ICI's "Trends in Mutual Fund Investing April 2016" confirmed a big decrease in money market fund assets in April, which declined by $41.8 billion, or 1.5%, to $2.717 trillion. Assets dropped $15.1 billion in March, jumped $38.2 billion in February, and fell $19.0 billion in January. In the 12 months through April 30, 2016, money fund assets are up $152.4 billion, or 5.9%, according to ICI. But based on ICI's weekly money market flow data, assets should end up sharply -- about $24 billion -- in May. Also, ICI's "Month-End Portfolio Holdings of Taxable Money Funds" shows that Repos and Treasuries plummeted in April while CDs surged. (See our May 12 News, "Latest MF Portfolio Holdings: Repo, T-Bills Plunge; TDs, CP Increase.") We review these below, and also excerpt from the SEC's recently updated "Money Market Reform Frequently Asked Questions."
Mutual fund publication Ignites hosted a webinar on Tuesday called, "Counting Down to Money Fund Reform," featuring Crane Data's Peter Crane and Federated Investors' Bud Person, and Moderated by Ignites' Beagan Wilcox Volz. In the 45 minute webinar, the panelists discussed asset flows, yield spreads, money fund managers readiness for reforms, strike times, lineup changes, and new products. In particular, Person talked about new funds that Federated has in the pipeline to launch prior to the October 14 implementation date.
In the May edition of our Money Fund Intelligence, we profile 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." (We reprint our latest MFI interview below.)
As usual, money market funds were barely mentioned at the Investment Company Institute's General Membership Meeting, which took place last week in Washington, DC. (Crane Data exhibited, promoting its new bond fund information product line; watch more coverage in our Bond Fund Intelligence.) But there were a couple of sessions which briefly touched on MMFs, including SEC Chair Mary Jo White's keynote address, "The Future of Investment Company Regulation," and a panel on global investing. We review the GMM below, and we also revisit the "2016 Investment Company Fact Book," which was officially released at the show. (See our May 10 News, "ICI 2016 Fact Book Contains Wealth of Statistics, Reviews MMFs in '15.")
BlackRock released an Update recently informing clients of the strike times for floating NAV funds. The letter reads, "We are excited to share with you some important updates related to the requirement for institutional prime and institutional municipal money market funds to adopt a per share floating net asset value no later than October 14, 2016. As previously communicated, certain BlackRock money market funds will be designated as institutional and will transact based on a per share floating net asset value. Today, the Board of Trustees of our institutional prime and institutional municipal money market funds listed below approved the following net asset value strike times to become effective on or about October 11, 2016. The determination of these NAV strike times was made in an effort to provide investors with the most flexibility to help meet their ongoing liquidity needs."
The Office of the Comptroller of the Currency issued a Bulletin entitled, "Compliance With SEC Money Market Fund Rules by Bank Fiduciaries, Deposit Sweep Arrangements, and Bank Investments," which "describes how the SEC's MMF rules are likely to affect banks, addresses the product and process changes that affected banks should consider, and highlights potential compliance, liquidity, operational, and strategic risks." Also, we review a report from Financial Advisor magazine on a Senate Subcommittee hearing on long-shot legislation to change money fund rules. (See our May 18 News, "Stable NAV Money Fund Legislation Has Subcommittee Hearing Says BB.")
Northern Trust posted an article, "It's Time to Weigh the Risks of Your Cash Strategy," which examines liquidity trends, and opportunities, ahead of the October 14 implementation date for MMF reform. It features commentary from Peter Yi, Director of Short-Duration Fixed Income, and discusses new ways to think about cash segmentation, balancing risks and rewards, and customized solutions for investors. Also, JP Morgan Securities' discusses "Sticky Deposits" in their latest "Short-Term Fixed Income" commentary, which examines the likelihood of bank deposits moving to money market funds in this regulatory environment.
As we make final preparations for next month's Crane's Money Fund Symposium in Philadelphia (June 22-24), we are also preparing for our 4th Annual European Money Fund Symposium, the largest money market event in Europe. The preliminary agenda is set for this year's show, scheduled for Sept. 20-21 in London, England. Read on for details. But first, if you haven't already registered for Money Fund Symposium, you can still do so via www.moneyfundsymposium.com. (We look forward to seeing many of you in Philadelphia next month and in London this fall!)
A bill introduced in Congress last year, the "Consumer Financial Choice and Capital Markets Protection Act of 2015," which would allow all money market funds continue to have a constant or stable NAV, is in the news once again. The bill's sponsor in the House, Rep. Gwen Moore (D-WI-4), along with co-sponsor Steve Stivers (R-OH-15) wrote in yesterday's Bond Buyer an article entitled, "Preventing Another Self-Inflicted Wound to Public Infrastructure Investment." It says the bill, which we covered in our March 8 News, "Long Shot Legislation Could Keep All Money Funds Stable, Ban Bailouts," is scheduled for a hearing by a Senate subcommittee this week. The Senate version of the bill (S.1802) was introduced on July 16, 2015, while the House version (H.R.4216) https://www.congress.gov/bill/114th-congress/house-bill/4216 was introduced on Dec. 10, 2015 by `Moore. We review the article below, but first some background.
With now less than 5 months to go before the remaining money market reforms go live, fund managers continue to ramp up their communications. Wells Fargo Funds' discusses how reforms are changing the investment landscape in their latest "Overview, Strategy, and Outlook," First American Funds reviews the April 14 "Phase II" MMF reforms in a commentary called, "Two Down, One To Go," and, Fort Pitt Capital Group looks forward to a "whole new ballgame" in its piece, "Money market reform finalized." We review these updates below.
The May issue of Crane Data's Bond Fund Intelligence was sent out to subscribers on Friday. Our latest edition features the stories, "ICI Fact Book Shows Outflows for Bond Funds in 2015; Stats," which looks at year-end 2015 trends in bond funds, and a profile of Charles Melchreit, co-Portfolio Manager of the $2.7 billion Pioneer Multi-Asset Ultrashort Income Fund. Also, we recap the latest Bond Fund News, including flows for March and April, and the launch of several new Ultra-Short funds, including one by Morgan Stanley. (See our May 11 News and today's "Link of the Day.") BFI also includes our Crane BFI Indexes, which showed gains in April. In other news, Stradley Ronon's new "Tax Insights" features recent IRS notices involving money market funds. (See our May 9 LOTD, "IRS Gives Guidance on Diversification in Govt VA MMFs, Advisor Contributions," and see our July 30, 2014 News, "Reform Floating NAV Accounting Issues Addressed by Treasury Proposal.")
Both Vanguard and BlackRock recently released video interviews with their leading portfolio managers and executives to discuss money fund related issues. Vanguard posted an interview entitled, "Money Market Reform: Are You Impacted?" The clip features money market fund PMs David Glocke and Justin Schwartz, who discuss how investors will be impacted by the SEC's Reforms. Also, BlackRock posted a video on its Cash Academy website called, "The Importance of Scale," which features commentary from Thomas Callahan, Head of BlackRock's Global Cash Management Business, on the recent acquisition of BofA's money fund business.Archives »