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The November issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Friday morning, features the articles: "MF Consolidation Accelerates; Govt Fund Conversions Begin," which looks at Prime to Government fund conversions, consolidation, and Schwab and Fidelity's declaration of "retail" funds; "Prior Speaks on Changes; New Reality at Fidelity," where we summarize recent comments from Fidelity's Nancy Prior and changes to the firm's funds; and "BlackRock Buys BofA MMFs in Biggest Deal of Decade," which recaps the news that BlackRock acquired BofA's $87 billion money fund business. We have also updated our Money Fund Wisdom database query system with Oct. 31, 2015, performance statistics, and sent out our MFI XLS spreadsheet earlier. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our November Money Fund Portfolio Holdings are scheduled to ship Tuesday, November 10, and our November Bond Fund Intelligence is scheduled to go out Monday, November 16.
MFI's lead "Consolidation" article says, "Acquisitions, liquidations, and conversions headlined a busy month in the money market fund space. With now less than a year until MMF reforms take effect, some Prime funds have already begun converting into Government funds. The first batch of these took place this week, and more are slated to convert in December and throughout 2016. To date, over $230 billion in Prime money funds have converted or declared their intent to convert into Government funds, with over $40 billion converting this week and next. On the acquisition front, BlackRock shook the money fund world with its purchase of BofA's cash management business, and a steady stream of minor fund liquidations, conversions and announcements continued."
The piece continues, "In October, two small Prime money market funds announced conversions to Government, and two more firms announced their exits from the money market space. Nationwide will convert its $1.0 billion Nationwide Money Market Fund and its $1.8 billion Nationwide VIT MMF to Government funds on 10/14/16. Also, Pioneer is converting its $280 million Pioneer Cash Reserves from Prime to Government on 11/13/15. Further, William Blair filed to liquidate its $1.4 billion Ready Reserves Fund on Nov. 18, and Delaware filed to convert its $169 million Delaware Cash Reserves to Delaware Ultrashort [Bond] Fund in Jan. 2016."
Our latest MFI "profile," reads, "Fidelity President of Fixed Income Nancy Prior spoke recently about the state of the money market fund industry in a speech at the AFP Annual Conference entitled, "Money Market Funds: The New Reality." She discussed Fidelity's second phase of changes to its money market fund lineup, which were announced October 14, and also talked about the size of the Government securities sector, conservative ultra-short bond funds and the fact that there is no "silver bullet" for corporate cash investors."
It adds, "The big news in the recent announcement, which followed the late January shocker that Fidelity Cash Reserves will "go government," is that Fidelity will convert both its $65.5 billion Fidelity Institutional Money Market Portfolio and its $2.2 billion FIMM Tax Exempt Portfolio into Retail funds. Fidelity will retain just one Prime Institutional fund, the $47.8 billion FIMM Prime Money Market Portfolio."
We quote Prior, "In the end, MMFs survived a very long and difficult regulatory process, and will continue to exist in a form we all recognize. That survival was not a given through a series of ups and downs of a regulatory process that lasted more than five years. One result of the regulation, however, is that the current value proposition of prime MMFs -- stability, liquidity, and a competitive market yield -- has been diminished. In fact, investors will no longer be able to maximize all three with any single MMF product. There will be tradeoffs between the different types of funds, and investors will have to choose which features are most important to them. For many of you here, prime MMFs have traditionally been a great cash investment option. They met your needs by providing all three elements -- stability, liquidity, and a competitive yield."
The "BlackRock Buys BofA" article says, "In one of the largest acquisitions ever in the money market fund space, BlackRock announced that it was taking over management of BofA Global Capital's cash business. BofA Funds is the 14th largest manager of money market fund assets that we track with $48.3 billion -- and according to BlackRock's press release announcing the move, has $87 billion in total cash assets under management. Prior to this transaction, the largest money fund mergers in the past included both BlackRock's merger with Merrill Lynch Investment Management in 2006 and BlackRock's merger with Barclays Global Investors in 2009. (See our Dec. 2, 2009 News, "Merged BlackRock, BGI Form World's 3rd Largest Money Fund Manager.") When the BofA transaction is complete, BlackRock will become the second largest manager of money fund assets with about $370 billion in AUM, jumping ahead of now No. 2-ranked JP Morgan."
