Mutual fund trade group the Investment Company Institute released a "revamped weekly report on money market mutual fund (MMF) assets" updated "to provide greater detail on assets held in funds that focus on government securities. ICI's expanded statistics, available at: http://www.ici.org/stats/mf/mm_01_29_09.html, now provide Taxable Government, Taxable Non-Government (or Prime), and Tax Exempt totals (combining both Retail and Institutional assets) and provide a "historical flow data for the past 52 weeks."
ICI's weekly numbers show that "total money market fund assets increased by $11.30 billion to $3.904 trillion for the week ended Wednesday, January 28. Assets of taxable government funds increased by $7.47 billion, taxable non-government funds increased by $10.42 billion, and tax exempt funds decreased by $6.59 billion."
"Assets of retail money market funds decreased by $5.70 billion to $1.352 trillion. Taxable government money market fund assets in the retail category decreased by $1.09 billion to $253.72 billion, taxable non-government money market fund assets decreased by $182 million to $801.38 billion and tax-exempt fund assets decreased by $4.42 billion to $297.32 billion," said the release.
It continues, "Assets of institutional money market funds increased by $16.99 billion to $2.552 trillion. Among institutional funds, taxable government money market fund assets increased by $8.56 billion to $1.199 trillion, taxable non-government money market fund assets increased by $10.60 billion to $1.163 trillion and tax-exempt fund assets decreased by $2.17 billion to $189.88 billion."
ICI also released its monthly money fund statistics for December and began reporting weekly statistics on long-term (stock and bond) mutual funds. The December 2008 "Trends In Mutual Fund Investing" shows money fund assets increased by $112.2 billion in December and increased by $746.1 billion, or 24.2%, in 2008.
Law firm Stradley Ronon and Counsel Joan Ohlbaum Swirsky write "Group of Thirty Recommends Fundamental Transformation for Money Market Funds" in the company's most recent "Fund Alert, January 2009" publication. (See our Jan. 19 News, "Group of Thirty Recommendation Poses Threat to Money Market Funds".) The article says, "A group of international leaders from the public and private sectors, including key advisers to President Obama, has recommended financial reforms that include fundamental changes to money market funds."
Stradley writes, "The recommended money market fund changes are part of a series of 18 sweeping proposals that address a broad range of financial and economic issues, including the role of rating agencies, the regulation of structured products, and the method of liquidating financial institutions. The Working Group on Financial Reform, which issued the report ("Financial Reform: A Framework for Financial Stability"), is a steering committee of the Group of Thirty, a private, nonprofit, international body composed of very senior representatives of the private and public sectors and academia. The steering committee was led by Paul Volcker, former Chairman of the Federal Reserve Board and Chairman of the Economic Recovery Advisory Board under President Obama, and other members of the Group of Thirty include Timothy Geithner, President Obama's just-confirmed Secretary of the Treasury, and Lawrence Summers, a senior economic adviser to the Obama administration."
The "Fund Alert" continues, "Under the Group of Thirty recommendations, money market funds that offer services that the report characterizes as 'bank-like,' such as checkwriting and assurances of maintaining a stable net asset value, would be required to reorganize as special-purpose banks, with appropriate prudential regulation and supervision, government insurance, and access to central bank lender-of-last-resort facilities. Those institutions remaining as money market mutual funds would have no explicit or implicit assurances to investors that funds could be withdrawn on demand at a stable NAV, would not be permitted to use amortized cost pricing, and would carry a fluctuating NAV.... It is not clear how, if at all, these funds would differ from existing short-term bond funds."
Finally, Stradley's Swirsky says, "The report notes that the recommendations are intended to address recent problems faced by money market funds, which 'underscored the dangers of institutions with no capital, no supervision, and no safety net...' The report does not reference the industry efforts and regulatory initiatives that have, to date, resulted in money market funds' weathering the recent financial crisis with isolated instances of loss to shareholders -- though at significant cost to some fund sponsors. Presumably, money market fund industry participants, including the ICI, will weigh in on the recommendations."
Fitch Ratings "published proposed changes to its global criteria for rating money market funds, primarily focusing on 'prime' funds, says a company press release. Fitch will host a teleconference on Thursday, Jan. 29, at 9:00 a.m., to discuss the changes in criteria. "Intended for `constant net asset value (CNAV) and variable net asset value (VNAV) cash management funds, irrespective of jurisdiction and domicile," these changes include: "a more direct recognition of potential institutional support; a closer alignment of portfolio liquidity and the potential for high investor redemptions in times of stress; introduction of new diversification guidelines and a Portfolio Credit Factor (PCF) matrix that offers a more sensitive assessment of credit risk; and, a revised ratings scale that adds a MMF subscript and eliminates existing Volatility ratings for money market funds."
Roger Merritt, Managing Director, Funds and Asset Managers, says, "These criteria changes have been under consideration since last year, after reflecting upon the stresses the industry faced. These proposals are offered against a backdrop of other industry and regulatory initiatives to examine whether changes to the money market fund industry are needed."
"The potential for institutional support, as gauged by willingness and ability to provide support during periods of financial stress, is an important change to Fitch's ratings methodology," says Nathan Flanders, Regional Head, U.S. Funds and Asset Managers. Fitch adds that "Financial Institutions analysts will play an integral role in assessing whether support is likely to be forthcoming. Where institutional support is viewed as less likely, Fitch is proposing more conservative rating criteria."
The release also says, "To address redemption risk, the proposed criteria more explicitly aligns overnight and one-month portfolio maturities with a fund's largest investors. The challenges that money market funds faced last year were exacerbated by investors risk aversion. Significant redemption activity placed additional pressure on the ability of funds to preserve the value of invested capital."
Fitch "is proposing to alter its rating scale for money market funds to provide market participants with more transparency as to the level of risk assumed. Fitch proposes to add an 'MMF' subscript to its money market fund ratings in an effort to highlight for investors, regulators and other market participants that these ratings are distinct from those assigned to higher risk bond funds. Fitch is seeking market feedback on the proposed criteria changes over a 60-day comment period. (The dial in number for the teleconference is 1-866-723-3590 and the conference ID is 83011266.)
MarketWatch just posted "Treasury money-market funds shut the door", which gives a comprehensive update on recent events in the money fund business and includes quotes from a number of difference money fund professionals and analysts.
