OppenheimerFunds, the 25th largest money fund manager, issued a statement on Friday stating that all of their Prime funds will be convert to Government funds later in 2016. Currently, Oppenheimer has $10.1 billion in money fund assets, all of which are currently in Prime funds. The move brings the assets converted recently or planning to convert from Prime to Government to almost $250 billion to date. Also, another firm that announced a major shift out of Prime into Government earlier this year, Deutsche Wealth and Asset Management, also announced the launch of two ultra-short term bond funds on Monday.
UBS Global Asset Management filed with the SEC to launch three new money funds, we learned this week from Strategic Insight's SimFund Filing service. SI writes in its weekly synopsis, "UBS registers three money market funds which will each invest through the same underlying master fund and that intend to qualify as "retail money market funds" on or before October 14, 2016: the UBS Prime Investor, UBS Prime Preferred and UBS Prime Reserves funds (with minimum investments of $10,000, $50,000,000, and $1,000,000, respectively)." New Prime money fund launches aren't exactly typical in the current environment, where we have seen a series of liquidations, mergers, and nearly $240 billion worth of Prime funds declare their intent to convert to Government funds. Among the few firms recently announcing plans to launch Prime Retail funds, Western Asset Management recently filed to launch Western Prime Obligations MMF. (See our Oct. 14 Link of the Day, "Western Files for Prime Retail."
Below, we reprint from the November issue of our Bond Fund Intelligence newsletter, which features an interview with Invesco Managing Director & Head of Government, Short Duration, and EMEA Portfolio Management Laurie Brignac; and Senior Client Portfolio Manager Robert Corner . Brignac and Marques Mercier manage the Invesco Conservative Income Fund, which launched in July 2014. As Brignac tells us, "In looking at that larger ultra-short category and listening to our clients, we wanted to create a product and strategy that provides them with additional yield and at the same time has enough of a footprint in the money market space." (To request the full latest issue of BFI, e-mail us at firstname.lastname@example.org.)
Federated Investors' President & CEO Chris Donahue spoke Wednesday at Bank of America Merrill Lynch's "Banking and Financial Services Conference" in New York, where he talked about money market funds and the need to "be ready for all activities" in the post-MMF reform world. He also discussed consolidation, as well as a range of other money market fund issues, including the stickiness of assets thus far. Also, we review a story in U.K.-based publication Treasury Today called, "Why Size Matters for MMF Sponsors," which also discusses consolidation in the MMF industry and why reforms may accelerate the trend.
The Investment Company Institute released its latest "Money Market Fund Holdings" summary (with data as of Oct. 31, 2015) yesterday, which reviews the aggregate daily and weekly liquid assets, regional exposure, and maturities (WAM and WAL) for Prime and Government money market funds. Earlier this week, JP Morgan Securities' also released its latest "Prime Money Market Fund Holdings Update," which reviews trends and also discusses the re-categorization of Prime to Government MMFs. We excerpt from these below. (See our Nov. 12 News, "Nov. Portfolio Holdings: Time Deps, Agencies Jump; Repos Plummet.")
Several money market fund family changes have come to our attention in recent weeks, including Prime to Government fund conversions by Columbia Threadneedle and Dreyfus. We also report on how Dreyfus, the 6th largest US money fund family with $161.9 billion in assets, will categorize their Institutional, Retail, and Government funds. Further, we have more information on when Deutsche will convert its Prime MMFs to Government funds. Also, there's fund merger news from Fidelity and BNP Paribas. Yesterday, we reported on Federated's announcement of which funds it will categorize as Institutional; Federated also announced plans to offer a stable value private fund to qualified investors in Q1 of 2016. (See our Nov 17 News, "Federated Designates Inst MMFs; Wells, Goldman, BlackRock Gain in Oct.," and see our November Money Fund Intelligence for the latest overall recap on fund lineup changes.)
A press release issued late yesterday entitled, "Federated Investors, Inc. Announces Plans for Institutional Prime and Tax-free Money Market Funds," maps out the latest phase of the 4th largest money fund provider's reform strategies. It says, "Federated Investors, one of the nation's largest investment managers, today announced further refinements to its plan to restructure the company's line of money market funds by delineating which money market funds will be categorized as institutional money market funds under Rule 2a-7 of the Investment Company Act of 1940 and compliant with regulations issued by the U.S. Securities and Exchange Commission (SEC) in July 2014. Federated announced refinements to its government and retail money market funds in February and June 2015." (See our Feb. 20 News, "Federated Announces Changes; Targets Floating MMFs That Won't Float, and our June 5 News, "Federated Announces Retail Money Fund Plan, Streamlines MF Lineup.") Below, we also review our latest Money Fund Market Share rankings.