We also look at how money fund managers are reducing fee waivers in the sidebar, "Fee Waivers Being Reduced." It says, "As yields creep up and a possible interest rate hike looms, money fund managers are beginning to reduce the amount of fee waivers. In Q3 earnings calls and releases, Federated, Schwab, Northern Trust and T. Rowe Price all reported lower fee waivers and higher MMF revenue. And, we take our quarterly look at the largest money fund markets in the world in our story, "Global MMF Data Shows: Big Jumps in Ireland and China." It says, "The Investment Company Institute's latest "Worldwide Mutual Fund Assets and Flows" show that global money market mutual fund assets increased in the 2nd Quarter of 2015, rising $31 billion, or 0.7%, to $4.580 trillion. Ireland solidified its spot as the second largest MMF market with a big jump, while China and Luxembourg also gained assets in Q2. Globally, MMF assets increased by $107.5 billion, or 2.2%, over the past year (through 6/30/15)."
Our November MFI XLS, with Oct. 31, 2015, data, shows total assets increasing $56.5 billion in October after declining by $9.4 billion in September, rising $7.2 billion in August, and jumping $52.4 billion in July. YTD, MMF assets are down by just $8.2 billion, or 0.3% (through 10/31/15). Our broad Crane Money Fund Average 7-Day Yield and 30-Day Yield remained at 0.02%, while our Crane 100 Money Fund Index (the 100 largest taxable funds) went up a basis point to 0.05% (7-day).
On a Gross Yield Basis (before expenses were taken out), funds averaged 0.18% (Crane MFA, up one bps) and 0.21% (Crane 100, unchanged). Charged Expenses averaged 0.15% (unchanged) and 0.17% (up one bps) for the two main taxable averages. The average WAMs (weighted average maturities) for the Crane MFA was 36 days (up two days from last month) and for the Crane 100 was 36 days (unchanged). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
The October issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Wednesday morning, features the articles: "Year to Go for Fund Changes; A Look at Floating NAV MMFs," which summarizes which large funds will have floating NAVs in October 2016; "Morgan Stanley Talks Growth, New Products," where we profile the money fund team at MS Investment Management; and "SEC Finalizes Ratings Removal from Rules," which recaps the recent SEC ruling on the removal of credit ratings from money funds. We have also updated our Money Fund Wisdom database query system with Sept. 30, 2015, performance statistics, and sent out our MFI XLS spreadsheet earlier. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our October Money Fund Portfolio Holdings are scheduled to ship Friday, October 9, and our October Bond Fund Intelligence is scheduled to go out Thursday, Oct. 15.
MFI's lead "Year to Go for Changes" article says, "With now just a year to go until the main piece of the SEC's 2014 Money Fund Reforms -- the floating NAV and emergency gates & fees for Prime and Municipal money funds -- goes into effect (Oct. 14, 2016), we wanted to again summarize some of the work done by fund companies to date. We also wanted to focus on the pending class of floating NAV money funds, Prime Inst in particular."
The piece continues, "First, while it's been a month since we've seen any major announcements from money market fund managers on reform-related changes, there have been a `flurry of smaller moves, including liquidations, name changes, share class launches, and changes in investment guidelines. PNC just merged its PNC Advantage Inst Govt MMF into PNC Govt MMF. Also, Dreyfus changed the names of several funds. (See the "`Changes" tab in our MFI XLS, and see our Oct. 5 News, "Lull in Major Announcements, But Minor Moves Continue: American, PNC") In addition, Goldman Sachs FS Federal Fund changed its name to Goldman Sachs FS Treasury Solutions on Oct. 1, 2015, and Fidelity recently provided another update to advisors on some previously announced fund mergers."