Writer Sam Mamudi says, "On Monday, Vanguard Group closed its Vanguard Admiral Treasury Money Market Fund and Vanguard Treasury Money Market Fund, and on Tuesday, Pimco, a unit of Allianz AG, said it had shelved plans to launch a Treasury money-market fund. In December, J.P. Morgan Funds, a unit of J.P. Morgan Chase & Co., and Fidelity Investments closed their Treasury money-market funds to new investors. The pressure on the Treasury funds has been immense."
They quote Debbie Cunningham, "There's whole host of [government] support programs to help with the liquidity and credit quality of other types of funds." MarketWatch says, "One program promises to buy debt from any money-market fund that needs to sell.... Wide spreads also make other fund types attractive."
Pimco Senior VP Paul Reisz said of their new Treasury fund, "It didn't make sense to launch that in this environment," saying "the launch was 'more likely' toward the end of the year," according to MarketWatch. They add, "Reisz said that Pimco launched Government Money Market, a fund that invests in government agency debt, because while the debt isn't explicitly guaranteed in the way Treasurys are, the level of safety is 'close enough.' And added to the higher yields, there's also more diversity of investment options," they quote Reisz.
Some speculate that "The fee pressure funds will face from lower yields, coupled with greater regulation -- for instance, an explicit guarantee of money fund assets -- could reduce profitability." Jeffries analysts wrote, "We believe the profitability of the cash management business would be severely impaired and only those with a significant footprint ... would benefit. Consolidation would likely ensue as capital requirements would drive smaller players out, and yields would be driven down as only the highest quality assets would be viable investment options."
In other news, see Bloomberg's "GE Leads Commercial Paper 'Test' as Fed's Buying Ebbs", which says, "About $245 billion of 90-day commercial paper that companies sold to the Federal Reserve starting in October will mature this week and next, central bank data show. As much as $50 billion to $70 billion of the debt may be rolled over and bought by investors, according to Barclays Capital in New York."
DB Advisors recently hosted a Webinar entitled, "Investing cash in a low interest rate environment," which discussed "How to improve yields conservatively." The Deutsche Bank subsidiary's Head of Portfolio Management Joe Benevevento and Head of Distribution Kevin Bannerton hosted the call.
The challenge for cash investors is that "U.S. interest rates are at historic lows," says DB, and that the "Federal Reserve's focus on alternative methods of eaasing monetary policy, including asset purchases" is contributing to "downward pressure on rates." The presentation says, "Increased demand for Agency securities has led to a drastic reduction in agency yields." Bannerton adds, "One segment that offers [more attractive] yields is Prime money market funds."
Benevento warns investors, "Pushing maturities out may not be the best option." He notes that opportunities for "incremental yield" exist in the A2/P2 market (though not for DB's money funds he notes), in FDIC-insured debt, and in sovereigns, or foreign bank debt guaranteed by governments. He adds, "There are a fair amount of investors that need to return better than the Fed funds market."
In addition, DB notes that the "Flight to quality trend is beginning to reverse," saying that "Treasury money market funds have seen a net negative cash flow due to low yields and fund closures" and that "Government and prime funds are experiencing positive inflows. (See our "Link of the Day" today too.) Finally, DB says that "Yields on prime funds continue to remain attractive" and that "Prime funds offer value -- despite the 'de-risking' of portfolios."
As we learned last week, money market mutual funds continue to garner unprecedented levels of attention on investment manager and brokerage earnings and other conference calls. Perhaps the most discussed topic lately has been the impact of ultra-low yields on money fund expense ratios, particularly in the Treasury fund space. Below, we excerpt and summarize various comments on the zero yield and fee waiver issue.
As we mentioned Friday ("Federated Believes Money Market Mutual Fund Core Will Remain Intact"), Federated Investors discussed the issue on its Friday earnings call. The company said it held $90 billion in Treasury funds (28%), $122 billion in Govt funds (38%), $78 billion in Prime funds (24%), and $35 billion in Muni funds (11%) as of Dec. 31, 2008. The company said in December is had $1.5 million in reduced operating earnings from 11 classes of shares with $15 billion in assets, while in January to date it had $505K in reductions from 20 classes with $29 billion.
Federated said it "Expects waivers to increase going forward, but that too many variables to predict how much. "While waivers reduce income, the growth of assets has made it possible for federated funds to perform well," said the company. Money market CIO Debbie Cunningham said, "The market for treasuries has become a little less punative" recently, citing repo rates that had been zero moving to 20-30 basis points." The company also said that approximately 75% of every waived dollar was being waived by intermediaries, with just 25% coming out of Federated's share of revenues.
On Thursday, we wrote about BlackRock's earnings call in "BlackRock Excited About Liquidity Business, Welcomes Capital Reserves." The company said, "Low interest rates are going to put pressure on the liquidity business, at least in the retail business. [But with the] institutional business, we are not seeing any pressures to date."
TD Ameritrade's call last week cited money fund fee waivers as a factor, but the yields on their money funds show that this should only be impacting the company currently. (The funds have just recently approached zero and appeared to be comfortably above zero in December.) TDA said, "We would waive to keep money market rates at zero... We're not looking at purchasing other types of securities right now, we're not the asset manager." The company added, "`We do have a view that the FDIC-insured product is better in this market."
Look for more on Treasury yields and fee waivers in our pending Money Fund Intelligence Distribution Survey and in our February issue of Money Fund Intelligence. Let us know too if you'd like to see our most recent Money Fund Intelligence Daily, which allows users to rank funds by their latest yields. The funds waiving fees are easy to spot -- they're the ones with 0.00% or 0.01% yields (which currently represent about 5% of money funds assets).
Federated Investors, the third largest manager of money funds, continued to reap the benefits of the flight to cash in the fourth quarter. The Pittsburgh company's quarterly earnings release showed a huge money fund asset surge of $119 billion in 2008. On its quarterly earnings conference call, the company addresses concerns about ultra-low yields and fee waivers and strongly defended the current structure of the money market mutual fund product. Federated derived 69 percent of its revenue from money market assets in Q42008.
President and CEO J. Christopher Donahue said on this morning's call he "believes the core will remain intact" of money market funds, including "amortized cost, dilligent, independent credit work," and the $1.00 a share NAV. "Investors understand that money funds are investment products and that investments involve risk," he said, dismissing suggestions of capital requirements for funds. "We believe it [the money fund] will transcend the difficult market conditions that we are experiencing now.... I wouldn't assume there's going to be a capital charge."
