A press release entitled, "HSBC introduces automated liquidity investment tool," says that "HSBC, a global leader in global liquidity solutions, today announced the launch of a powerful new tool that will enable treasurers to automate the allocation and investment of excess cash." It explains, "Liquidity Investment Solutions (LIS) gives Corporate and Institutional clients the ability to invest and redeem their excess cash across an array of investment options, including a choice of asset managers. Once the client has defined their investment policy, including their risk and liquidity parameters, LIS executes their investments/redemptions accordingly with nominated money market funds of HSBC Global Asset Management Group, BlackRock, Goldman Sachs Asset Management and/or J.P. Morgan Asset Management." We excerpt from HSBC's release, and we also review our upcoming European Money Fund Symposium (Sept. 20-21 in London) below.
Federated Investors posted a series of informational videos on YouTube discussing Money Market Reform and featuring Deborah Cunningham and Bud Person. The videos are entitled: "Will Prime and Municipal funds still be compelling if they are subject to fees and gates?" "What is the current state of Federated's government money market complex and its capacity for growth?" "How much will institutional FNAV funds fluctuate?" and "What prime and municipal products will Federated offer for institutional accounts?" We excerpt from these below.
The U.S. Treasury's Office of Financial Research unveiled a new "Money Market Fund Monitor" tool, "a set of interactive charts for exploring the portfolios of U.S. money market funds." Their statement explains, "Money market funds have been popular for decades among investors who want better returns than bank accounts offer, but still with little risk. Since the 1990s, institutional investors have used money market funds as a professional cash management option." (Note: Crane Data publishes its own Money Fund Portfolio Holdings data series and provides reports based on fund postings and feeds, as well as from the SEC's Form N-MFP information.)
Charles Schwab & Co. reported higher profits due to increased money market fund revenues and a shift of sweeps to bank deposits, according to the company's 2nd quarter earnings release, "Schwab Reports Record Quarterly Net Income of $452 Million, Up 28%." It says, "The Charles Schwab Corporation announced today that its net income for the second quarter of 2016 was $452 million, up 10% from $412 million for the first quarter of 2016, and up 28% from $353 million for the second quarter of 2015." BlackRock CEO Laurence Fink also recently discussed money market funds and his expectations for the path of interest rates on the firm's 2nd quarter earnings call, according to the transcript on SeekingAlpha.com. We review these reports, as well as the ICI's latest Money Market Fund Holdings, below.
State Street Global Advisors is merging its SSGA money funds into similar State Street products, according to a July 1 letter to clients and a recent SEC filing, which outline the fund mergers and revamped money fund lineup. The $2.4 billion SSGA Money Market Fund and $6.4 billion SSGA Prime Money Market Fund will be merged into the $39.5 billion State Street Institutional Liquid Reserves Fund. Also, the $2.8 billion SSGA US Government MMF will be reorganized into the $19.3 billion State Street Institutional US Government MMF, and the $9.2 billion SSGA US Treasury MMF will be merged into the $1.5 billion State Street Institutional Treasury Plus Money Market Fund. (For more, see our Jan. 28 News, "SSGA's "Cash Solutions for the New Reality" Webinar; Fed Holds Rates” and Oct. 16, 2015 News, “SSGA Meets Challenges With New Money Funds, Enhanced Cash Options.”) We also review some additional changes from State Farm, American Century and Rydex, below.
Law firm Stradley Ronon encapsulated the recent IRS/US Treasury final ruling to simplify accounting for floating NAV money market funds in the latest issue of its "Tax Insights" newsletter. (See our July 8 News, "IRS Finalize MMF Acctg Rules; July MFI Features Prime Drop, Novick.") The Stradley piece, which we excerpt from below, adds further insight. We review this and also excerpt from a press release entitled, "Capital Advisors Group and StoneCastle Partner to Deliver Capital Advisors Group Insured Liquidity Accounts." (Note: We also corrected our article from Friday, which initially had some Morgan Stanley strike times wrong. See the revised version here or see Morgan Stanley's announcement here.)