Our latest MFI "profile," "Morgan Stanley Talks Growth, New Products," reads, "The October issue of our flagship Money Fund Intelligence newsletter features an interview with the cash management team at Morgan Stanley Investment Management -- Managing Director Fred McMullen, Managing Director, Sr. Portfolio Manager Jonas Kolk, and Executive Director, Product Management Scott Wachs. Morgan Stanley, which has been managing money funds since 1975, is the 7th largest global institutional MMF manager with over $120 billion in MMF assets. McMullen, Kolk, and Wachs talk about Morgan Stanley's industry leading growth over the past 5 years and new product development."
MFI asks, "What is your biggest priority right now? McMullen: There are several priorities -- one is working with our clients to help them strategize around the impending rate and regulatory changes. Two is our focus on new product development. We're fortunate that we have a large retail fund money fund lineup as well as a large institutional fund lineup. Some in the marketplace have to create new retail funds to deal with the bifurcation the SEC created between institutional and retail investors. We don't have to worry about that so we're more freed up to focus on new product development. We've already announced some changes that we've made to our product lineup in response to the regulations and we've shared our views on several aspects of the regulations and the competitive landscape. A few months ago, we provided clients our perspectives on the announcements that several of our competitors had made to date. We'll soon post a more comprehensive update on our progress to date and on some of our key product development issues. Three, we are very focused on growing our European liquidity business."
The third article, "SEC Finalizes Ratings Removal from Rules," says, "The U.S. S.E.C. finalized one of two remaining supporting rules for its July 2014 Money Fund Reforms, the "`Removal of Certain References to Credit Ratings and Amendment to the Issuer Diversification Requirement in the Money Market Fund Rule." A press release says, "The Securities and Exchange Commission adopted amendments to remove credit rating references in the principal rule that governs money market funds and the form that money market funds use to report information to the Commission each month about their portfolio holdings. The Commission also adopted amendments that would subject additional securities to issuer diversification provisions in the money market fund rule." Thus, as expected, money funds' "First Tier" and "Second Tier" credit regime, which required (roughly) A-1, P-1, F-1 ratings (or A-2, P-2, F-2), will be replaced by a new "minimal credit risk" test that doesn't reference ratings."
We also briefly recap two sessions from our recent, European Money Fund Symposium, which was held September 17-18 in Dublin. One story, "Irish Funds' CEO on CNAV: Legitimate Reason to Exist," features commentary from Irish Funds' CEO Pat Lardner and Regulatory Affairs Head Patrick Rooney. The other, "French MMFs Have 'Continuum of Strategies'," says, "As the US money market fund industry braces for Floating or Variable NAV funds, it can look to France, for some insights into VNAV funds. France, with $329 billion in MMF assets, is almost entirely made up of VNAV funds."
Our October MFI XLS, with Sept. 30, 2015, data, shows total assets declining by $9.4 billion in September, after rising $7.2 billion in August, $52.4 billion in July, and $15.2 billion in June. YTD, MMF assets are down by $64.7 billion, or 2.5% (through 9/30/15). Our broad Crane Money Fund Average 7-Day Yield and 30-Day Yield remained at 0.02%, while our Crane 100 Money Fund Index (the 100 largest taxable funds) remained at 0.04% (7-day).
On a Gross Yield Basis (before expenses were taken out), funds averaged 0.17% (Crane MFA, up from 0.16% last month) and 0.21% (Crane 100, up from 0.20% from last month). Charged Expenses averaged 0.15% (up from 0.14% last month) and 0.16% (unchanged) for the two main taxable averages. The average WAMs (weighted average maturities) for the Crane MFA was 34 days (up one day from last month) and for the Crane 100 was 35 days (down one day). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
The September issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Tuesday morning, features the articles: "Bad News Good News for MFs; More Prime Changing to Govt," which discusses a confluence of forces that may be driving MMF assets higher; "New IMMFA Chair Reyer Kooy on European MMFs," where we discuss regulations, negative yields, and all things euro money funds with the new Chair of IMMFA; and "MFI International Review: Negative Yields, Regs Loom," an annual look at the largest funds and current trends in European money funds. We have also updated our Money Fund Wisdom database query system with August 31, 2015, performance statistics, and sent out our MFI XLS spreadsheet shortly. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our September Money Fund Portfolio Holdings are scheduled to ship Thursday, Sept. 10, and our September Bond Fund Intelligence is scheduled to go out on Tuesday, Sept. 15. (Note: We also look forward to seeing those of you planning to attend Crane's European Money Fund Symposium, which will take place Sept. 17-18 in Dublin.)