A press release entitled, "J.P. Morgan Asset Management Releases 2015 Global Liquidity Survey Results, Identifies Investor Sentiment amid Shifting Market and Regulatory Landscape," announced late last week that JPMAM released the findings of its "2015 Global Liquidity Investment PeerView" survey, which "highlights the current sentiment of more than 400 respondents, including CIOs, treasurers and other senior decision-makers, representing more than 400 unique entities from all sectors of the global economy." It says, "The survey uncovered widespread industry trends, as the decision-makers confront both a shifting interest rate environment and far-reaching regulatory reforms." The report shows that 70% of respondents (institutional investors) who have Prime money funds intend to stay in them, while 83% will either maintain their allocations to money funds or increase them. The JP Morgan survey comes on the heels of a recent Sungard survey (see our Nov. 9 News, "Sungard Survey Shows Majority of Corps Will Stick w/Prime; Portals") that also says the majority of corporate investors will stick with Prime funds after the new SEC rules requiring these funds to have a floating NAV go into effect in October 2016.
The Investment Company Institute discusses shifting money fund assets and the reclassification of Prime funds to Government in their latest "Viewpoint," entitled, "Changes to Money Market Funds Are Showing Up in Data." Last week, ICI's "Money Market Fund Assets" data series showed a big decrease in Prime assets and increase in Government assets last week as money managers began converting Prime funds to Govt funds. (ICI's latest numbers only show minor shifts this week, however. See today's "Link of the Day" for more.) Also, mutual fund publication Ignites recaps recent Prime to Govie conversions in an article Wednesday, "The Great Money Fund Migration Kicks Off." Finally, another big conversion is finalized today (and will be reflected in next week's asset totals) as the $15.7 billion Fidelity Cash Management Prime Fund is officially merged into Fidelity Government Money Market Fund.
Crane Data released its November Money Fund Portfolio Holdings Tuesday, and our latest collection of taxable money market securities, with data as of Oct. 31, 2015, shows a huge gain in holdings of Other (Time Deposits), a big gain in Agencies, and smaller gains in CDs, CP, and Treasuries, as well as a giant drop in Repos. Money market securities held by Taxable U.S. money funds overall (those tracked by Crane Data) increased by $61.8 billion in October to $2.616 trillion. MMF holdings decreased by $30.1 billion in September, increased by $35.0 billion in August, and increased by $55.0 billion in July. Repos remained the largest portfolio segment, even as Fed repo plummeted following last month's quarter-end surge; CDs remained the second largest segment. Agencies solidified their hold on third place, driven by Prime funds preparing for reclassification as Government funds. Agencies remained well ahead of both Treasuries and Commercial Paper. Other (mainly Time Deposits) securities were sixth, followed by VRDNs. Money funds' European-affiliated securities represented 27.3% of holdings, up significantly from the previous month's 18.5%. Below, we review our latest Money Fund Portfolio Holdings statistics.
Charles Schwab Investment Management filed recently with the SEC to launch a new floating NAV money market fund, Schwab Variable Share Price Money Fund, which should go live in January 2016. Schwab recently outlined their money market fund plans in a letter to clients and shareholders (see our Oct. 13 News, "Schwab Going All Retail, Converting Inst Shares; MMP Switches to Govt"). In that announcement, Schwab said it was converting its few Institutional share classes to Retail, making its current roster entirely "Retail". The company said nothing about this new seemingly Institutional offering, though, and couldn't comment on the pending filing. In other news, Invesco sent out an update to clients late last week announcing plans for its MMF lineup. (See their press release, "Invesco Announces Intended Changes to Money Market Funds.") The company details which funds will be Government, Retail, and Institutional and designated its $17 billion Liquid Assets and STIC Prime funds as Institutional. It also announced that it will convert one fund -- the $662 million Invesco VI Money Market Fund -- to a Government MMF.
Online money market trading portal and financial software company Sungard released its 5th annual "Corporate Cash Investment Report," which "reveals significant challenges for treasurers due to regulatory report reforms" and which indicates that the majority of corporate investors will stick with Prime money market funds after reforms and keep investment levels similar." A press release says, "The study examines treasurers' changing attitudes toward cash investment over the last 12 months -- including strategic cash holdings, asset allocation, investment policies and transaction execution -- as well as identifying trends and developments over the last five years. Survey participants represented a cross-section of geographic regions and industries, with 46 percent located in North America and 37 percent in Europe."Archives »