Park your money in super‐​safe Treasury bills, earn yields of more than 5%, rinse and repeat.... Even now, with Federal Reserve officials poised to ease benchmark interest rates from a two‐​decade high -- a move that would instantly push down yields on bills and other short‐​term debt -- money‐​market funds are thriving. They raked in $​106 billion this month alone and their balances, at $​6.​24 trillion, have never been higher.'"

Our September MFI XLS, with Aug. 31 data, shows total assets increased $​105.​6 billion to $​6.​620 trillion, after increasing $​19.​7 billion in July, $​11.​8 billion in June, $​79.​7 billion in May, decreasing $​17.​6 billion in April, $​66.​7 billion in March, increasing $​50.​0 billion in February, $​87.​0 billion in January, $​24.​5 billion in December and $​219.​8 billion in November. Assets decreased $​39.​3 billion in October, but increased $​77.​8 billion in September.

Our broad Crane Money Fund Average 7-​Day Yield was down 3 bps at 4.​99%, and our Crane 100 Money Fund Index (​the 100 largest taxable funds) was also down 3 bps at 5.​10% in August. On a Gross Yield Basis (​7-​Day) (​before expenses are taken out), the Crane MFA and the Crane 100 averaged 5.​36% and 5.​37%. Charged Expenses averaged 0.​37% and 0.​27% for the Crane MFA and the Crane 100. (​We'​ll revise expenses once we upload the SEC'​s Form N-​MFP data for 8/​31/​24 on Tuesday, 9/​10.) The average WAM (​weighted average maturity) for the Crane MFA was 33 days (​down 1 bp) and the Crane 100 WAM was unchanged from previous month at 33 days. (​See our Crane Index or craneindexes.​xlsx history file for more on our averages.)

Aug 12

 

Crane Data'​s August Money Fund Portfolio Holdings, with data as of July 31, 2024, show that Other, Treasuries and Agencies jumped while, Repo holdings dropped last month. Money market securities held by Taxable U.​S. money funds (​tracked by Crane Data) increased by $​90.​4 billion to $​6.​437 trillion in July, after decreasing by $​0.​4 billion in June, increasing $​105.​6 billion in May and decreasing $​61.​4 billion in April. Repo decreased $​21.​5 billion in July after increasing $​99.​3 billion in June. It remains the largest portfolio segment. Treasuries increased by $​24.​3 billion, staying at the No. 2 spot. (​The U.​S. Treasury continues to be the single largest Issuer to MMFs. `​In July, U.​S. Treasury holdings increased to $​2.​453 trillion, while NY Fed Repo decreased by $​234.​3 billion to $​380.​6 billion.) Agencies were the third largest segment, CP remained fourth, ahead of CDs, Other/​Time Deposits and VRDNs. Below, we review our latest Money Fund Portfolio Holdings statistics. (Note: Register soon for our European Money Fund Symposium, which is Sept. 19-​20, 2024 in London, England. Our discounted hotel rate expires on Wednesday!)

Among taxable money funds, Repurchase Agreements (​repo) decreased $​21.​5 billion (-​0.​8%) to $​2.​559 trillion, or 39.​8% of holdings, in July, after increasing $​99.​3 billion in June, $​26.​8 billion in May, and $​94.​9 billion in April. Treasury securities increased $​24.​3 billion (​1.​0%) to $​2.​453 trillion, or 38.​1% of holdings, after decreasing $​17.​3 billion in June, increasing $​51.​0 billion in May and decreasing $​144.​9 billion in April. Government Agency Debt was up $​22.​9 billion, or 3.​2%, to $​747.​0 billion, or 11.​6% of holdings. Agencies decreased $​16.​9 billion in June, increased $​19.​9 billion in May and $​3.​8 billion in April, but decreased $​14.​2 billion in March and $​6.​7 billion in February. Repo, Treasuries and Agency holdings now total $​5.​758 trillion, representing a massive 89.​5% of all taxable holdings.