The lead "Bad News Good News” article in MFI says, "It was a pretty good summer for money market mutual funds, all things considered. Assets increased for the 4th month in a row, climbing back to almost $2.7 trillion for the first time since January 2015. With the market turmoil, it even felt a little like the pre-crisis good old days, when bad news for the rest of the world was good news for money funds."
The piece continues, "However, changes ahead of next year's Money Fund Reforms continue, as small and even mid-sized fund companies either announce that their prime funds are "going government" or that they're exiting the space entirely. We review flows and the latest fund reform-related changes below. (See our Link of the Day on the latest liquidations, Forward Funds and Eaton Vance.)"
Our latest "profile," "New IMMFA Chair Reyer Kooy," reads, "This month, we profile the new Chair of the Institutional Money Market Fund Association, Reyer Kooy. Kooy, the Head of Institutional Liquidity Management, EMEA and Asia business for Deutsche Asset & Wealth Management, replaces Jonathan Curry who served as IMMFA Chair for the past three years. Kooy comes aboard in a challenging environment for money funds in Europe, as the industry faces negative yields and the likelihood of substantial reforms. But he remains optimistic about the future."
MFI asks, "When did you become Chair?" Kooy responds, "I was elected to become Chairman of IMMFA in June of this year for a two year term. Previously I was an IMMFA board member and Treasurer of the association for the preceding three years. IMMFA has been around for more than 15 years and is focused on the European CNAV money market fund industry specifically. I've personally been involved with the money fund industry twelve years."
We also ask, "What has been IMMFA's main focus?" Kooy says, "Regulation has been the main focus of the association over the last two to three years. We focus on making the case for money market funds in general, but also for constant NAV. We are keen to share our knowledge and insights with the decision makers of the European regulatory process. Regulations will be a prime focus going forward as well as the yield environment. These two key items are of crucial importance to our members and therefore to IMMFA."
The third article, "MFI International Review," says, "The European money market fund industry is in the midst of extreme challenges and major changes as it endures a negative yield environment and braces for a regulatory overhaul. With Crane's 3rd annual European Money Fund Symposium taking place next week (Sept. 17-18) in Dublin, we thought it would be a good time to take a look at the latest trends in Europe -- including assets, largest funds and fund managers, WAMs, yields, and others. The two big themes are -- assets are down and yields have gone negative, and continue to drop, in Europe."
It adds, "Total international or "offshore" money market fund assets in US dollar, euro, and sterling stand at USD $686 billion through August 31, according to our Money Fund Intelligence International -- down $69 billion since the end of 2014. The bulk of that total, $372 billion, is in USD denominated funds, while L147 billion is in Sterling, and E76 billion is in Euros. Year-to-date through 8/31, USD MMFs are down $12B, Sterling MMFs are down $5B, and Euro MMFs are down E15B. In the second quarter, assets dropped sharply among Euro funds. Sterling funds fell 10.3% in Q2, while USD funds were relatively stable."
We also write in MFI's "News" briefs about "Yet More Money Fund Liquidations," saying, "Forward Funds (US Govt MMF) and Eaton Vance are the latest managers to give up on the money fund space. (See today's Link of the Day for details.) Municipal fund liquidations also continue with Dreyfus Basic Muni MMF liquidating and Western Asset Institutional AMT Free Municipal MMF merging into Western Asset Inst Tax Free Reserves. (Dreyfus Basic NY Muni MMF and Dreyfus NY AMT-Free Muni MMF will also liquidate 10/28/15.)