On fee waivers, Donahue said, "While waivers reduce income, the growth of assets has made it possible for Federated to perform well." Federated's release warned, "Fee waivers to produce positive or zero net yields are expected to increase and these increases could be significant," but said the levels of waivers would be based on yields, assets, types of funds, expenses, and the advisor's willingness to sustain the waivers. The company also addressed and downplayed the overall threat of low yields to money fund economics in its Q&A, saying that waivers have cost the company $560K in waivers the first three weeks of January.
Federated's earnings cited a "$5.6 million increase in voluntary fee waivers for competitive reasons, which included $3.4 million in fee waivers on certain money market funds in order to maintain zero to positive net yields. The increase in fee waivers was offset by a related reduction in marketing and distribution expenses of $1.9 million such that the net impact on operating income was a decrease of $1.5 million." They noted increasing Treasury yields, the shift away from Treasury funds into Govt and Prime, and their growing economies of scale as alleviating factors.
The Federated press release said, "Asset growth for 2008 was driven by a $119.1 billion increase in money market assets. Average managed assets for Q4 2008 were $369.8 billion, up $79.7 billion or 27 percent from $290.1 billion reported for Q4 2007 and up $34.7 billion or 10 percent from $335.1 billion reported for Q3 2008." Donahue said in the release, "As investors sought haven from unprecedented market conditions, demand for our money market funds and fixed-income investments during 2008 enabled Federated to reach record highs in managed assets."
"Money market assets in both funds and separate accounts were $355.7 billion at Dec. 31, 2008, up $119.1 billion or 50 percent from $236.6 billion at Dec. 31, 2007 and up $67.9 billion or 24 percent from $287.8 billion at Sept. 30, 2008. Money market mutual fund assets were $327.3 billion at year end, up $112.3 billion or 52 percent from $215.0 billion at Dec. 31, 2007 and up $68.1 billion or 26 percent from $259.2 billion at Sept. 30, 2008," says the release. Donahue added that Federated has seen increases continue in January with Prime funds seeing the bulk of inflows.
Janus Capital Group notified shareholders of its Janus Institutional Cash Management Fund, Janus Institutional Money Market Fund, and Janus Institutional Government Money Market Fund that it "plans to exit the institutional cash management business" in a letter from Chief Executive Officer Gary Black. The letter says, "Given the meaningful changes to the competitive landscape of the instutional cash management business, Janus believes it is in the best interest of our clients to focus its institutional distribution and investment management resources on its core business of long-term equity and fixed-income investing."
The Prospectus Supplement to Janus Institutional Money Market Fund says, "The Board of Trustees of the Janus Funds has approved a plan to liquidate and terminate Janus Institutional Money Market Fund and Janus Institutional Government Money Market Fund, effective on or about April 30, 2009 or at such earlier time as may be authorized by the Trustees. This plan is reflective of Janus Capital Management LLC's analysis of the competitive institutional money market business and current trends regarding the future of that business. Effective as of January 22, 2009, the Funds will no longer accept investments by new shareholders. Effective February 2, 2009, the Funds will no longer accept investments by existing shareholders."
The filing continues, "Shareholders of the Funds may redeem or exchange their Fund shares at any time prior to the Liquidation Date. If a shareholder has not redeemed their shares as of the Liquidation Date, the shareholder's account will be automatically redeemed and proceeds will be sent to the shareholder of record. To prepare for the closing and liquidation of each Fund, the Fund's portfolio managers may need to increase the portion of the Fund's assets held in cash and similar instruments in order to pay for Fund expenses and meet redemption requests. As a result, each Fund may deviate from its stated investment policies. The liquidation and closing of the Funds to shareholders may result in large shareholder redemptions, which could adversely affect a Fund's expense ratio and yield. There is no guarantee that a Fund will maintain a positive yield."
As of Dec. 31, Janus was the 32nd largest manager of money funds, according to Money Fund Intelligence XLS, with $9.6 billion in assets. Assets had declined by $6.6 billion, or 40.7%, over the past 12 months as concerns over money fund parents without "deep pockets" and support events related to SIV Victoria Finance took their toll. The company's $2.0 billion Janus Money Market Fund will continue operations. Finally, Black's letter says to investors, "We thank you for your business over the years and would like to help make this transition as smooth as possible."
BlackRock, the nation's 4th largest manager of money funds with $258 billion in assets, released its quarterly earnings and hosted a conference call yesterday, and the company made a number of comments on the liquidity and money market business. BlackRock said on the call, "On our cash and liquidity business, we are very proud of our team.... I think 2008 clearly tested every every liquidity firm."
They continued, "There are huge survivors and huge losers. Many firms have announced large, either purchases of assets out of their funds [or] huge losses associated with some of their portfolio decisions.... I would say very loudly BlackRock navigated our positions very well. I think our performance in the 4th quarter with asset growth in our liquidity business truly indicated our clients' willingness to work with us. I think the strength of the overall BlackRock platform continued to shine."
They continue, "We are very excited about the continuation of our liquidity business. We believe it's going to continue to be a large driver of our business. We are continuing to build our third party distribution channels in liquidity in the United States, and we are looking to continue to build our international liquidity business. We believe there are great growth opportunities internationally."
"On the other hand, let's be honest, the liquidity business in 2009 is going to be challenged because of low interest rates. Low interest rates are going to put pressure on the liquidity business, at least in the retail business. [With the] institutional business, we are not seeing any pressures to date," said BlackRock.
Finally, one question asked about the Group of 30 report (see Crane Data's Jan. 19 News "Group of Thirty Recommendation Poses Threat to Money Market Funds") and potential regulatory changes. BlackRock said, "We are a loud and large believer in capital reserves," though they admit that "ICI is probably against this." They continue, "We believe the money market business, which is essentially a shadow banking business, should be treated like a banking business, with capital charges associated with it, or reserves associated with it. We believe it's going to force even greater consolidation in the money market business."
Note: See also ignites' article, "Critics: Proposal Would Mean the End of Money Funds", which discusses the Group of 30 proposal.
On Friday, our benchmark Crane 100 Money Fund Index, the average 7-day (simple, annualized) yield of the 100 largest taxable money market mutual funds, fell below 1.0% for the first time since its launch in May 2006. Though overall money fund yields were undoubtedly lower during the 2003-2004 period -- our annual returns for the Crane 100 show a 0.89% rate for 2003 -- rates likely will continue to inch lower in coming weeks.