Money fund holdings of Other (​Time Deposits), CP and CDs increased in July. Commercial Paper (​CP) increased $​8.​2 billion (​3.​1%) to $​276.​7 billion, or 4.​3% of holdings. CP holdings decreased $​2.​0 billion in June, $​2.​8 billion in May and $​30.​7 billion in April. Certificates of Deposit (​CDs) increased $​6.​9 billion (​3.​6%) to $​200.​7 billion, or 3.​1% of taxable assets. CDs decreased $​5.​6 billion in June, $​15.​8 billion in May and $​2.​2 billion in April. Other holdings, primarily Time Deposits, increased $​49.​0 billion (​35.​2%) to $​188.​2 billion, or 2.​9% of holdings, after decreasing $​57.​5 billion in June and increasing $​26.​2 billion. VRDNs increased to $​12.​4 billion, or 0.​2% of assets. (​Note: This total is VRDNs for taxable funds only. We will post our Tax Exempt MMF holdings separately Monday around noon.)

Prime money fund assets tracked by Crane Data increased to $​1.​171 trillion, or 18.​2% of taxable money funds' $​6.​437 trillion total. Among Prime money funds, CDs represent 17.​1% (​up from 16.​6% a month ago), while Commercial Paper accounted for 23.​6% (​up from 23.​0% in June). The CP totals are comprised of: Financial Company CP, which makes up 15.​9% of total holdings, Asset-​Backed CP, which accounts for 6.​3%, and Non-​Financial Company CP, which makes up 1.​4%. Prime funds also hold 0.​4% in US Govt Agency Debt, 4.​5% in US Treasury Debt, 20.​9% in US Treasury Repo, 0.​8% in Other Instruments, 13.​5% in Non-​Negotiable Time Deposits, 7.​6% in Other Repo, 10.​3% in US Government Agency Repo and 0.​8% in VRDNs.

Government money fund portfolios totaled $​3.​503 trillion (​54.​4% of all MMF assets), up from $​3.​426 trillion in June, while Treasury money fund assets totaled another $​1.​762 trillion (​27.​4%), up from $​1.​754 trillion the prior month. Government money fund portfolios were made up of 21.​2% US Govt Agency Debt, 17.​0% US Government Agency Repo, 31.​7% US Treasury Debt, 29.​6% in US Treasury Repo, 0.​4% in Other Instruments. Treasury money funds were comprised of 73.​2% US Treasury Debt and 26.​5% in US Treasury Repo. Government and Treasury funds combined now total $​5.​265 trillion, or 81.​8% of all taxable money fund assets.

European-​affiliated holdings (​including repo) increased by $​140.​9 billion in July to $​798.​0 billion; their share of holdings rose to 12.​4% from last month'​s 10.​4%. Eurozone-​affiliated holdings increased to $​510.​9 billion from last month'​s $​438.​2 billion; they account for 7.​9% of overall taxable money fund holdings. Asia & Pacific related holdings rose to $​336.​1 billion (​5.​2% of the total) from last month'​s $​293.​1 billion. Americas related holdings fell to $​5.​293 trillion from last month'​s $​5.​391 trillion, and now represent 82.​2% of holdings.

The overall taxable fund Repo totals were made up of: US Treasury Repurchase Agreements (​down $​39.​2 billion, or -​2.​2%, to $​1.​747 trillion, or 27.​1% of assets); US Government Agency Repurchase Agreements (​up $​17.​5 billion, or 2.​5%, to $​717.​5 billion, or 11.​1% of total holdings), and Other Repurchase Agreements (​up $​0.​3 billion, or 0.​3%, from last month to $​94.​0 billion, or 1.​5% of holdings). The Commercial Paper totals were comprised of Financial Company Commercial Paper (​up $​8.​2 billion to $​186.​0 billion, or 2.​9% of assets), Asset Backed Commercial Paper (​up $​2.​0 billion to $​74.​2 billion, or 1.​2%), and Non-​Financial Company Commercial Paper (​down $​1.​9 billion to $​16.​6 billion, or 0.​3%).

