The October issue of Crane Data's Money Fund Intelligence was sent to subscribers Friday morning, along with our September 30, 2012 monthly performance data and rankings. Our Money Fund Wisdom database query website was also updated, and our Money Fund Intelligence XLS monthly spreadsheet, and Crane Index money fund averages were released. (Our next monthly Money Fund Portfolio Holdings with 9/30/12 data are scheduled to be released on the 7th business day, Wednesday, Oct. 10.) The latest edition of MFI features the articles: "MMF Reform Undead: Geithner Urges FSOC to Rise," which discusses the possible revival of regulations; "Vanguard's David Glocke: Low Expense Is Our Alpha," which interviews the veteran portfolio manager of Vanguard Prime Money Market Fund; and, "Gating Gains Momentum: BlackRock's SLF Breaker," which reviews a new "way forward" for money fund reform.
Our MMF Reform Undead piece comments, "Following the SEC's decision to withdraw a vote on reforming money market funds, the issue seemed dead, or at least in the critical ward. But last week, U.S. Treasury Secretary Timothy Geithner reopened the issue, sending a letter to members of the Financial Stability Oversight Council.."
Geither wrote, "I urge the Council to use its authority under section 120 of the Dodd-Frank Act to recommend that the SEC proceed with MMF reform. To do so, the Council should issue for public comment a set of options for reform to support the recommendations in its annual reports. The Council would consider the comments and provide a final recommendation to the SEC, which, pursuant to the Dodd-Frank Act, would be required to adopt the recommended standards or explain in writing to the Council why it had failed to act. I have asked staff to begin drafting a formal recommendation immediately and am hopeful that the Council will consider that recommendation at its November meeting."
Our monthly "profile" of says, "This month, we interview Vanguard Group Portfolio Manager and Principal David Glocke, who has been managing money funds for 20 year, 15 of them at Vanguard. The fourth largest money fund manager, with $161 billion, runs the flagship Vanguard Prime MMF, which opened in 1975, and the money fund management team also includes John Lanius on the taxable side and Pam Tynan and John Carbone on the municipal side. Below, we discuss ultra-low rates, portfolio holdings, and recent developments in the money fund space."
Glocke says of his biggest challenge, "The low interest rate environment is certainly a challenge, especially for savers. Everybody still wants to know, 'When do you think rates are going to move back up again?' The nice part is that the money funds remain well supported in the marketplace. You haven't seen this massive exodus from money markets. People are still very supportive of the product, believe in it and believe in the team behind it, too. The regulatory environment is also a challenge. There's obviously a degree of uncertainty, which creates concern on the part of investors. That said, investors remain confident and committed to the product."
Our Gating article says, "BlackRock recently published a white paper entitled, "Money Market Funds: A Path Forward," which criticizes the money market fund reform options championed by SEC Chairman Mary Schapiro and which proposes a new "circuit breaker" or "standby liquidity fee" (SLF) option as a reform solution. A "gating" or "toll" option has gained momentum following its mention by SEC Commissioners Gallagher and Paredes in their Aug. 28 letter, and following Treasury Secretary Tim Geithner's mention in his letter to the FSOC last week."
The October MFI also contains monthly News, Indexes, top rankings and extensive performance tables. E-mail email@example.com to request the latest issue. Subscriptions to Money Fund Intelligence are $500 a year and include web access to archived issues and fund "profiles". Additional users are $250 and bulk pricing and "site licenses" are available. Crane Data's other products include: Money Fund Intelligence XLS ($1K/yr), MFI Daily ($2K/yr), Money Fund Wisdom ($4K/yr), MFI International ($2K/yr), and Brokerage Sweep Intelligence ($1K/yr).