A press release entitled, "UBS Asset Management Announces Changes to Its Money Market Fund Platform" tell us, "UBS Asset Management (Americas) Inc. ("UBS AM") and its affiliates/predecessors have managed money market funds for more than 35 years and offer client-focused solutions throughout the world. In an effort to best address its clients' needs in an era of evolving regulatory reform and industry changes, UBS AM today announced changes to its money market fund platform, including the launch of new products." We review the changes from the 17th largest MMF manager, and we also discuss ICI's latest "Money Market Fund Assets" and monthly "Trends in Mutual Fund Investing" reports below.
The release explains, "Highlights of the changes to UBS AM's money market fund platform include: The UBS Select Prime Funds, with a largely institutional ... shareholder base, will adopt floating net asset value (FNAV) pricing by an October 2016 regulatory compliance deadline. The UBS Prime Funds, a recently launched retail money market family of funds, will accept investments from retail investors ('natural persons') and seek to maintain a constant net asset value (CNAV) per share of $1.00. The UBS Select Tax-Free Funds intend to qualify as 'retail money market funds' and will also undergo a name change later in 2016. The UBS Select Treasury Funds affirmed their intention, announced in June 2015, to qualify as 'government money market funds'.... The UBS Select Government Funds, a new suite of government money market funds will be launched in 2016 to complement the existing UBS Select Treasury Funds.... The UBS Investor Series will reduce the initial minimum investment requirement from $100,000 to $10,000.... UBS AM's sweep money market funds, available via UBS Financial Services' automatic cash 'sweep platform,' will undergo changes later in 2016."
"The changes we announced today and the expansion of our money market fund platform are designed to ensure that all our clients continue to have access to UBS Asset Management's deep capabilities in liquidity management," said Joe Abed, Head of Global Liquidity for UBS Asset Management. "Evolving our global liquidity product offering in the US is a critical component of UBS Asset Management's growth strategy in the Americas," said Blake Moore, Head of the Americas for UBS Asset Management. "With over $40 billion in US money market assets and almost $99 billion in liquidity products globally as of September 30, 2015, we continue to offer our clients a broad range of investment products to meet their liquidity needs."
In other news, money fund assets increased $13.8 billion in the past week to $2.757 trillion, their third straight weeks of gains. For the month-to-date in January (through 1/27), money market fund assets are still down $2 billion. The "Trends" report for December confirms that assets increased by $35.3 billion and ended the year up $30 billion, or 1.1%, the fourth straight year of gains. We also discuss ICI's "Month-End Portfolio Holdings of Taxable Money Funds," which confirms that holdings of Fed Repo skyrocketed in December (and Agencies gained), while Time Deposits, CDs, CP, and Treasuries all dropped. (See our Jan. 13 News, "Jan. Portfolio Holdings: Fed Repo Jumps to Record; TDs, Europe Plunge.")
The latest weekly MMF Assets update says, "Total money market fund assets increased by $13.79 billion to $2.76 trillion for the week ended Wednesday, January 27, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $6.28 billion and prime funds increased by $14.28 billion. Tax-exempt money market funds decreased by $6.77 billion. Assets of retail money market funds increased by $2.93 billion to $1.02 trillion. Among retail funds, government money market fund assets increased by $6.94 billion to $367.26 billion, prime money market fund assets increased by $500 million to $469.57 billion, and tax-exempt fund assets decreased by $4.51 billion to $182.13 billion.... Assets of institutional money market funds increased by $10.86 billion to $1.74 trillion. Among institutional funds, government money market fund assets decreased by $670 million to $873.78 billion, prime money market fund assets increased by $13.78 billion to $797.79 billion, and tax-exempt fund assets decreased by $2.25 billion to $66.37 billion."
A Footnote adds, "In anticipation of the Securities and Exchange Commission's (SEC) new money market fund regulations, many advisers are changing their prime money market funds into government money market funds. As a result, there have been, and will continue to be, large shifts in assets from prime funds to government funds before the October 2016 deadline." (There were no reclassification shifts in the latest week, but ICI moved over $70 billion, including Fidelity Inst MM Portfolio, from Prime Inst to Prime Retail in the first week of 2016.)