The 20 largest Issuers to taxable money market funds as of July 31, 2024, include: the US Treasury ($​2.​453T, 38.​1%), Fixed Income Clearing Corp ($​646.​3B, 10.​0%), Federal Home Loan Bank ($​598.​6B, 9.​3%), the Federal Reserve Bank of New York ($​380.​6B, or 5.​9%), JP Morgan ($​201.​1B, 3.​1%), Citi ($​162.​4B, 2.​5%), BNP Paribas ($​144.​2B, 2.​2%), RBC ($​140.​8B, 2.​2%), Federal Farm Credit Bank ($​133.​2B, 2.​1%), Barclays PLC ($​126.​2B, 2.​0%), Bank of America ($​125.​1B, 1.​9%), Goldman Sachs ($​110.​2B, 1.​7%), Mitsubishi UFJ Financial Group Inc ($​83.​3B, 1.​3%), Credit Agricole ($​72.​4B, 1.​1%), Wells Fargo ($​67.​9B, 1.​1%), Sumitomo Mitsui Banking Corp ($​65.​5B, 1.​0%), Mizuho Corporate Bank Ltd ($​57.​4B, 0.​9%), Societe Generale ($​56.​7B, 0.​9%), Toronto-​Dominion Bank ($​54.​1B, 0.​8%) and Canadian Imperial Bank of Commerce ($​54.​1B, 0.​8%).

In the repo space, the 10 largest Repo counterparties (​dealers) with the amount of repo outstanding and market share (​among the money funds we track) include: Fixed Income Clearing Corp ($​630.​3B, 24.​6%), the Federal Reserve Bank of New York ($​380.​6B, 14.​9%), JP Morgan ($​192.​7B, 7.​5%), Citi ($​150.​6B, 5.​9%), BNP Paribas ($​133.​2B, 5.​2%), RBC ($​111.​8B, 4.​4%), Barclays PLC ($​111.​7B, 4.​4%), Goldman Sachs ($​110.​0B, 4.​3%), Bank of America ($​104.​7B, 4,​1%) and Wells Fargo ($​63.​1B, 2.​5%). The largest users of the $​380.​6 billion in Fed RRP include: Vanguard Federal Money Mkt Fund ($​71.​8B), Fidelity Cash Central Fund ($​46.​5B), Vanguard Cash Reserves Federal MM ($​22.​7B), Fidelity Govt Money Market ($​20.​2B), Fidelity Sec Lending Cash Central Fund ($​20.​0B), Fidelity Inv MM: MM Port ($​17.​6B), Fidelity Inv MM: Treas Port ($​15.​9B), Fidelity Money Market ($​15.​4B), American Funds Central Cash ($​14.​5B) and Vanguard Market Liquidity Fund ($​13.​6B).

The 10 largest issuers of "​credit" -- CDs, CP and Other securities (​including Time Deposits and Notes) combined -- include: Mitsubishi UFJ Financial Group Inc ($​33.​4B, 5.​6%), RBC ($​29.​1B, 4.​8%), Mizuho Corporate Bank Ltd ($​28.​9B, 4.​8%), Toronto-​Dominion Bank ($​28.​4B, 4.​7%), Credit Agricole ($​23.​2B, 3.​9%), Skandinaviska Enskilda Banken AB ($​22.​5B, 3.​7%), Sumitomo Mitsui Trust Bank ($​21.​6B, 3.​6%), Canadian Imperial Bank of Commerce ($​20.​8B, 3.​5%), Bank of America ($​20.​4B, 3.​4%) and ING Bank ($​19.​8B, 3.​3%).

The 10 largest CD issuers include: Mitsubishi UFJ Financial Group Inc ($​23.​9B, 11.​9%), Credit Agricole ($​13.​9B, 6.​9%), Bank of America ($​13.​5B, 6.​7%), Sumitomo Mitsui Banking Corp ($​12.​8B, 6.​4%), Sumitomo Mitsui Trust Bank ($​12.​2B, 6.​1%), Toronto-​Dominion Bank ($​10.​6B, 5.​3%), Canadian Imperial Bank of Commerce ($​8.​4B, 4.​2%), Mitsubishi UFJ Trust and Banking Corporation ($​8.​2B, 4.​1%), Mizuho Corporate Bank Ltd ($​7.​2B, 3.​6%) and Bank of Montreal ($​6.​7B, 3.​3%).