While yields on Treasury money market funds are inching higher, relieving some pressure on the portion waiving some of their fees, the Prime funds that dominate the Crane 100 continue to see yields ease lower. Our Money Fund Intelligence Daily shows Treasury Institutional funds yielding 0.19%, up 0.03% over the week, while Treasury Individual funds yield a mere 0.05% on average. (Posted money fund yields are always "net" of expenses, though Crane Data does track gross yields and expenses too.)
Government Institutional funds, a handful of which have temporarily closed or restricted new investments, yield 0.59% on average vs. 0.39% for Government Individual funds. Prime Institutional money funds yield 1.15% vs. a yield of 0.91% for Prime Individual money market funds. (Yields are net, simple, annualized as of Tuesday, Jan. 20.)
Crane Data's weekly Brokerage Sweep Intelligence, which tracks FDIC-insured default sweep vehicles, money funds and CDs, shows brokerage customers earning a mere 0.19% for balances under $100K, 0.24% for balances under $500K, 0.32% for balances under $5M, and 0.54% for balances over $5 million. (Rates and yields are as of Friday, Jan. 16.)
State Street Corporation, by some estimates the largest manager of cash and cash equivalents, released its 4th quarter earnings Friday and hosted a conference call this morning. The company revealed positive earnings, but took a $450 million charge on its stable value funds and revealed stresses in its securities lending pools. The company's SSgA and State Street Institutional money market funds were not involved, though, and these continue to be unharmed by the continued market turmoil.
While money market funds and auction-rate securities have gotten most of the headlines over the past 17 months, other "cash"-type investments, such as stable value funds, securities lending collateral reinvestment pools, and bank short-term investment funds, have gained some notice recently, primarily from support actions disclosed by their managers or from those rare losses taken by participants. State Street has not experienced any loss events or securities defaults in its stable value or sec lending portfolios, but its 8-K filing sheds light on the overall toll and risks market stresses placed on these types of portfolios in the fourth quarter. Note that these money fund-like pools normally don't have the stringent quality guidelines, nor the daily liquidity needs, of money market mutual funds.
The company's filing warns, "We may be exposed to customer claims, financial loss, reputational damage and regulatory scrutiny as a result of transacting purchases and redemptions relating to the unregistered cash collateral pools underlying our securities lending program at a net asset value of $1.00 per unit rather than a lower net asset value based upon market value of the underlying portfolios. A portion of the cash collateral received by customers under our securities lending program is invested in cash collateral pools that we manage.... Our cash collateral pools that are money market funds registered under the Investment Company Act are required to maintain, and have maintained, a constant net asset value of $1.00 per unit. The remainder of our cash collateral pools are bank collective investment funds.... These unregistered cash collateral pools seek, but are not required, to maintain, and transact purchases and redemptions at, a constant net asset value of $1.00 per unit. At December 31, 2007, September 30, 2008 and December 31, 2008, the aggregate net asset value of these unregistered cash collateral pools (based on a constant net asset value of $1.00) was approximately $178 billion, $150 billion and $113 billion, respectively."
It continues, Throughout 2008 and currently, these unregistered cash collateral pools have continued to transact purchases and redemptions at a constant net asset value of $1.00 per unit even though the market value of the unregistered cash collateral pools portfolio holdings, determined using pricing from third party pricing sources, has been below $1.00 per unit. At December 31, 2008, the net asset value based upon market value of our unregistered cash collateral pools ranged from $0.908 to $1.00, with the average weighted net asset value on such date being $0.955.... We believe that our practice of continuing to transact at $1.00 per unit at the unregistered cash collateral pools, notwithstanding the underlying portfolios having a market value of less than $1.00 per unit, is consistent with the practices of other securities lending agents and in compliance with the terms of our unregistered cash collateral pools. We have continued this practice for a number of reasons, including that none of the securities in the cash collateral pools is currently in default or considered by the pools to be impaired, that there are restrictions on withdrawals from the collective investment funds and that the cash collateral pools have adequate sources of liquidity from normal lending activity under the securities lending program."
The Group of Thirty, a "private, nonprofit, international body composed of very senior representatives of the private and public sectors and academia" recently issued a publication entitled, "Financial Reform, a Framework for Financial Stability," which contains suggestions that, if implemented, would change money market funds dramatically and could threaten the very existence of the money fund business.
The report's introduction says, "The report addresses flaws in the global financial system and provides 18 specific recommendations to: improve supervisory systems by redefining the scope, boundaries, and structure of prudential regulation; enhance the role of the central banks; improve governance practices and risk management; address pro-cyclicality via capital and liquidity standards; enhance accounting practices; strengthen the financial infrastructure; and increase coordination internationally. The project was led by Paul Volcker, Chairman, and Tommaso Padoa-Schioppa and Arminio Fraga Neto, Vice Chairmen."
Under the subtitle, "Money Market Mutual Funds and Supervision, Recommendation 3," the report suggests, "Money market mutual funds wishing to continue to offer bank-like services, such as transaction account services, withdrawals on demand at par, and assurances of maintaining a stable net asset value (NAV) at par should be required to reorganize as special-purpose banks, with appropriate prudential regulation and supervision, government insurance, and access to central bank lender-of-last-resort facilities."
It continues, "Those institutions remaining as money market mutual funds should only offer a conservative investment option with modest upside potential at relatively low risk. The vehicles should be clearly differentiated from federally insured instruments offered by banks, such as money market deposit funds, with no explicit or implicit assurances to investors that funds can be withdrawn on demand at a stable NAV. Money market mutual funds should not be permitted to use amortized cost pricing, with the implication that they carry a fluctuating NAV rather than one that is pegged at US$1.00 per share."
We encourage money fund participants, customers, and supporters to express their displeasure with these recommendations, as they could endanger the very existence of the almost $4 trillion money fund industry. A change of this magnitute could cause severe trauma and repercussions in the broader financial markets, and would deny consumers one of the most efficient, effective and popular means of parking cash.
Saturday's Wall Street Journal writes "A Glimpse at Reserve's 'Buck' Race", which recaps the "top managers' desperate, chaotic and ultimately ill-fated attempt to keep the $1 price and save its flagship Primary Fund from collapse." The information behind the Journal story was revealed earlier this week in a lawsuit filed by the Secretary of the Commonwealth of Massachusetts William Galvin. See the original release, "Secretary Galvin Charges Reserve Management With Fraud," which includes a 43-page Complaint and 55 pages of Exhibits.