Below, we review yet another batch of money fund changes, including a number of liquidations, closings, conversions and declarations. BlackRock is liquidating its BIF National and State-Specific Municipal funds, Nicholas Money Market Fund is closing to new investors, a likely precursor to liquidation, and MainStay Money Market Fund designated itself as Retail. We also review filings from Morgan Stanley Investment Management, which involve its Retail fund lineup and strike times for its Institutional funds. Finally, the $4.8 billion PFM Prime Series Fund is converting to Government, according to a recent SEC filing. That brings the total of Prime funds either liquidating or converting to Government to $314.1 billion (it moves to over $350 billion when the conversion of the $40+ billion Prudential Core to an ultra-short bond fund is included).
The Association for Financial Professionals released its "2016 Liquidity Survey" yesterday. The new report shows a tiny decrease in bank deposits and increase in money fund holdings, but it also shows that a majority of respondents will make changes to how they invest in Prime money market funds. Specifically, it says 62% plan to make changes in how they invest in prime funds and that 37% of that number will move to Govt funds or Bank products. However, AFP takes the under on how much it expects will move out of Prime Inst -- just $40 billion. Also, "Safety of principal" remains the top priority among investment objectives, increasing to 68% in 2016 from 65% last year. (Note: The full survey is only available to AFP members. See our July 13 Link of the Day, "2016 AFP Liquidity Survey," for coverage of the press release.)
Crane Data released its July Money Fund Portfolio Holdings yesterday, and our latest collection of taxable money market securities, with data as of June 30, 2016, shows increases in Repos, Agencies, and VRDNs, and decreases in Time Deposits, CDs, CP, and Treasuries. Money market securities held by Taxable U.S. money funds overall (tracked by Crane Data) decreased by $59.7 billion to $2.544 trillion, after increasing by $24.6 billion in May, decreasing $21.0 billion in April, and falling $75.5 billion in March. Repos remained the largest portfolio segment, followed by Agencies and Treasuries; Agencies moved ahead of Treasuries in June. CDs were in fourth place, followed by Commercial Paper, Time Deposits and VRDNs. Money funds' European-affiliated securities fell to 19.6% of holdings, down from the previous month's 27.4%. (U.K.-affiliated holdings declined by just $9.0 billion to $80.9 billion, or 3.2% of assets.) Below, we review our latest Money Fund Portfolio Holdings statistics.
Crane Data's latest Money Fund Market Share rankings show asset declines for the majority of U.S. money fund complexes in June as money market fund assets decreased by $14.8 billion, or 0.06%. Overall assets have fallen by $65.1 billion, or 2.4%, over the past 3 months, but over the past 12 months through June 30, they are up $81.6 billion, or 3.2%. The biggest gainer in June was Dreyfus, whose MMFs rose by $8.3 billion, or 5.6%. Federated, PNC, Morgan Stanley, Fidelity, and USAA also saw assets increase, rising by $6.4 billion, $5.2 billion, $4.4 billion, $2.0 billion, and $442M respectively. (Our domestic U.S. "Family" rankings are available in our MFI XLS product, our global rankings are available in our MFI International product, and the combined "Family & Global Rankings" are available to Money Fund Wisdom subscribers.) We review these below, and we also look at money fund yields the past month, which rose slightly.
The Investment Company Institute released its latest "Worldwide Mutual Fund Assets and Flows" data collection recently. The latest report shows that total global money fund assets inched lower by $9 billion, or 0.2%, to $5.063 trillion in Q1 2016. China, Ireland, and Luxembourg suffered the biggest declines, while France, Korea, Brazil, and the U.S. saw gains. Worldwide MMF assets have increased by $515.0 billion, or 11.3%, over the previous 12 months through 3/31/16. We review the latest Worldwide MMF totals below, and we also discuss Crane Data's latest MFI International statistics and recent comments from our Money Fund Symposium conference below.
The IRS and the US Treasury Department issued a Final Rule on their proposal to simplify accounting and rules to accompany pending Money Fund Reforms. (See our July 30, 2014 News, "Reform Floating NAV Accounting Issues Addressed by Treasury Proposal.") The rule, "Method of Accounting for Gains and Losses on Shares in Money Market Funds," says, "This document contains final regulations that provide a simplified method of accounting for gains and losses on shares in money market funds (MMFs). The final regulations also provide guidance regarding information reporting requirements for shares in MMFs. The final regulations respond to [SEC] rules that change the amount for which certain MMF shares are distributed, redeemed, and repurchased. The final regulations affect MMFs and their shareholders." We discuss this last remaining piece of reforms below, and we also review the July issue of our flagship Money Fund Intelligence, which was sent to subscribers Friday morning.Archives »