The 10 largest CP issuers (​we include affiliated ABCP programs) include: Toronto-​Dominion Bank ($​17.​7B, 7.​0%), RBC ($​16.​8B, 6.​6%), Barclays PLC ($​12.​4B, 4.​9%), Bank of Montreal ($​11.​0B, 4.​3%), BPCE SA ($​10.​4B, 4.​1%), BSN Holdings Ltd ($​9.​4B, 3.​7%), Sumitomo Mitsui Trust Bank ($​9.​3B, 3.​7%), Bank of Nova Scotia ($​8.​6B, 3.​4%), Canadian Imperial Bank of Commerce ($​8.​5B, 3.​3%) and JP Morgan ($​8.​4B, 3.​3%).

The largest increases among Issuers include: Fixed Income Clearing Corp (​up $​110.​5B to $​646.​3B), Barclays PLC (​up $​45.​0B to $​126.​2B), Citi (​up $​26.​9B to $​162.​4B), Credit Agricole (​up $​25.​1B to $​72.​4B), US Treasury (​up $​24.​3B to $​2.​453T), Mitsubishi UFJ Financial Group Inc (​up $​18.​8B to $​83.​3B), Societe Generale (​up $​16.​2B to $​56.​7B), Federal Home Loan Bank (​up $​15.​5B to $​598.​6B), Mizuho Corporate Bank Ltd (​up $​13.​6B to $​57.​4B) and Bank of America (​up $​10.​1B to $​125.​1B).

The largest decreases among Issuers of money market securities (​including Repo) in July were shown by: the Federal Reserve Bank of New York (​down $​234.​3B to $​380.​6B), RBC (​down $​31.​4B to $​140.​8B), Wells Fargo (​down $​12.​5B to $​67.​9B), JP Morgan (​down $​8.​9B to $​201.​1B), Sumitomo Mitsui Banking Corp (​down $​5.​2B to $​65.​5B), Bank of Nova Scotia (​down $​2.​4B to $​27.​9B), BPCE SA (​down $​1.​2B to $​10.​4B), HSBC (​down $​0.​8B to $​32.​7B), Canadian Imperial Bank of Commerce (​down $​0.​7B to $​54.​1B) and Norinchukin Bank (​down $​0.​7B to $​7.​3B).

The United States remained the largest segment of country-​affiliations; it represents 77.​0% of holdings, or $​4.​956 trillion. Canada (​5.​2%, $​336.​3B) was in second place, while France (​5.​0%, $​322.​4B) was No. 3. Japan (​4.​7%, $​300.​5B) occupied fourth place. The United Kingdom (​3.​2%, $​204.​4B) remained in fifth place. Netherlands (​1.​0%, $​61.​3B) was in sixth place, followed by Australia (​0.​8%, $​49.​1B), Germany (​0.​8%, $​48.​8B), Sweden (​0.​8%, $​48.​0B), and Spain (​0.​4%, $​26.​4B). (​Note: Crane Data attributes Treasury and Government repo to the dealer'​s parent country of origin, though money funds themselves "​look-​through" and consider these U.​S. government securities. All money market securities must be U.​S. dollar-​denominated.)

As of July 31, 2024, Taxable money funds held 50.​3% (​up from 48.​6%) of their assets in securities maturing Overnight, and another 10.​1% maturing in 2-​7 days (​down from 12.​2%). Thus, 60.​4% in total matures in 1-​7 days. Another 11.​2% matures in 8-​30 days, while 9.​0% matures in 31-​60 days. Note that over three-​quarters, or 80.​6% of securities, mature in 60 days or less, the dividing line for use of amortized cost accounting under SEC regulations. The next bucket, 61-​90 days, holds 5.​9% of taxable securities, while 9.​6% matures in 91-​180 days, and just 3.​9% matures beyond 181 days. (​Visit our Content center to download, or contact us to request our latest Portfolio Holdings reports.)