The Journal says, "Just hours after Lehman Brothers fell, billions of dollars in redemption requests were pouring into the $62 billion Reserve Primary Fund, which held Lehman debt. The storied money-market fund was in danger of seeing its share price fall below the sacrosanct $1 level, an event that would further undermine investor confidence. So Bruce Bent II, senior vice president of the fund's management company, placed an urgent call for help to Timothy F. Geithner, president of the Federal Reserve Bank of New York. Mr. Bent didn't get past a receptionist."
It continues, "The company sought help from the Fed and the Securities and Exchange Commission. It even tried the Investment Company Institute, the mutual-fund industry's leading trade group. In the end, the problems proved overwhelming: the large holding of debt from Lehman and a flood of calls from investors to redeem their Primary Fund shares. Now the company faces a bevy of civil suits from investors, actions against it by Massachusetts and Colorado, and a potential SEC enforcement action. Investors have been returned a portion of their money, but are awaiting the rest, and it isn't clear how much they will get back."
The article and Massachusetts complaint contain a detailed description of actions by Reserve Management and by Reserve Primary's Board of Directors and a timeline of events between the Lehman bankruptcy filing and the second-in-history "breaking of the buck". The WSJ story finishes, "At 3:45 p.m. word came that the Fed had declined to help. Reserve Management said it had exhausted all its options to support the Primary Fund.... The trustees announced that the Lehman paper was worthless and the Primary Fund had broken the buck."
Deutsche Bank reported earnings earlier this week and noted "an impairment charge related to DWS Scudder and injections into money market funds" in their conference call and earnings release. During the Q&A, Chairman Josef Ackermann responded to a Bloomberg reporter's question asking about "substantial injections into money market funds" by saying, "We gave some guidance about yield [on these funds]," implying that these were non-U.S. money funds. We confirmed with DB Advisors Managing Director Joe Sarbinowski that, "No Rule 2a-7 money market funds were involved." The injections involved European products that pledge to return a stated interest rate we were told. More details on DB's earnings and the European "fund injections" will be given when the bank releases its official results on February 5.
Beyond the U.S., strict regulation defining the term "money market mutual fund" is scarce. Money market funds in the States must abide by strict quality, maturity, and diversity standards, which are known as "Rule 2a-7" (of the Investment Company Act of 1940). In France, Germany and elsewhere, however, you'll often find products that are more akin to stable value funds or ultra-short bond funds termed "money market funds". Worldwide, the ICI estimates that "money market mutual fund" assets total $5.6 trillion.
As we wrote last May, DB Advisors was the first U.S. money market fund complex to participate in Clearwater Analytics "Money Fund Transparency" initiative (see our story, "DB Advisors, Clearwater Going Live With Fund Transparency Initiative"). To see DWS Money Market Series' (ICAXX) information on the Clearwater platform, click here.
The flight from Treasury money market mutual funds into Prime and Government fund continues. Our Money Fund Intelligence Daily with yesterday's data shows $3.0 billion moving out of Treasury funds, $2.5 billion moving into Government funds, and $2.4 billion moving into Prime funds. For the week, Treasury funds declined by $10.6 billion, while Prime funds increased by $30.8 billion. Since their peak on December 8 (at $695.1 billion), Treasury money fund assets have fallen by $75.8 billion, or -10.9%, to $619.3 billion. Treasuries now represent 18% of all money fund assets. Meanwhile, Prime money funds have gained $110.8 billion, or 7.1%, to $1.665 trillion, and Government money funds have gained $90.6 billion, or 13.9%, to $742.7 billion since that date.
While likely unfounded fears about "negative yields" and "breaking the buck" due to ultra-low Treasury rates may have contributed to the turnaround, Treasury funds closing to new investors also likely played a role. And of course the yawning yield differential -- Prime Institutional money funds are paying 1.24% vs. 0.16% for Treasury Institutional funds (Govt Inst are yielding 0.59%) -- has made the price of absolute safety too steep for some. As we've been saying for months, you can only stay in the bunker for so long. Pretty soon you have to go out and look for food.
An article in MarketWatch yesterday entitled, "Investors seeking higher returns move from Treasurys" also noted the trend, saying, "The flight of mutual fund investors into the relative safety of Treasury and government money market funds seems to be slowing, and possibly reversing, with fund firms and analysts seeing an increase in interest and cash into corporate money market, enhanced cash and even short duration funds."
Note that our Money Fund Intelligence Daily tracks the 500 largest money funds, so is a subset of the overall moneyfund universe. In other news, see Bloomberg writes "Reserve Fund's Fraud Started After Call With SEC, Galvin Says".
The past month has been a busy one for money fund prospectus changes and SEC filings. The flurry of recent updates involves Treasury money fund "soft" closings, fee waivers related to ultra-low yields, and disclosures related to the U.S. Treasury's Guaranty Program for Money Market Funds. Consulting firm Strategic Insight's SimFund Filing has documented a number of these, and filings may also be seen via the SEC's EDGAR website. Below, we review some of the most recent filings.
Since the start of December, filings have been made by Allegiant, BlackRock, Calvert, Centennial/Oppenheimer, Columbia, Delaware, First American Funds (FAF), Fidelity, Mainstay, Neuberger Berman, Pioneer, Rydex, Schwab, Security Investors, State Street Global, Transamerica, and Wilmington Trust. Most involve fee waiver statements such as the one from Oppenheimer Institutional Money Market Fund, which says, "The Manager has voluntarily undertaken to waive fees to the extent necessary to assist the Fund in attempting to maintain a positive yield. There is no guarantee that the Fund will maintain a positive yield. That undertaking may be amended or withdrawn at any time." Filings do not necessarily mean that an advisor needs to use fee waivers, just that they are prepared to.
A number of other filings involve disclosures related to the U.S. Treasury's Temporary Guaranty Program for Money Market Funds, which virtually every money fund has elected to continue participation in. Funds are amending their fee structures to include payments to the Treasury and to exclude these payments from waivers. Many of the filings include all three popular actions -- closing Treasury funds, waiving fees, and allowing fee payments to the Treasury.
One example is Fidelity's prospectus supplement, which (in addition to implementing a "soft" close on its Treasury fund) says, "The Program extension requires each participating fund to pay the U.S. Department of Treasury a fee equal to 0.015% based on the number of shares outstanding as of September 19, 2008. This expense will be borne by each fund without regard to any expense limitation currently in effect for a fund. This payment is in addition to the fee paid by each participating fund at the start of the Program in October 2008."
