The May issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Friday morning, features the articles: "Crane Data Celebrates 10th Birthday; Happy to Be Here," which looks at where Crane Data has been, where we are, and where we are going; "Goldman's Fishman Talks MMF Reforms, Growth," which profiles Dave Fishman, Head of Liquidity Solutions at Goldman Sachs Asset Management; and "ICI Fact Book Shows Money Funds Hung Tough in 2015," which reviews trends from the just-released "2016 Investment Company Fact Book." We have updated our Money Fund Wisdom database query system with April 30, 2016, performance statistics, and also sent out our MFI XLS spreadsheet Friday morning. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our May Money Fund Portfolio Holdings are scheduled to ship Tuesday, May 10, and our May Bond Fund Intelligence is scheduled to go out Friday, May 13. Below, we also review a release entitled, "First American Funds Announce Strike Times For Prime Fund, Share Class Name Changes."
Federated Investors became the latest money fund manager to announce "strike" or pricing times for its pending Floating NAV funds. It outlined plans in an April release entitled "Federated Announces Institutional FNAV Money Market Funds and Strike Times." The firm also put out a document, "New Money Market Fund Disclosure Rules Mitigate Concerns on Gates and Fees," which says that disclosure rules should help allay investors concerns about fees and gates. Federated's Deborah Cunningham also commented on disclosure rules in her latest "Month in Cash" commentary. Also, Wells Fargo Securities published a report called, "Money Market Reform Series, Part 3: Observations and Updates," which examines the "money market fund changes that will be relevant to institutional investors."
BlackRock has filed to launch a money market, fund of funds ETF, we learned from Wells Fargo Securities Strategist Garret Sloan. He wrote last week, "In a recent SEC registration filing, BlackRock has introduced an interesting new product called the BlackRock Collateral Trust, which is designed as an ETF, in which the principal investment strategy is to invest "at least 80% of its net assets in a portfolio of U.S. dollar-denominated government securities and other money market securities eligible for investment by U.S. government money market funds (including indirect investments through the Underlying Funds)." We examine BlackRock's SEC filing and Sloan's comments below. We also review a "Money Market Fund Planning Update," from SEI Investments, which discusses the liquidation of 5 money funds and the launch of 2 new ultra-short bond funds.
While the majority of Prime to Government money fund conversions have already occurred, we saw another chunk of assets shift yesterday, and we continue to see a series of minor name and lineup changes as we approach the home-stretch of MMF Reform implementation. Among the most recent switches, Deutsche converted a slew of funds from Prime to Govt. Just the past two days, 23 funds, totaling $28.4 billion, converted from Prime to Government on April 29 and May 2. With these changes, $242.1 billion has now already shifted from Prime to Govt, 83.6% of the $289.7 billion slated to convert by October 14. We also learned that BNY Mellon is converting its BNY Mellon Prime MMF to the BNY Mellon Government MMF, and that Dreyfus changed the names <b:>`_of several of its funds. We review the latest changes and tweaks below, and also excerpt from a recent piece by `TCW's Michael Pak on "Money Market Reform."
Federated Investors reported a jump in earnings for the first quarter of 2016, due primarily to higher yields and reduced fee waivers. Their Q1 earnings call Friday also featured some discussion of new products, including a private money fund and a collective fund for retirement accounts. Federated also commented on how assets may shift and settle leading up to and beyond the MMF reform implementation date in October. Debbie Cunningham, CIO, Global Money Markets, said, "They [investors] are enjoying that additional yield spread right now, and the question they're asking is, 'How do I continue to use this product and enjoy this yield spread as these regulations roll in?' It's a different question than maybe a year ago when it was, 'What do I need to do and when do I need to switch?"
Money fund assets increased $10.4 billion in the past week, according to the ICI's latest statistics, but that wasn't enough to make up for April's big drop month-to-date. Crane Data shows money fund assets still down $45.2 billion for the month through April 27 with almost all of the decline coming from the Prime sectors. This will be the second straight month of MMF asset declines (assets dropped by $15.1 billion in March), no surprise given it includes tax season. We review ICI's latest weekly "Money Market Fund Assets" report, and their latest monthly "Trends in Mutual Fund Investing" report below. We also discuss ICI's "Month-End Portfolio Holdings of Taxable Money Funds," which confirms that holdings of CDs (primarily Time Deposits) plummeted in March, while Repo and Treasuries surged. (See our April 12 News, "April Portfolio Holdings: Repo and T-Bills Jump; TDs and CDs Plunge.")