Aug 07

 

The August issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Wednesday morning, features the articles: "Prime Inst MMF Conversions, Shifts Continue: FAF Does WLA," which breaks down the latest shifts in the Prime Inst space; "Q2 Earnings Calls: Sweep Rates Take Center Stage," which quotes from recent questions over brokerage sweep programs; and, "Deposits Under Pressure from Insurance, Funding," which covers a recent speech by Lorie Logan, President of the Federal Reserve Bank of Dallas. We also sent out our MFI XLS spreadsheet Wednesday a.​m., and we'​ve updated our Money Fund Wisdom database with 7/​31/​24 data. Our Aug. Money Fund Portfolio Holdings are scheduled to ship on Friday, August 9, and our Aug. Bond Fund Intelligence is scheduled to go out on Wednesday, August 14. (Note: We'​ll be publishing our latest Form N-​MFP files and revisions on Thursday, August 8. The SEC has changed the format of these files as their new regulations go into effect, so there may still be issues with our programs and collections.)

MFI'​s "Prime Inst." article says, "We'​ve now seen 16 Prime Institutional money funds with over $​265 billion in assets (​over 1/​3 of the sector) announce exits from the space to date (​see the News brief on DFA at right). But now comes a decision by one to live with the new rules in a unique way. A Prospectus Supplement for First American'​s Institutional Prime Obligations Fund tells us, '​In July 2023, the SEC adopted amendments to Rule 2a-​7 under the Investment Company Act of 1940.... [T]​he Amendments will require institutional prime and institutional tax-​exempt money market funds, including First American Institutional Prime Obligations Fund, to impose a mandatory liquidity fee when [​they] experience daily net redemptions that exceed 5% of assets on a day. Funds subject to the mandatory liquidity fee will not be required to apply such fee if the amount of the fee is less than 0.​01% of the value of the shares redeemed.'"

They continue, "​It explains, 'The mandatory liquidity fee requirement will become effective on Oct. 2, 2024. In calculating the amount of the mandatory liquidity fee under Rule 2a-​7, the fee amount must be based on a good faith estimate, supported by data available, of the costs the fund would incur if it sold a pro rata amount of each security in its portfolio to satisfy the amount of net redemptions. The calculation must factor in the spread costs and market impacts for each portfolio security, as described further in this supplement. A fund may assume a market impact of zero for its daily and weekly liquid assets.'"

We write in our Q2 Earnings article, “This past month, a number of earnings calls and articles discuss the continued shift from bank deposits into money market funds, and questions focused on brokerages facing pressure to pay higher rates on '​advisory' sweeps due to lawsuits and regulatory pressure."

It tells us, "Schwab'​s Peter Crawford was asked about 'scrutiny of advisory sweeps.' He answers, 'With respect to the Wells Fargo issue, we have provided money market fund sweep cash and -- or money market yields on bank cash for all of our fiduciary-​driven investment advisory solutions already. So, I don'​t really see the Wells Fargo report having any kind of meaningful implications for us. We'​ve been doing this for an extended period of time already.'"

Our "Deposits Under Pressure" piece says, "Federal Reserve Bank of Dallas President Lorie Logan recently gave a speech titled, 'A level playing field for deposit insurance,' which discussed increasing the FDIC deposit limit and other means of preventing bank deposit runs. She tells us, 'Funding risk is both one of the oldest challenges in banking and one of the most timely.... [​B]​ankers have long understood the importance of being prepared to meet withdrawals -- and of maintaining depositors' confidence so they don'​t withdraw money based on unfounded fears.'"