This month in Money Fund Intelligence we interview Charlie Morrison, senior vice president and leader of the Money Market Group for Fidelity Management & Research Company. With taxable and municipal money market funds totaling over $460 billion, Fidelity Investments is by far the largest money fund manager. Below, we excerpt from the interview.
Morrison tells MFI, "Historically, the biggest challenge has always been protecting the NAV and providing liquidity. We clearly take that to heart, and we have never wavered since we started in this business. The most significant challenges in the current market are the impact of very low rates on fund yields, and obviously, continued pressure in the credit markets."
He says, "One of the things that we have been very careful about is making sure that, not only do we want our shareholders to be comfortable with us but we want to be comfortable with our shareholders. It is very important to make sure that you've got some stability in your customer base, particularly when dealing with what is considered a highly liquid asset class. We have always pushed against hot money.... It's to the benefit of all of our customers if we have stable assets in the funds.
On Fidelity's keys to success, he says, "This business is a franchise business for us and it has been for many years. We've had a very long-term commitment in terms of providing whatever resources are necessary to manage money market funds in the most effective way.... We take this business very seriously, and have populated our portfolio manager, trader and analyst positions with some of our most experienced fixed income professionals. You can see that in the returns that we have been able to generate over the years, and obviously in the stability of fund NAV's and the liquidity that we have provided to our shareholders."
Morrison continues, "I am extremely proud of the work that our research team executed over the past year. In combination with our portfolio managers and traders, the team navigated our funds through the most difficult market any one of us has ever experienced. The decision making throughout the year was exceptionally strong and clearly kept us out of harm's way.... I firmly believe that it was a solid investment process and clear-headed decision making that allowed us to maneuver through 2008 so well. The past year clearly provided an opportunity for us to differentiate ourselves in an industry where, generally speaking, it is difficult to do so."
Regarding possible changes to money funds, he says, "Generally speaking, our industry has performed well over the past year, despite significant challenges. Yet we are thinking about ways to make it even that much stronger.... We think the industry ought to focus on creating an environment, on its own, that supports the stability of money market funds and safety for our shareholders.... Rule 2a-7 has served the industry well for many years, but reviewing it following the events of last fall certainly makes sense at this point."
Each month, Crane Data's Money Fund Intelligence lists the top-performing money market mutual funds in a number of categories ranked by 1-year return (and ranked by latest 7-day yield). The January issue also highlights the awarding of our No. 1 and No. 2 rankings for 2008 in our nine major money fund categories ("Types") -- Prime Institutional, Government Institutional, Treasury Institutional, Prime Individual, Government Individual, Treasury Individual, Tax-Exempt Institutional, Tax-Exempt Individual and State Individual. (Note that the "Rank" numbers in our MFI Fund Listings and in our free web "profiles" (under "Resources", "Browse Funds") refer to the rank within a fund's category.)
The top-performing money market mutual fund (and No. 1 Prime Institutional fund) in 2008 was Touchstone Institutional Money Market Fund (TINXX) with a return of 3.42%. The No. 2-ranked fund among 218 Prime Inst funds was Oppenheimer Institutional Money Market E (IOEXX), which returned 3.14%. Among 235 Prime Individual (retail) money funds, Fidelity Select MM Portfolio (FSLXX) took the No. 1 spot with a return of 2.97%. Touchstone Money Market Fd A (TMMXX) ranked No. 2 with a return of 2.94%.
The highest-yielding Government Institutional fund in 2008 was Accessor US Government Money Market Inst (ANIXX) with a 2.56% return. Federated Govt Oblig Tax Man IS (GOTXX) ranked No. 2 among 117 Govt Inst funds with a return of 2.52%. Vanguard Federal Money Market Fund (VMFXX), ranked first among 108 Government Individual funds with a 2.53% return, while Fidelity US Govt Reserves (FGRXX) ranked second with a 2.45% return.
Vanguard Admiral Treasury Money Market (VUSXX) placed first among Treasury Institutional funds, while Milestone Treasury Obligs Fin (MIL01) placed second among 102 funds. Vanguard Treasury MMF (VMPXX) ranked No. 1 among 103 Treasury Individual funds with a return of 1.97, and Pioneer Treasury Reserves A (ITAXX) placed second with a return of 1.62%.
Among Tax-Exempt money market mutual funds, Alpine Municipal MMF Y (AMUXX) returned 2.67% in 2008, placing it first among 121 Tax-Exempt Individual money market mutual funds, while USAA Tax Exempt MMF (USEXX) ranked No. 2. Neuberger Berman Tax-Fr MF Reserve (LBTXX) placed first among 85 Tax-Exempt Institutional money funds with a return of 2.61% and Marshall Tax-Free MMF I (MFIXX) placed second. Dreyfus Basic NJ Muni MMF (DBJXX) ranked No. 1 among 235 State Tax-Exempt money funds while USAA Tax Exempt CA MMF (UCAXX) ranked No. 2.
See the January issue of our Money Fund Intelligence XLS for more detailed listings and rankings. (To request a copy, e-mail firstname.lastname@example.org.)
Sunday's New York Times features an article written by Diana Henriques entitled, "Money Market Funds Are a Refuge, Right?," which discusses the dramatic growth, unprecedented turmoil and rapidly shifting landscape in the money market mutual fund industry. The Times says, "The amount of cash held in money market funds at the start of 2009 exceeded the money in stock mutual funds for the first time in more than a decade.... Yet 2008 may go down in history as the year that cast doubt on everything American investors thought they knew about money market funds."
It cites The Reserve Primary Fund's "breaking of the buck," delays in redemptions, and myriad lawsuits, saying, "The Reserve Fund battle already involves regulatory investigators, a giant Chinese fund caught in the mess and a federal judge in Minneapolis. The Treasury had to cobble together an ad hoc insurance program to keep the Reserve Fund panic from spreading."
The Times quotes Matthew P. Fink, former chairman of the ICI, "If the Treasury is going to insure these funds, bank-style, we are likely to end up with bank-style regulations." The article adds, "And the money fund industry will be one target of the broader regulatory reform effort that has been promised by the incoming Obama administration. `Regulators may consider requiring greater portfolio diversification and minimum levels of cash as a buffer against a panic, according to Mr. Fink."
Finally, the NYT piece says, "And yet, as the economic storm worsens, money funds still seem the refuge of choice." It says, "Those billions could have flowed into F.D.I.C.-insured bank accounts," and quotes `Peter Crane, "But for decades, people have had the choice between higher yield and absolute safety, and they've chosen yield." But adds the Tiems, "That doesn't mean the money fund industry will not be changed by the fallout from the money fund crisis of 2008."
