The May issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Friday morning, features the articles: "Crane Data Celebrates 10th Birthday; Happy to Be Here," which looks at where Crane Data has been, where we are, and where we are going; "Goldman's Fishman Talks MMF Reforms, Growth," which profiles Dave Fishman, Head of Liquidity Solutions at Goldman Sachs Asset Management; and "ICI Fact Book Shows Money Funds Hung Tough in 2015," which reviews trends from the just-released "2016 Investment Company Fact Book." We have updated our Money Fund Wisdom database query system with April 30, 2016, performance statistics, and also sent out our MFI XLS spreadsheet Friday morning. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our May Money Fund Portfolio Holdings are scheduled to ship Tuesday, May 10, and our May Bond Fund Intelligence is scheduled to go out Friday, May 13. Below, we also review a release entitled, "First American Funds Announce Strike Times For Prime Fund, Share Class Name Changes."
MFI's lead "10th Birthday" article says, "Crane Data hits a milestone this month, celebrating our 10th birthday. Given the wild and crazy events of the past decade in the money markets, we consider ourselves lucky to have made it this far. As we've done in past May issues, we'd like to take a moment to review our progress and update you on our efforts, which include expanding the types of data we track and extending our coverage beyond money market funds. Our company, run by money fund expert Peter Crane and technology guru Shaun Cutts, was launched in May 2006 to bring faster, cheaper and cleaner information to the money fund space. We began by publishing our flagship Money Fund Intelligence newsletter, and we've grown to offer a full range of daily and monthly spreadsheets, news, database query systems and reports on U.S. and "offshore" money funds."
It continues, "Just as money market fund complexes have been busy the past year preparing for the 2016 MMF reform deadlines, so have we at Crane Data. In reaction to the new rules on website disclosure that went into effect April 14, we’ve begun publishing Daily Liquid Assets, Weekly Liquid Assets, and Daily MNAVs -- all of which money fund firms are now required to post on their websites to comply with the new regulations. Given the stresses of the zero yield environment and massive regulatory changes, we have evolved and expanded our coverage beyond money funds. In early 2015, we officially launched our Bond Fund Intelligence monthly newsletter, which tracks the bond fund universe with a focus on the ultra-short and short-term bond fund sector."
Our profile of GSAM's Dave Fishman reads, "This month, MFI profiles Dave Fishman, Head of Liquidity Solutions at Goldman Sachs Asset Management. Fishman discusses GSAM's reform plans, its fund lineup, and the industry shift from Prime to Government. Says Fishman on their recent growth, "For the past several years, we've been investing in our business, and we've been staying in front of clients, working to educate them on the coming regulatory reforms and their investment options. I think clients have responded, and our growth is simply the result of staying in front of people and investing in a business we believe in."
Responding to the question, What is your biggest priority? Fishman answers, "Our biggest priority is meeting or exceeding our clients' needs. Obviously, money fund reform has made that a bigger job compared to the past. Reform is creating significant change in a product that was basically unchanged for 40 years and has offered many features and functions that people came to rely on. So our priority is to make sure we offer the right mix of products to meet clients' needs. With this in mind, we have made some significant changes to our product line-up over the last two years, which we think set us up well for October of this year when we'll implement the final changes."
The article on the "Fact Book" explains, "ICI's just-released "2016 Investment Company Fact Book" reports that while equity and bond funds experienced outflows in 2015, money market funds had modest inflows last year. The annual guide looks at institutional and retail money fund demand and the effects of the SEC's money market fund reforms. Overall, money funds assets were $2.755 trillion at year-end, comprising 18% of the $15.7 trillion in mutual fund assets."
On "Demand for Money Market Funds," ICI says, "In 2015, money market funds received a modest $21 billion in net inflows. Money market funds experienced outflows in the first four months of 2015, with investors redeeming $162 billion, on net. Tax payments by corporations in mid-March and individuals in mid-April were likely key drivers behind these redemptions. Outflows abated and money market funds received net inflows of $183 billion over the last 8 months of the year."
In a sidebar, we discuss, "More Changes Afoot." This brief says, "The latest month-end saw 23 funds, totaling $28.4 billion, converted from Prime to Government. With these changes, $242.1 billion has now already shifted from Prime to Govt, 83.6% of the $289.7 billion slated to convert by October 14. Deutsche was by far the largest chunk of it, converting 8 funds totaling $18.8 billion on May 2."
Also, we do a sidebar on "Fee Waivers Keep Dropping," which says, "Federated, Schwab, BNY Mellon, T. Rowe Price, and Northern Trust all released their Q1 earnings this month and a common thread throughout was reduced MMF fee waivers.... BNY Mellon said in its earnings release that "roughly half of money market fee waivers have been recovered following the Fed's December rate increase." Finally, as we do every month, we review all the important "Money Fund News."
Our May MFI XLS, with April 30, 2016, data, shows total assets decreased $42.0 billion in April to $2.636 trillion, after decreasing $20.3 billion in March, increasing $37.4 billion in February, and decreasing $22.4 billion in January. Our broad Crane Money Fund Average 7-Day Yield dropped by 1 bps to 0.11% for the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) decreased 1 basis point to 0.21% (7-day). It is the first time since the beginning of the year that these indexes have declined.
On a Gross Yield Basis (before expenses were taken out), the Crane MFA was up 3 bps to 0.43% and the Crane 100 was down 1 bps to 0.46%. Charged Expenses averaged 0.31% (up 2 bps) and 0.29% (up 4 bps) for the Crane MFA and Crane 100, respectively. The average WAM (weighted average maturity) for the Crane MFA was 35 days (down 1 day from last month) and for the Crane 100 was 35 days (down 2 days). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
In other news, First American Funds' release says, "The First American family of mutual funds today announced that it intends to offer intraday liquidity for shareholders in its planned institutional prime obligations fund. As previously announced, the current First American Prime Obligations Fund will be renamed First American Institutional Prime Obligations Fund (Institutional Prime). First American plans to offer three intraday pricings for Institutional Prime at 9:00 a.m., 12:00 p.m. and 3:00 p.m. (Eastern Time) beginning October 14, 2016. Institutional Prime will be subject to a floating net asset value and the possibility of liquidity fees and redemption gates beginning October 14, 2016."
It adds, "Also as previously announced, on July 18, 2016 First American plans to launch a new fund for retail investors only, First American Retail Prime Obligations Fund (Retail Prime). Retail Prime will seek to maintain a stable $1.00 per share NAV and will price once daily at 4:30 p.m. (Eastern Time). Beginning October 14, 2016, Retail Prime will be subject to the possibility of liquidity fees and redemption gates. First American also announced today that it intends to change several share class names across its family of funds ... effective October 14, 2016."
The share class name changes are as follows: First American Govt Obligs Institutional Investor Share will be V shares; FA Inst Prime Obligs I Shares will be T shares and Institutional Investor shares will be V shares; FA Treasury Obligs Reserve Shares will be G shares and Institutional Investor shares will be V shares; FA Tax Free Obligs Institutional Investor shares will be V shares; and FA US Treasury MMF Institutional Investor Shares will be V shares.