It continues, "​Logan explains, 'But as we saw in 2023, maintaining depositors' confidence can be challenging in today'​s highly networked society that allows bank runs to propagate with unprecedented speed. Now ... it’​s a good time to consider whether adjustments in banks' liquidity risk management or in related public policies can support a strong and vibrant banking system.'"

MFI also includes the News brief, "MMF Assets Eke Out Record $​6.​510 Trillion in July; Fasten Your Seatbelts." It says, Crane Data'​s Money Fund Intelligence XLS shows money fund assets rising by $​16.​8 billion in July to a (​monthly) record $​6.​510 trillion. Over 12 months (​through 7/​31/​24), money fund assets have increased by $​607.​5 billion, or 10.​3%. (​Our MFI Daily shows assets up $​32.​3 billion in August through 8/​5 to $​6.​5384 trillion. We expect MMF totals to break $​7.​0 trillion by year end.)

Another News brief, "DFA Short-​Term Investment Fund Converts to Ultra-​Short," tells us, "​An SEC filing for the DFA Short Term Investment Fund indicates that yet another internal money market fund is abandoning the Prime Institutional sector ahead of the implementation of emergency mandatory liquidity fees in October. The $​15.​1 billion DFA Short Term Investment Fund is converting to an ultra-​short bond fund, though we couldn'​t confirm this with Dimensional Fund Advisors."

A third News brief, "BNY Mellon Govt MMF Liquidates," tells readers, "BNY announced that it is liquidating its MLMXX, explaining, 'The Board of Trustees of BNY Mellon Funds Trust has approved the liquidation of BNY Mellon Government Money Market Fund, a series of the Trust, effective on or about August 27, 2024.'"

A sidebar, "WSJ on Bank NIM Squeeze," says, "The Wall Street Journal covers the Q2 earnings news in, 'Yield-​Hungry Wealth Management Clients Are Becoming a Headache for Big Banks,' They explain, 'Brokerage customers are still demanding more for their cash. And banks are scrambling to keep up. Across several banks with large wealth-​management businesses, a common theme in second-​quarter earnings reports was continuing to have to pay higher rates to hang on to brokerage customers' cash that isn'​t invested in things like stocks and bonds. Wells Fargo and Morgan Stanley called out increases in some of the rates they pay on certain brokerage account deposit products, and Bank of America noted a rise in rates paid on wealth-​management deposits.'"

Our August MFI XLS, with July 31 data, shows total assets increased $​19.​7 billion to $​6.​513 trillion, after increasing $​11.​8 billion in June, $​79.​7 billion in May, decreasing $​17.​6 billion in April, $​66.​7 billion in March, increasing $​50.​0 billion in February, $​87.​0 billion in January, $​24.​5 billion in December and $​219.​8 billion in November. Assets decreased $​39.​3 billion in October, but increased $​77.​8 billion in September and $​104.​2 billion in August.

Our broad Crane Money Fund Average 7-​Day Yield was unchanged at 5.​02%, and our Crane 100 Money Fund Index (​the 100 largest taxable funds) was also unchanged at 5.​13% in July. On a Gross Yield Basis (​7-​Day) (​before expenses are taken out), the Crane MFA and the Crane 100 both averaged 5.​40%. Charged Expenses averaged 0.​37% and 0.​27% for the Crane MFA and the Crane 100. (​We'​ll revise expenses once we upload the SEC'​s Form N-​MFP data for 7/​31/​24, though this may take some time as we adjust to the new N-​MFP format.) The average WAM (​weighted average maturity) for the Crane MFA was 34 days (​unchanged) and the Crane 100 WAM was down 1 bp from previous month at 33 days. (​See our Crane Index or craneindexes.​xlsx history file for more on our averages.)