The January 2009 issue of Crane Data's flagship newsletter Money Fund Intelligence, which was released yesterday, features our year-in-review recap, "Money Funds Rule Kingdom of Blind in '08", our monthly fund profile, "Fidelity's Morrison on Money Market Funds," and an article on our latest rankings, "Top-Performing Money Market Funds for 2008." Look for excerpts from these articles and rankings in coming days on the website.
In other news, we're told that the SEC will not extend its no-action letter that allowed money funds to "shadow price" using amortized cost. (See our News from Oct. 13, 2008, "SEC Allows Amortized Cost "Shadow Pricing" for Money Market Funds.") ICI told members in a memo, "Based on current market conditions, the SEC staff has determined not to extend that relief, which will expire on Monday, January 12, 2009."
Money funds should then return to "mark-to-market" shadow pricing for all securities. This shouldn't be an issues since the Fed's rate cuts and support actions have made most money markets relatively liquid once more. The SEC's earlier letter said, "Rule 2a-7 ... requires money market funds to adopt written procedures (monitoring procedures) requiring the fund to periodically calculate 'the extent of deviation, if any, of the current net asset value per share calculated using available market quotations (or an appropriate substitute that reflects current market conditions) from the money market fund's amortized cost price per share.' This process is referred to in the rule as 'shadow pricing'."
Elsewhere, Standard & Poor's rated Pacific Capital Cash Assets Trust 'AAAm'. Pacific Capital is advised by a subsidiary of the Bank of Hawaii. Also, `S&P withdrew ratings on RidgeWorth U.S. Govt Securities Ultra Short Bond Fund.
Finally, Federated Investors announced that it will report its year-end results on Thursday, Jan. 22. A conference call will be held on Friday, Jan. 23, 2009, at 9:00 a.m. Eastern. (See also Debbie Cunningham's most recent comments.)
The Federal Reserve Board just announced changes to its Money Market Investor Funding Facility (MMIFF), one of the myriad support program put in place to "help restore liquidity to the money markets." The MMIFF is meant to purchase commercial paper and certificates of deposits from money funds, and the new changes expand the program to include LGIPs (local government investment pools), STIFs (short-term investment funds), and securities lending pools. Offshore money funds continue to be excluded.
The Fed's statement says, "First, the set of institutions eligible to participate in the MMIFF was expanded from U.S. money market mutual funds to also include a number of other money market investors. The newly eligible participants include U.S.-based securities-lending cash-collateral reinvestment funds, portfolios, and accounts (securities lenders); and U.S.-based investment funds that operate in a manner similar to money market mutual funds, such as certain local government investment pools, common trust funds, and collective investment funds. The possibility that the set of eligible investors would be expanded beyond money market mutual funds to include other money market investors was noted when the program was first announced on October 21, 2008."
It continues, "Second, the Board authorized the adjustment of several of the economic parameters of the MMIFF, including the minimum yield on assets eligible to be sold to the MMIFF, to enable the program to remain a viable source of backup liquidity for money market investors even at very low levels of money market interest rates.... The Board authorized the MMIFF on October 21, 2008 under section 13(3) of the Federal Reserve Act. The MMIFF became operational on November 24, 2008."
"The MMIFF is designed to serve as a source of liquidity to money market mutual funds and other eligible money market investment vehicles, thereby increasing their ability to meet redemption requests and their willingness to invest in money market instruments, particularly term money market instruments. Under the MMIFF, the Federal Reserve Bank of New York provides a credit facility to a series of special purpose vehicles (SPVs) established by the private sector. The SPVs will purchase certain U.S. dollar-denominated, highly rated, short-term certificates of deposit, bank notes, and commercial paper from eligible money market investors."
The Fed's Terms and conditions may be seen here, the Fed's MMIFF Frequently Asked Questions may be seen here, and the Fed's H.4.1 "Factors Affecting Reserve Balances" may be seen here. The MMIFF continues to show a balance of zero and has yet to be used by money funds, which have not seen a need for borrowing to meet redemptions over the past couple of months. Prime funds have seen assets recover and have seen particularly strong inflows since Jan. 1.
Today's Investors Business Daily features the story "Money Funds Are Facing Rate Pressure", which discusses in depth the issue of near-zero rates on Treasury bills and their impact on Treasury money market funds.
IBD says, "The walls are closing in on Treasury money market funds. With rates near zero on the new short-term Treasury securities they must invest in, it is becoming increasingly hard for these money funds to remain profitable and still have positive yield. At worst, some such funds could be forced to merge or fold. More likely, funds will raise or impose fees. Others have closed to at least some new money."
"This situation may pose a survival threat to a handful of the highest-expense Treasury funds," IBD quotes Peter Crane, president of Crane Data, which tracks money market funds. "But Treasury funds overall are still yielding on average just under 0.20% (as of Jan. 5), an all-time low. And that's net -- with fees taken into account."
IBD continues, "And what happens if the Federal Reserve keeps short-term rates low for a long time or pushes them down more, and a fund does not cut its expenses while raising add-on fees? Some funds' NAV could fall below $1, a catastrophe for money funds. But it would happen slowly." The paper quotes Crane, "Instead of 'breaking the buck,' it's more a slow erosion. If you had negative yields - for example, if Treasuries paid zero percent and funds average a 0.5% expense ratio - it would still take a year to erode their NAV to, say, 99 cents. That's because at the outset some of their holdings would be older securities, paying more."
Finally, the article says, "The decline in short-term interest rates is a potential threat to Treasury money funds, but not so much for other categories of money funds. That's because Treasury money funds invest mostly in short-term Treasury securities."
To see a ranking of Treasury funds by their latest yields, request a copy of our Money Fund Intelligence Daily or Money Fund Intelligence XLS.
The Internal Revenue Service recently issued a "revenue procedure ruling," which "provides a safe harbor for the treatment of certain payments received by ... a money market fund registered with the Securities and Exchange Commission and regulated under Rule 2a-7 of the Investment Company Act of 1940."
Joan Ohlbaum Swirsky, Counsel for Stradley Ronon Stevens & Young and author of "The Guide to Rule 2a-7: A Map through the Maze for the Money Market Professional," explains, "This ruling allows short term capital gain treatment for contributions by an adviser to a money fund that are made to repair impaired share value or to purchase a low valued portfolio security for a price above its fair market value. This treatment essentially allows the contribution to be kept within the fund rather than dividended out where there is an offsetting realized loss (capital or ordinary). So this treatment could be useful for a fund that sells a holding with an impaired value or a fund that experiences prolonged negative yields that impair share value."