Our September MFI XLS, with August 31, 2015, data, shows total assets rising by $7.2 billion in August, after rising $52.4 billion in July and $15.5 billion in June. YTD, MMF assets are down by $55.2 billion, or 2.1% (through 8/31/15). Our broad Crane Money Fund Average 7-Day Yield and 30-Day Yield remained at 0.02%, while our Crane 100 Money Fund Index (the 100 largest taxable funds) remained at 0.04% (7-day). On a Gross Yield Basis (before expenses were taken out), funds averaged 0.16% (Crane MFA, same as last month) and 0.20% (Crane 100, unchanged from last month). Charged Expenses averaged 0.14% and 0.16% (unchanged) for the two main taxable averages. The average WAMs (weighted average maturities) for the Crane MFA and the Crane 100 were 33 and 36 days, respectively, both down 3 days from last month. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
Crane Data's latest Money Fund Intelligence Family & Global Rankings, which rank the market share of managers of money market mutual funds in the U.S. and globally, will be sent out to subscribers later this week. The August edition, with data as of July 31, 2015, shows asset increases for the majority of US money fund complexes in the latest month, as well as over the past 3 months. Assets increased by $49.9 billion overall, or 1.9%, in July; over the last 3 months, assets are up $94.1 billion, or 3.8%. For the past 12 months through June 30, total assets are up $122.2 billion, or 5.0%. Below, we review the latest market share changes and figures. (Note: Crane Data's August Money Fund Portfolio Holdings will be released later on Tuesday, and our August Money Fund Intelligence was released last Friday.)
The biggest gainers in July were Goldman Sachs, JP Morgan, Fidelity, Federated, BofA, and Dreyfus, rising by $10.3 billion, $7.3B, $7.2 billion, $5.6B, $4.9B, and $4.5B, respectively. JP Morgan, Goldman Sachs, Fidelity, BlackRock, Federated, and Morgan Stanley had the largest increases over the 3 months through July 31, 2015, rising by $16.6 billion, $15.8B, $15.6B, $10.2B, $10.2B, and $9.9B, 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 our Money Fund Wisdom subscribers.)
Our latest domestic U.S. money fund Family Rankings show that Fidelity Investments remained the largest money fund manager by far with $410.3 billion, or 15.9% of all assets (up $7.2 billion in June, up $15.6 billion over 3 mos., and up $5.6B over 12 months). Fidelity was followed by JPMorgan's $257.2 billion, or 10.0% (up $7.3B, up $16.6B, and up $25.9B for the past 1-month, 3-months and 12-months, respectively). BlackRock remained the third largest MMF manager with $209.5 billion, or 8.1% of assets (up $3.7B, up $10.2B, and up $27.9B). Federated Investors was fourth with $206.3 billion, or 8.0% of assets (up $5.6B, up $10.2B, and up $9.4B), and Vanguard ranked fifth with $174.0 billion, or 6.7% (down $644M, up $1.7B, and up $2.6B).
The sixth through tenth largest U.S. managers include: Dreyfus ($170.9B, or 6.6%), Goldman Sachs ($156.0B, or 6.0%), Schwab ($155.9B, 6.0%), Morgan Stanley ($125.2B, or 4.9%), and Wells Fargo ($110.0B, or 4.3%). The eleventh through twentieth largest U.S. money fund managers (in order) include: Northern ($79.7B, or 3.1%), SSgA ($77.2B, or 3.0%), BofA ($55.7B, or 2.2%) which moved ahead of Invesco, Invesco ($55.3B, or 2.1%), Western Asset ($43.2B, or 1.7%), First American ($41.8B, or 1.6%), UBS ($36.8B, or 1.4%), Deutsche ($30.1B, or 1.2%), Franklin ($24.5B, or 1.0%), and American Funds ($15.0B, or 0.6%). Crane Data currently tracks 69 U.S. MMF managers, down one from last month. (Reich & Tang was liquidated last month.)
