The November issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Tuesday morning, features the articles: "D&I Share Classes All the Rage While ESG MMFs Liquidate," which reviews the "Social" money fund space; "BNY Mellon Portal White Labels MS; ICD Upgrades," which covers recent MMF trading platform changes; and, "Fund Companies Prep for Liquidity Fees Via Filings," which reviews the changing in disclosures for funds in preparation for new regulations. We also sent out our MFI XLS spreadsheet Tuesday a.m., and we've updated our Money Fund Wisdom database with 10/31/23 data. Our November Money Fund Portfolio Holdings are scheduled to ship on Thursday, November 9, and our November Bond Fund Intelligence is scheduled to go out on Tuesday, November 14.
MFI's "D&I Share Classes All the Rage But ESG MMFs Liquidating" article says, "We've seen a lot of activity and interest in the D&I or Social money fund space over the past month, including the launch of two new share classes from Allspring and one from HSBC. But it's been mostly bad news among ESG-named Prime MMFs with yet another liquidation. We review the latest news and statistics on these sectors below."
It continues, "Just yesterday, a press release stated, 'Wells Fargo & Company ... announced it is working with Allspring Global Investments, a global asset management firm, to launch a Tribal Inclusion share class for the Allspring Government Money Market Fund, which will be offered exclusively to Wells Fargo corporate clients. `The Tribal Inclusion share class is the first money market product with a charitable donation feature focused on benefiting tribal communities in the United States.'"
We write in our Portal article, "There also was a flurry of news in the online money market fund trading or 'portal' space in recent weeks, including two announcements from the recent AFP corporate treasury conference. We learned from the first press release, entitled, 'BNY Mellon Launches White Labeling Service for LiquidityDirect Platform,' that, 'BNY Mellon announced ... the launch of LiquidityDirect's new White Labeling service offering, providing financial institutions a liquidity management solution for their end clients. Financial institutions seeking to include short-term investments in their suite of offerings can now leverage LiquidityDirect's technology and services to provide a seamless user experience through a single sign-on for their clients.'"
It tells us, "Morgan Stanley Investment Management will be the first financial institution to leverage BNY Mellon's new White Labeling service offering. The collaboration between BNY Mellon's robust platform combined with MSIM’s extensive global client base is the first of its type and will set a new industry standard for delivering efficient cash management solutions to clients."
Our "Fund Filings" piece states, "Now that the previous regime of emergency gates and liquidity fees has been removed from money market mutual funds (effective Oct. 2), advisors have begun changing disclosures and filing updates to prepare for the new round of pending regulations. As we mentioned in our Oct. 23 Link of the Day, 'Dreyfus Recaps 2a-7 Changes for AFP,' discretionary liquidity fees will become live on April 2, 2024 and mandatory liquidity fees for Prime Institutional MMFs will become active on Oct. 2, 2024. Below, we excerpt from some recent SEC filings, which shed more light on the rules and how managers are handling disclosures. (See filings with the term 'discretionary liquidity fee' here.)"
It explains, "A Prospectus Supplement (497) for DWS Money Market Prime Series and DWS Tax-Exempt Portfolio explains, 'In July 2023, changes to the federal regulations that govern money market funds were adopted. The changes will be effective at various times in 2023 and 2024. Among the changes are: (i) an increase in the minimum investment percentages in securities offering daily and weekly liquidity, (ii) making any liquidity fees fully discretionary and not tied to minimum liquidity requirements, and (iii) the removal of the ability to temporarily suspend (gate) redemptions."
MFI also includes the News brief, "WSJ: Cash Is Hot But Could Cost. The Wall Street Journal writes on its front page, 'How This Year's Hottest Investment Could End Up Costing You.' They say, 'Cash has rarely been this hot on Wall Street. Financial advisers warn holding too much can burn a hole in your portfolio. With markets rocky and cash earning 5% or more, investors have boosted their holdings of money- market funds.'"
Another News brief, "MMF Assets Dip in October," explains, "Our MFI XLS shows assets declining by $39.3 billion in October to $6.061 trillion, the first decline in 12 months. ICI's latest weekly 'Money Market Fund Assets' report shows MMFs jumping for the second week in a row after plunging the prior week. ICI's series jumped $62.7 billion the past week to $5.695 trillion. Assets are up by $960 billion, or 20.3%, year-to-date in 2023, with Institutional MMFs up $423 billion, or 13.8% and Retail MMFs up $537 billion, or 32.0%. Over the past 52 weeks, money funds have risen a massive $1.063 trillion, or 23.0%, with Retail MMFs rising by $627 billion (39.5%) and Inst MMFs rising by $436B (14.3%)."
A third News brief, "BlackRock, Schwab Earnings Show Shift to MMFs Still Going," says, "Asset managers, brokerages and banks discussed money funds and bank deposit trends during their latest earnings calls. They show that 'cash sorting,' or the shift into money funds from bank deposits, is alive and well. On BlackRock's call, CFO Martin Small tells us, 'Rate hikes over the last 18 months mean that for the first time in nearly 20 years, clients can earn a real return in cash. In the short term, this has benefited many portfolios.... [C]ash management net inflows were $15 billion in the quarter. Money market funds have returned to earning yields not seen in nearly two decades. We're leveraging our scale and integrated cash offerings to engage with clients who are using cash not only to manage liquidity, but also to earn attractive returns.'"
A sidebar, "Federated Q3 Earnings Call," says, "Federated Hermes, the 7th largest manager of money funds, reported Q3'23 earnings and hosted its Q3'23 earnings call recently. The release quotes CEO J. Christopher Donahue, 'Record assets under management at the end of the third quarter were again driven by money market asset increases, particularly investor demand for our prime money market offerings in the current interest rate environment, where general market volatility made the improved yields of our cash offerings an appealing haven for investors.'"
Our November MFI XLS, with October 31 data, shows total assets decreased $39.3 billion to $6.061 trillion, after increasing $77.8 billion in September, $104.2 billion in August, $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 last October."
Our broad Crane Money Fund Average 7-Day Yield was up 1 bp to 5.08%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was up 1 bp to 5.19% in October. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 both were both higher at 5.35% and 5.26%, respectively. Charged Expenses averaged 0.37% and 0.26% for the Crane MFA and the Crane 100. (We'll revise expenses on Wednesday once we upload the SEC's Form N-MFP data for 10/31/23.) The average WAM (weighted average maturity) for the Crane MFA was 31 days (up 4 days from previous month) and the Crane 100 WAM was also up 3 at 30 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