The IRS ruling's Background says, "Money Market Funds strive to maintain a stable per share net asset value of $1.00. Persons who contract to perform investment advisory or management services are concerned that a decline in per share net asset value to a threshold amount below $1.00 (commonly referred to as 'breaking the buck') will significantly harm their business reputations and could lead to litigation by shareholders. These Advisors may make a payment to the Money Market Fund in order to maintain a per share net asset value of $1.00. This Payment is not calculated with reference to the investment advisory fees paid or to be paid to the Advisor by the Money Market Fund, is not a loan to the Money Market Fund, and does not give the Advisor any ownership interest in the Money Market Fund."
It also explains, in "Excess Amount Received in a Purchase Transaction, ... an Advisor may purchase an asset of a Money Market Fund for an amount that exceeds the asset's fair market value.... When property is purchased for an amount above fair market value for a purpose other than the acquisition of the property, the Excess Amount ... is generally not accounted for as part of the purchase/sale transaction for tax purposes. The Excess Amount should be treated in the same manner as a Payment described in section 2.01 of this revenue procedure."
Finally, the ruling says, "The Internal Revenue Service will not challenge the treatment of a Payment or Excess Amount by a Money Market Fund to which this revenue procedure applies if the Money Market Fund treats the Payment or Excess Amount as short-term capital gain in the taxable year in which the Payment or Excess Amount is received. No inference should be drawn from this revenue procedure as to whether or not other treatments of Payments or Excess Amounts may be appropriate. This revenue procedure is effective with respect to Payments or Excess Amounts received before January 1, 2010, by a Money Market Fund to which this revenue procedure applies."
Below, we excerpt from comments from Calvert Asset Management Company's most recent "Focus On Fixed Income" publication, written by Calvert's Fixed Income Strategist and Money Fund Portfolio Manager Steve Van Order. Calvert discusses the myriad support programs in place to assist the money markets. Van Order says in today's commentary, "Government intervention is intended to cushion this painful adjustment and counter the contraction in credit that resulted from the failure of the 'shadow banking system' with the heavy collateral damage done to the traditional banking system."
In a section entitled, "Fed Monetary and Credit Policies: Keep 'em Liquid and Low," he says, "The goal of Fed policies this year will be to maintain and expand on gains in liquefying money markets and lowering long-term interest rates. The collapse of Lehman in early September immediately deepened the financial crisis with a fresh liquidity shock to the money markets. After Lehman failed, perhaps the Fed saw a bad parallel with the failure of the Bank of the United States in late 1930.... Bernanke, sought to avoid the mistakes the central bank made early in the Depression."
Van Order continues, "As we start 2009, the Fed has deployed a vast array of tools and we expect those tools to be variously expanded and enlarged or contracted and retired. The new TALF asset-backed financing facility is a $200 billion SPV capitalized by Treasury. It should be heavily used, as it will offer any institution or individual the ability to get one-year low-cost financing for any AAA-rated asset-backed security. If credit markets remain frozen, the Fed is likely to broaden the range of collateral and perhaps go down in credit quality in TALF. Purchases of agency debt and RMBS will temporarily replace the decimated investor base in that sector."
"The Fed already owns nearly 20% of outstanding commercial paper and will buy more if issuers are unable to find enough buyers out the CP curve. Money market funds will remain propped with the MMIFF. The AMLF facility, created to provide a selling outlet for money market funds hung with ABCP post-Lehman, will continue to wind down as the paper held in that facility matures. Central banks had success pushing down interbank lending rates in Q4 and will keep the global system flooded with dollars to keep them there. Facilities, such as TAF, TSLF and agency term repos, used to relieve Street bond inventory pressures, will remain in place and expand if needed, although there is evidence of less reliance on these than earlier in 2008. The Fed may create more Maiden Lane LLC's to further unwind AIG problems," Calvert's Focus on Fixed Income says.
Van Order adds, "With these facilities the Fed has given the credit market patient many medicines and they will continue to work. Money market liquidity and short term funding have improved and should further improve in 2009." Finally, Calvert's publication includes a helpful "Glossary of Fed Liquidity and Credit Facilities," which includes: AMLF - Asset-backed Commercial Paper Money Market Mutual Fund Liquidity Facility, CPFF - Commercial Paper Funding Facility, MMIFF - Money Market Investor Funding Facility, PDCF - Primary Dealer Credit Facility, TAF - Term Auction Facility, TALF - Term Asset-Backed Securities Loan Facility, and TSLF - Term Securities Lending Facility.
Money market mutual fund assets rose by $21.8 billion to $3.830 trillion in the week ended Dec. 30, their second consecutive record and the 10th record high out of the past 11 weeks. ICI's weekly totals show that institutional funds continue to lead the surge, increasing $18.7 billion to a record $2.545 trillion. (They broke $2.5 trillion last week.) Retail money fund assets rose $3.1 billion to $1.285 trillion; they remain $11 billion below their record high on Oct. 15.
While the official monthly totals won't be available for some time, ICI's weekly statistics show that money fund assets grew by approximately $685 billion, or 21.8%, in 2008, their second best year ever following 2007's $760 billion cash flood. Since the week ended Oct. 1, money fund assets have grown by a stunning $373 billion, or 10.8%. (Funds had declined by $129 billion in September.)
Government Institutional funds showed the largest asset increase last week, rising $10.9 billion to $1.180 trillion, while Prime Institutional funds increased by $7.3 billion to $1.180 trillion. This represented Prime Institutional funds' 8th consecutive weekly increase. Tax Exempt Institutional funds stopped a 3-week decline, rising $536 million to $184.9 billion.
Prime Retail fund assets increased by $2.7 billion to $722.8 billion, Government Retail fund assets decreased by $720 million to $263.7 billion, and Tax Exempt Retail money fund assets increased by $1.2 billion to $298.3 billion.
Our Money Fund Intelligence Daily shows that assets increased by an additional $4.0 billion on Wednesday, Dec. 31. Treasury Institutional funds continue seeing outflows, down $8.2 billion in the past week, while Government Institutional funds continue seeing heavy inflows, up $10.9 billion. Our Crane 100 Money Fund Index fell from 1.26% to 1.21% over the past week.