The May issue of the Association for Financial Professionals' AFP Exchange features the story, "How New MMF Rules May Impact Delta's Cash Portfolio," a Q&A with Barbara Quiroga, director of cash operations for Delta Air Lines. AFP asks, "What potential impact do you see the new regulations having on your cash portfolio at Delta?" Quiroga answers, "Delta has relied heavily on MMFs for its operational daily cash investments. We have already seen some funds closing/selling their funds (Reich & Tang) or changing their strategy (Fidelity) that had an impact on our operational cash investments. Delta will have to assess if prime MMFs will still be the optimal investment vehicle for operational cash after all regulatory changes are implemented and we have a better understanding of how the daily investments or redemptions will work." We also preview this week's New York Cash Exchange conference, which features a number of sessions on cash investments, including our Peter Crane's "Money Fund Rates & Regulations Roundtable," which takes place Wednesday at 9:00am at the New York Hilton.
The 10th largest money market fund complex in the U.S., Wells Fargo Advantage Funds, became the latest to lay out its plan to comply with pending SEC money market reforms. In a statement entitled, "Wells Fargo Advantage Funds Announces Changes to Money Market Fund Lineup," the company, with $110.5 billion in MMF assets (as of March 31), categorizes which funds will be Retail, Institutional, and Government. To date, 7 of the 10 largest US money fund managers have announced money fund lineup changes. The release says, "Wells Fargo Advantage Funds today announced that its Board of Trustees preliminarily approved changes to its money market fund lineup to address the regulatory changes adopted by the U.S. Securities and Exchange Commission (SEC) in July 2014. These changes will become effective on or prior to October 14, 2016."
While most of the compliance dates for money market reforms are in 2016, there is one coming in 2015 -- July 14 to be exact. It's on reporting and disclosure; specifically, money market funds will be required to report certain information on Form N-CR, as well as make related website disclosures. One of the industry's leading law firms, Dechert, published an article yesterday entitled, "U.S. Money Market Fund Reform: Form N-CR and Related Website Disclosure Compliance Deadline Quickly Approaching" that lays out everything money fund complexes need to know about complying with this piece of the reforms.
JP Morgan Asset Management is streamlining the number of 'AAA' ratings on its money market mutual funds, removing triple-A ratings on a number of its money market funds, and it recently added a new ultra-short "offshore" money fund. The ratings removals include funds rated 'AAAm' by S&P and 'Aaa-mf' by Moody's and involve U.S. money funds, as well as "offshore" Luxembourg-domiciled money funds. On the changes, JP Morgan Asset management's John Donohue, CEO of Investment Management Americas says, "The three major NRSRO's views of credit and risk management have diverged significantly over the past few years and have imposed differing investment requirements on rated money market funds. Our request to remove these ratings follows an ongoing global strategic review of all of our ratings across the J.P. Morgan range of money market funds. Removing these ratings does not signal any change in the investment policies or credit process of the money market funds."
The Investment Company Institute released its latest "Money Market Fund Holdings" report (with data as of April 30, 2015), which tracks the aggregate daily and weekly liquid assets, regional exposure, and maturities (WAM and WAL) for Prime and Government money market funds. ICI's "Prime and Government Money Market Funds' Daily and Weekly Liquid Assets" table shows Prime Money Market Funds' Daily liquid assets at 23.3% as of April 30, down from 24.9% on March 31. Daily liquid assets were made up of: "All securities maturing within 1 day," which totaled 18.2% (vs. 19.2% last month) and "Other treasury securities," which added 5.2% (down from 5.8% last month). Prime funds' Weekly liquid assets totaled 37.6% (vs. 37.9% last month), which was made up of "All securities maturing within 5 days" (31.1% vs. 30.8% in March), Other treasury securities (5.0% vs. 5.8% in March), and Other agency securities (1.5% vs. 1.3% a month ago). (See also Crane Data's May 12 "News", "May MF Portfolio Holdings Show Plunge in Fed Repo, Jump in TDs, CP.") We also examine the latest MMF holdings report from JP Morgan Securities below.
Wells Fargo Advantage Funds' monthly "Overview Strategy, and Outlook" examines recent changes in the repo market and their impact on money market funds. Also, we report on Part 2 of a webinar series from Capital Advisors Group on "Recent Money Fund Developments and Key Issues for Corporate Cash Investors." (Read coverage of Part 1 of the webinar in our April 10 "News," "Capital Advisors' Pan, Campbell on Recent MMF Moves; $615B Outflow?") The Wells Fargo "Focus piece: Repurchase agreements", authored by Jeff Weaver, Head of Money Funds and Short Duration, and his team, explains, "The first part of April was an unusually heavy news cycle for repurchase agreements (repos). These sleepy, white-bread staples of the money markets typically get little press, let alone a spotlight focused on them. However, several events have conspired to bring them front and center."