Jul 08

 

The July issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Monday morning, features the articles: "AFP Liquidity Survey: Banks, MMFs, T-​Bills Kings of Cash," which breaks down the latest trends in corporate cash; "Money Fund Symposium '​24: Records, 5%, Big Prime Shift," which quotes from our recent Money Fund Symposium in Pittsburgh; and, "ICI Worldwide: MMFs Rise to $​10.​4 Tril. in Q1'​24; US, China," which reviews the latest figures on money fund markets outside of the U.​S. We also sent out our MFI XLS spreadsheet Monday a.​m., and we'​ve updated our Money Fund Wisdom database with 6/​30/​24 data. Our July Money Fund Portfolio Holdings are scheduled to ship on Wednesday, July 10, and our July Bond Fund Intelligence is scheduled to go out on Monday, July 15. (Note: We may not be publishing our latest Form N-​MFP files and revisions on Tuesday, July 9. The SEC has changed the format of these files as their new regulations go into effect, so it may take us a number of weeks to revise our programs and collections. We'​ll keep you posted!)

MFI'​s "AFP" article says, "​We wrote late last month on the '2024 AFP Liquidity Survey.' (​See our June 24 News, 'AFP 2024 Liquidity Survey: Cash Still King Among Corporates, Increasing.') Below, we excerpt from `​some of the highlights of the annual survey of corporate investors' cash habits. Discussing 'Current Allocations of Short-​Term Investments,' AFP says, '​Companies maintain their investments in relatively few vehicles. Organizations invest in an average 2.​7 vehicles for their cash and short-​term investments -- unchanged from the average in 2023. Most organizations continue to allocate a large share of their short-​term investment balances -- an average of 83% -- in safe and liquid investment vehicles: bank deposits, money market funds (​MMFs) and Treasury securities. This result is four percentage points higher than the 79% reported in 2023 -- and the highest percentage on record since AFP began tracking the data.'"

It continues, "​They explain, 'The typical organization currently maintains 47% of its short-​term investments in bank deposits. This allocation is the same as reported last year (​2023) but is 8 percentage points lower than the 55% reported in 2022, and lower than both the 52% reported in 2021 and the 51% in 2020. This year'​s allocation is similar to percentages reported in 2019 (​46%) and 2018 (​49%).'"

We write in our MFS'​24 article, "Crane Data recently hosted its Money Fund Symposium conference in Pittsburgh, where almost 600 money market professionals discussed rates, pending reforms, asset inflows and a number of other hot topics in cash. The opening session, 'Keynote: Fifty Years of Managing Money Funds' featured Federated Hermes' CEO Chris Donahue, who comments, 'Liquidity for me is the Eighth Wonder of the World, and money market funds make it that way.... Money market funds enable the capital markets to flow, enable cities to grow, enable wildlife to flourish. You know, the Irish said that Guinness was Mother'​s milk. I contend it'​s money market funds.' (Note: Conference materials and recordings are available in our 'Money Fund Symposium 2024 Download Center.')"

It tells us, "Laurie Brignac of Invesco, was asked about Money Fund Reforms during the 'Major Money Fund Issues 2024' segment. She comments, 'I think everybody in the room is painfully aware of the reforms and everything that'​s kind of going into that.... It'​s unfortunate, not surprising, seeing some of the transitions, the liquidations and things like that. We actually just filed today, so we will be liquidating our prime institutional funds, which is really sad because one of them is our oldest money market fund. It is 43 years old, so not quite 50.... But unfortunately, the mandatory liquidity fee is just not something that'​s going to be tenable to a lot of clients. So, we made that decision.'"

Our "ICI Worldwide" piece says, "​The Investment Company Institute published, 'Worldwide Regulated Open-​Fund Assets and Flows, First Quarter 2024,' which shows that money fund assets globally decreased $​35.​6 billion, or -​0.​3%, in Q1'​24 to $​10.​405 trillion. But the series excluded Australia'​s 6th largest $​286.​7 billion, so assets would have increased by $​236.​8 billion (​or 2.​3%) with Australia included. Increases were led by a sharp jump in money funds in U.​S. and China, while Luxembourg and Mexico also rose. Meanwhile, money funds in Ireland, Chile and Japan were lower. MMF assets worldwide increased by $​944.​5 billion, or 10.​0%, in the 12 months through 3/​31/​24, and money funds in the U.​S. represent 57.​5% of worldwide assets."