ICI's "Trends in Mutual Fund Investing: December 2015" confirms a big increase in MMF assets in December, up $35.3 billion, or 1.3%, to $2.755.3 trillion. Assets increased in 7 of the last 8 months of 2015. MMFs increased $4.8 billion in November and $45.2 billion in October, dropped $5.1 billion in September, gained $8.1 billion in August, rose $45.9 billion in July. For calendar year 2015, money fund assets were up $30.0 billion, or 1.1%, according to ICI's monthly series. It was the fourth straight year that MMF assets climbed.
The release says, "The combined assets of the nation's mutual funds decreased by $292.35 billion, or 1.8 percent, to $15.65 trillion in December, according to the Investment Company Institute's official survey of the mutual fund industry.... Bond funds had an outflow of $27.22 billion in December, compared with an outflow of $5.05 billion in November.... Money market funds had an inflow of $35.36 billion in December, compared with an inflow of $2.84 billion in November. In December funds offered primarily to institutions had an inflow of $15.17 billion and funds offered primarily to individuals had an inflow of $20.19 billion." Money funds now represent 17.6% of all mutual fund assets, while bond funds represent 21.8%. The total number of money market funds dropped to 482 in December, from 496 the previous month.
ICI's latest "Portfolio Holdings" summary shows that Repo skyrocketed and Agencies gained, while CDs plummeted, and CP and Treasuries fell. Repurchase agreement displaced CDs to become the largest portfolio segment, increasing $151.9 billion, or 27.7%, in December to $699.6 billion. Repo represents 28.0% of taxable MMF holdings. Treasury Bills & Securities moved into second place among composition segments, falling $21.7 billion, 4.3%, in December to $481.4 billion (19.3% of assets). U.S. Government Agency Securities continued their steady climb, moving into third after increasing $34.5 billion, or 7.9%, to $469.2 billion (18.8% of assets).
CDs (including Eurodollar CDs) plunged to fourth place from first the month before, decreasing $113.8B, or 20.1%, in December to $453.8 billion (18.1% of assets). (ICI's CD totals likely include Time Deposits, which Crane Data and the SEC categorize as "Other" -- we reported a large decrease in Other/TDs in December.) Commercial Paper was still fifth, declining $21.0B, or 6.6%, to $298.8 billion (12.0% of assets). Notes (including Corporate and Bank) dropped by $11.4 billion, or 15.1%, to $64.4 billion (2.6% of assets), and Other holdings (including Cash Reserves) gained $8.9 billion to $33.2 billion.
The Number of Accounts Outstanding in ICI's series for taxable money funds decreased by 181.1 thousand to 23.394 million, while the Number of Funds fell by 8 to 337. Over the past 12 months, the number of accounts fell by 80.1 thousand and the number of funds declined by 28. The Average Maturity of Portfolios remained unchanged at 35 days in December. Over the past 12 months, WAMs of Taxable money funds have declined by 9 days. At 35, WAM's remain at the lowest level since June 2010, according to our analysis of ICI's data. Note: Crane Data will update its January MFI XLS today to reflect 12/31/15 Portfolio Composition and Maturity Breakout data for our entire fund universe. (Visit our Content Center and the latest Money Fund Portfolio Holdings download page to access our January Money Fund Portfolio Holdings and the latest files.)
Finally, "T Rowe Price released its Q4 Earnings yesterday. Their press release says, "For the three-month period ended Dec. 31, 2015, the mutual funds' net cash flows after client transfers include net outflows of $1.4 billion from the stock and blended asset funds that `were offset in part by net inflows of $.9 billion into the fixed income funds and $.2 billion into the money market funds." It continues, "Money market advisory fees and other fund expenses voluntarily waived by the firm to maintain positive yields for investors in the fourth quarter of 2015 were $9.8 million, compared with $14.5 million in the 2014 quarter. In 2015, the firm has waived $47.6 million in such fees compared with $58.4 million in the 2014 period. The firm expects that it will continue to waive such fees into 2016." (Federated Investors also reported earnings and hosts a conference call this morning; watch for News coverage Monday.)