Over the past year through July 31, 2015, BlackRock showed the largest asset increase (up $27.9B, or 15.4%), followed by JP Morgan (up $25.9B, or 11.2%), Morgan Stanley (up $23.8B, or 23.5%), Goldman Sachs (up $21.0B, or 15.6%), Dreyfus (up $17.5B, or 11.4%), and Federated (up $9.4B, or 4.8%). Other asset gainers for the year include: BofA (up $7.4B, or 15.3%), Fidelity (up $5.6B, or 1.4%), First American (up $5.2B, or 14.3%), Franklin ($4.8B, 24.3%), and Northern (up $3.8B, 5.0%). The biggest decliners over 12 months include: SSgA (down $4.8B, or -5.9%), RBC (down $4.3B, or -22.8%), Schwab (down $3.6B, or -2.3%), Deutsche (down $3.0B, or -9.2%), American Funds (down $2.9B, or -16.2%), and T. Rowe Price (down $1.3B, or -8.1%). (Note that money fund assets are very volatile month to month.)
When European and "offshore" money fund assets -- those domiciled in places like Dublin, Luxembourg, and the Cayman Islands -- are included, the top 10 managers match the U.S. list, except for Goldman moving up to No. 4 (dropping Vanguard to 7), and Western Asset appearing on the list at No. 10 (displacing Wells Fargo from the Top 10). Looking at the largest Global Money Fund Manager Rankings, the combined market share assets of our MFI XLS (domestic U.S.) and our MFI International ("offshore"), the largest money market fund families are: Fidelity ($416.9 billion), JPMorgan ($382.3 billion), BlackRock ($308.7 billion), Goldman Sachs ($235.4 billion), and Federated ($214.6 billion). Dreyfus/BNY Mellon ($195.3B), Vanguard ($174.0B), Schwab ($155.9B), Morgan Stanley ($143.9B), and Western ($119.4B) round out the top 10. These totals include offshore US Dollar funds, as well as Euro and Pound Sterling (GBP) funds converted into US dollar totals. (Note that big moves in the dollar have recently caused volatility in Euro and Sterling balances, which are converted back into USD.)
Finally, our August 2015 Money Fund Intelligence and MFI XLS show that yields went up for many indexes in July. Our Crane Money Fund Average, which includes all taxable funds covered by Crane Data (currently 842), remained at 0.02% for both the 7-Day Yield and the 30-Day Yield (annualized, net) Average. The Gross 7-Day Yield and 30-Day Yield were 0.16% (unchanged). Our Crane 100 Money Fund Index shows an average 7-Day Yield and 30-Day Yield of 0.04%, up from 0.03% last month. Also, our Crane 100 shows a Gross 7-Day Yield of 0.20% (up from 0.19%) and a Gross 30-Day Yield of 0.19% (same as last month). For the 12 month return through 7/31/15, our Crane MF Average returned 0.02% and our Crane 100 returned 0.03%.
Our Prime Institutional MF Index (7-day) yielded 0.05% (unchanged), while the Crane Govt Inst Index was at 0.02% (unchanged). The Crane Treasury Inst, Treasury Retail, and Crane Govt Retail Index Indexes all yielded 0.01%, while Prime Retail yielded 0.02% (up from 0.01%). The Crane Tax Exempt MF Index also yielded 0.01%. The Gross 7-Day Yields for these indexes were: Prime Inst 0.24% (up from 0.23%), Govt Inst 0.13% (same as last month), Treasury Inst 0.08% (same), and Tax Exempt 0.12% (down from 0.13%) in July. The Crane 100 MF Index returned on average 0.00% for 1-month, 0.01% for 3-month, 0.02% for YTD, 0.03% for 1-year, 0.03% for 3-years (annualized), 0.04% for 5-year, and 1.41% for 10-years. (Contact us if you'd like to see our latest MFI XLS or Crane Indexes file.)