It continues, "​ICI says, 'On a US dollar-​denominated basis, equity fund assets increased by 4.​1% to $​33.​08 trillion at the end of the first quarter of 2024. Bond fund assets increased by 0.​8% to $​13.​00 trillion in the first quarter. Balanced/​mixed fund assets increased by 0.​5% to $​7.​33 trillion in the first quarter, while money market fund assets decreased by 0.​3% globally to $​10.​41 trillion.'"

MFI also includes the News brief, "MMF Assets Retake Record in July. ICI'​s latest weekly 'Money Market Fund Assets' show assets jumping by over $​50 billion to a record $​6.​154 trillion. Assets have risen in 10 of the last 11 weeks, increasing by $​185.​5 billion (​or 3.​1%) since April 24. MMF assets are up by $​267 billion, or 5.​6%, YTD in 2024 (​through 7/​2/​24). Crane Data'​s separate Money Fund Intelligence Daily series shows money fund assets rising by $​61.​7 billion in July, through 7/​2, to a record $​6.​551 trillion. (​Our MFI XLS shows assets up $​11.​8 billion in June to a record $​6.​487 trillion.)"

Another News brief, "Invesco Files to Liquidate Prime Inst MMFs; UBS MF Converting to Retail," says, "​An SEC filing for Invesco Liquid Assets Portfolio and Invesco STIC Prime Portfolio tells us, '​On June 11, 2024, the Board of Trustees of Short-​Term Investments Trust approved a Plan of Liquidation and Dissolution, which authorizes the termination, liquidation and dissolution of the Funds.' In related news, UBS Select Prime Preferred Fund announced that the fund will change to Retail.'"

A third News brief, "BlackRock Liquidates TempFund, LEAF," tells readers, "BlackRock also filed to liquidate 2 of its 3 Prime Institutional money funds, bringing the number of Prime Inst MMFs liquidating or converting to Government to 12 to date (​with total assets of $​245.​8 billion, or 38.​7% the $​635.​8 billion in Prime Inst MMFs)."

A sidebar, "Fidelity Intl Tokenizes MMF," says, "CoinDesk writes, 'Fidelity International Tokenizes Money Market Fund on JPMorgan'​s Blockchain,' which says, 'Fidelity International ... has tokenized shares in a money market fund (​MMF) using JPMorgan'​s Ethereum-​based private blockchain network, Onyx Digital Assets. Tokenization occurred near instantaneously through connectivity between the fund'​s transfer agent (​JPMorgan'​s transfer agency business) and Tokenized Collateral Network ... said Fidelity International, a separate entity to U.​S.-​based FMR.'"

Our July MFI XLS, with June 30 data, shows total assets increased $​11.​8 billion to $​6.​487 trillion, after increasing $​79.​7 billion in May, decreasing $​17.​6 billion in April, $​66.​7 billion in March, increasing $​50.​0 billion in February, $​87.​0 billion in January, $​24.​5 billion in December and $​219.​8 billion in November. Assets decreased $​39.​3 billion in October, but increased $​77.​8 billion in September, $​104.​2 billion in August and $​21.​0 billion in July.

Our broad Crane Money Fund Average 7-​Day Yield was down 1 bp at 5.​02%, and our Crane 100 Money Fund Index (​the 100 largest taxable funds) was down 1 bp to 5.​13% in June. On a Gross Yield Basis (​7-​Day) (​before expenses are taken out), the Crane MFA and the Crane 100 averaged 5.​40% and 5.​39%, respectively. Charged Expenses averaged 0.​38% and 0.​26% for the Crane MFA and the Crane 100. (​We'​ll revise expenses once we upload the SEC'​s Form N-​MFP data for 6/​30/​24, though this may take some time as we adjust to the new N-​MFP format.) The average WAM (​weighted average maturity) for the Crane MFA was 34 days (​unchanged) and the Crane 100 WAM was down 1 bp from previous month at 34 days. (​See our Crane Index or craneindexes.​xlsx history file for more on our averages.)