As you've hopefully been reading in www.CraneData.com's daily "News", we have reported on all of the news that has come to our attention over the past several months from companies announcing their intentions post-money market reform. Of the 20 largest money fund complexes, half have issued updates, including the four largest -- Fidelity, JP Morgan, BlackRock, and Federated. Note that through all of the announced changes, every statement to date has pledged to offer all types of funds. Here, we recap all of the statements, and dates they were announced, that have happened so far. (Major parts of this summary were originally printed in our May Money Fund Intelligence. A PDF version of the MFI story, "Schwab and Latest Fund Co. Changes; SEC Answers FAQs" may be accessed here.) We also look at a new release from Fitch Ratings called "Post-MMF Reform Cash Management Landscape Takes Shape," which looks at how the money market environment is shifting.
Last week we wrote about the release of ICI's "2015 Investment Company Fact Book" (see our May 5 Crane Data "News," "ICI's 2015 Investment Company Fact Book: MMF Assets, Corps Hold Fast). But today we examine the "Fact Book's" numerous "Data Tables" on "Money Market Mutual Funds (which start on page 207) in more detail. ICI lists annual statistics on shareholder accounts, the number of funds, net assets, net new cash flows, paid and reinvested dividends, composition of prime and government funds, and net assets of institutional investors by type of institution (one of the only glimpses of fund investors types available anywhere). We also examine some of the data tables related to Bond Fund assets, flows, portfolio holdings, and fees. (Watch for more on these too in our May Bond Fund Intelligence, which is due to ship Friday.)
Crane Data's latest Money Fund Intelligence Family & Global Rankings, which rank the asset totals (and break out by type of fund) and market share of managers of money market mutual funds in the U.S. and globally, were sent out to subscribers late last week. The May edition, with data as of April 30, 2015, shows asset decreases for almost all of money fund complexes in the latest month. The vast majority of managers also show losses over the past three months. Assets declined by $89.0 billion overall, or 3.6%, in April; over the last 3 months, assets are down $112.5 billion, or 4.3%. But for the past 12 months through March 31, total assets are flat -- down just $1.3 billion, or 0.1%. Below, we review the latest market share changes and figures. (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 our Money Fund Wisdom subscribers.)
Crane Data released its May Money Fund Portfolio Holdings Monday, and our latest collection of taxable money market securities, with data as of April 30, 2015, shows jumps in Other (Time Deposits) and CP, and a plunge in Repo and Treasuries. Money market securities held by Taxable U.S. money funds overall (those tracked by Crane Data) decreased by $49.3 billion in April to $2.404 trillion, after dropping $19.2 billion in March and $52.1 billion in February. In the seesaw battle between the two, Repos remained the largest portfolio segment ahead of CDs. Treasuries stayed in third place, followed by Commercial Paper. Agencies were fifth, followed by Other (Time Deposits), then VRDNs. Money funds' European-affiliated securities represented 29.3% of holdings, up from 21.4% the previous month as holdings of Fed RRP repo plummeted from their quarter-end peak. Below, we review our latest Money Fund Portfolio Holdings statistics. (Note: We also added a new "Holdings Reports Funds Module" to our "Reports & Pivot Tables" lineup. The new file allows user to choose funds (pick a fund then click its ticker) and show Performance alongside Composition, Country breakout, Largest Holdings and Fund Information.)
Crane Data, publisher of Money Fund Intelligence, celebrates its 9th birthday this month. As we wrote in our most recent issue of MFI, we'd like to take a moment to review our progress and update you on our efforts, which include growing our conference business and extending our coverage beyond money market funds. Crane Data was launched in May 2006 by money fund expert Peter Crane and technology guru Shaun Cutts to bring faster, cheaper and cleaner information to the money fund space. We began with our MFI newsletter and have grown to offer a full range of daily and monthly spreadsheets, news, database query systems and reports on U.S. and "offshore" money funds and other cash investments. (Note: We also wanted to remind you to make hotel reservations -- we expect the hotel to be sold out soon -- and to register for our upcoming Money Fund Symposium, June 24-26 in Minneapolis, and to start making plans for our European Money Fund Symposium, Sept. 17-18 in Dublin.)
The matter of Treasury Bill supply for the money markets appears to be on the radar of the U.S. Treasury, judging by a recent report prepared for the Treasury Borrowing Advisory Committee. The "Charge 1" TBAC report examines current developments in the market, such as regulations and policy, which have "the potential to change significantly the supply and demand in the market for short-end, high-quality assets where Treasury Bills are centric." This, of course, includes money markets, where the there is concern among asset managers that supply may be strained should the expected migration of assets from Prime to Government take place once the new SEC rules kick in in October 2016. The TBAC report concludes that it should consider increasing the level of T-Bills.Archives »