In the April issue of our Bond Fund Intelligence newsletter, we profile OppenheimerFunds' Senior Portfolio Managers Chris Proctor and Adam Wilde. They manage the Oppenheimer Ultra-Short Duration Bond Fund, which is celebrating its 5th anniversary this month. Proctor and Wilde discuss the conservative nature of the portfolio and why they think it is well-positioned in a "slow and stable" rising rate environment. They also believe the funds' 5-year track record of stable returns will serve it well. Says Proctor, "Funds that can deliver reasonable income and low volatility, I think, will be the winners in the space." The following is a reprint of the BFI article.
Money fund managers continue to enhance their websites to meet the new disclosure requirements that went into effect on April 14. Goldman Sachs Asset Management posted an update on the changes they've made to comply with the SEC's reforms, and also announced strike times for their funds that will have floating NAVs in October. (For more, see our April 14 News, "Money Fund Disclosure Reforms Go Live; Websites Add MNAVs, DLA, WLA.") We also review recent earnings reports from investment managers, which so far show that fee waivers have declined sharply in the first quarter of 2016. BNY Mellon, T. Rowe Price and Northern Trust all show sharp increases in money fund revenues, following Schwab's earnings jump. (See our April 18 Link of the Day, "Schwab Earnings: MMF Revenues Jump, Shift to Bank Deposits Continues.") Federated also reports earnings this Friday.
The Dutch Presidency and a subgroup of the European Parliament's Council on Money Market Funds posted a "Presidency Compromise" draft on European money market reforms, the latest iteration of a long process that could bring changes to money funds domiciled in Ireland, Luxembourg, and France later this year. The text, issued on April 12, includes several key changes to a previous European Parliament proposal, including removing a "sunset clause" on Low Volatility NAV (LVNAV Funds), improved emergency gates and fees options and less onerous diversification requirements. Note, this is just the latest iteration of the reform process, and reforms in Europe are by no means a done deal. They still must go through the full "trilogue" process and will likely be revised further. Passage is uncertain, but this latest edition appears to be somewhat more palatable to MMF providers. We also discuss the latest on European or "International" money fund assets, yields, and portfolio holdings below.
In the April edition of our Money Fund Intelligence, we profile Tory Hazard, President and COO of Institutional Cash Distributors. Hazard talks about the growth of ICD, which has expanded beyond money funds to include short-term bond funds, SMAs, private funds, and bank deposit products. He says, "Institutional Prime money funds are still going to be a very important part of the portfolios." Hazard also discusses enhancements to the ICD Portal slated to debut next week to help investors deal with upcoming reforms. He says, "We're extremely excited about 2016 and beyond." (We reprint the MFI article below. For more on ICD's enhancements, see our April 15 News, "Treasury Strategies, Fitch on New Disclosure; ICD Adds Enhancements," or see ICD's press release.")
The U.S. Securities & Exchange Commission released its latest "Money Market Fund Statistics" and the Investment Company Institute published its weekly "Money Market Fund Assets" yesterday. The SEC's report confirmed that assets fell (led by a sharp drop in Prime MMFs) and yields continued to rise in March, while the ICI's latest update shows money fund assets plunging in the latest week, which included the April 15 (or 18 this year) tax date. The SEC's Division of Investment Management summarizes monthly Form N-MFP data and includes asset totals and averages for yields, liquidity levels, WAMs, WALs, holdings, and other money market fund trends. (Note that the SEC had been releasing the full Form N-MFP data to the public with a 2-month lag, but this lag was removed last week after the "Additional Disclosures" segment of the SEC's 2014 MMF Reforms went into effect. See our April 14 News, "Money Fund Disclosure Reforms Go Live; Websites Add MNAVs, DLA, WLA.")
State Street Global Advisors released a new white paper and a revamped set of papers into a 51-page document entitled, "Yielding to a New Regulatory Reality." They write, "Previously, we've shared our perspectives on the new, post-crisis banking regulations and their impact on cash management. To help you prepare for upcoming implementation deadlines, our series of whitepapers now includes "What Liquidity Means Now." This latest read drills deeper into how regulators have redefined the concept -- and how markets and managers can adapt. This joins our six-part series ... recently abridged and redesigned to help you more quickly and easily review the new regulations and get actionable ideas for reassessing your cash investments."Archives »