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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."
MFI's lead "10th Birthday" article says, "Crane Data hits a milestone this month, celebrating our 10th birthday. Given the wild and crazy events of the past decade in the money markets, we consider ourselves lucky to have made it this far. As we've done in past May issues, we'd like to take a moment to review our progress and update you on our efforts, which include expanding the types of data we track and extending our coverage beyond money market funds. Our company, run by money fund expert Peter Crane and technology guru Shaun Cutts, was launched in May 2006 to bring faster, cheaper and cleaner information to the money fund space. We began by publishing our flagship Money Fund Intelligence newsletter, and we've grown to offer a full range of daily and monthly spreadsheets, news, database query systems and reports on U.S. and "offshore" money funds."
It continues, "Just as money market fund complexes have been busy the past year preparing for the 2016 MMF reform deadlines, so have we at Crane Data. In reaction to the new rules on website disclosure that went into effect April 14, we’ve begun publishing Daily Liquid Assets, Weekly Liquid Assets, and Daily MNAVs -- all of which money fund firms are now required to post on their websites to comply with the new regulations. Given the stresses of the zero yield environment and massive regulatory changes, we have evolved and expanded our coverage beyond money funds. In early 2015, we officially launched our Bond Fund Intelligence monthly newsletter, which tracks the bond fund universe with a focus on the ultra-short and short-term bond fund sector."
Our profile of GSAM's Dave Fishman reads, "This month, MFI profiles 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."
Responding to the question, What is your biggest priority? Fishman answers, "Our biggest priority is meeting or exceeding our clients' needs. Obviously, money fund reform has made that a bigger job compared to the past. Reform is creating significant change in a product that was basically unchanged for 40 years and has offered many features and functions that people came to rely on. So our priority is to make sure we offer the right mix of products to meet clients' needs. With this in mind, we have made some significant changes to our product line-up over the last two years, which we think set us up well for October of this year when we'll implement the final changes."
The article on the "Fact Book" explains, "ICI's just-released "2016 Investment Company Fact Book" reports that while equity and bond funds experienced outflows in 2015, money market funds had modest inflows last year. The annual guide looks at institutional and retail money fund demand and the effects of the SEC's money market fund reforms. Overall, money funds assets were $2.755 trillion at year-end, comprising 18% of the $15.7 trillion in mutual fund assets."
On "Demand for Money Market Funds," ICI says, "In 2015, money market funds received a modest $21 billion in net inflows. Money market funds experienced outflows in the first four months of 2015, with investors redeeming $162 billion, on net. Tax payments by corporations in mid-March and individuals in mid-April were likely key drivers behind these redemptions. Outflows abated and money market funds received net inflows of $183 billion over the last 8 months of the year."
In a sidebar, we discuss, "More Changes Afoot." This brief says, "The latest month-end saw 23 funds, totaling $28.4 billion, converted from Prime to Government. 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. Deutsche was by far the largest chunk of it, converting 8 funds totaling $18.8 billion on May 2."
Also, we do a sidebar on "Fee Waivers Keep Dropping," which says, "Federated, Schwab, BNY Mellon, T. Rowe Price, and Northern Trust all released their Q1 earnings this month and a common thread throughout was reduced MMF fee waivers.... BNY Mellon said in its earnings release that "roughly half of money market fee waivers have been recovered following the Fed's December rate increase." Finally, as we do every month, we review all the important "Money Fund News."
Our May MFI XLS, with April 30, 2016, data, shows total assets decreased $42.0 billion in April to $2.636 trillion, after decreasing $20.3 billion in March, increasing $37.4 billion in February, and decreasing $22.4 billion in January. Our broad Crane Money Fund Average 7-Day Yield dropped by 1 bps to 0.11% for the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) decreased 1 basis point to 0.21% (7-day). It is the first time since the beginning of the year that these indexes have declined.
On a Gross Yield Basis (before expenses were taken out), the Crane MFA was up 3 bps to 0.43% and the Crane 100 was down 1 bps to 0.46%. Charged Expenses averaged 0.31% (up 2 bps) and 0.29% (up 4 bps) for the Crane MFA and Crane 100, respectively. The average WAM (weighted average maturity) for the Crane MFA was 35 days (down 1 day from last month) and for the Crane 100 was 35 days (down 2 days). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
In other news, First American Funds' release says, "The First American family of mutual funds today announced that it intends to offer intraday liquidity for shareholders in its planned institutional prime obligations fund. As previously announced, the current First American Prime Obligations Fund will be renamed First American Institutional Prime Obligations Fund (Institutional Prime). First American plans to offer three intraday pricings for Institutional Prime at 9:00 a.m., 12:00 p.m. and 3:00 p.m. (Eastern Time) beginning October 14, 2016. Institutional Prime will be subject to a floating net asset value and the possibility of liquidity fees and redemption gates beginning October 14, 2016."
It adds, "Also as previously announced, on July 18, 2016 First American plans to launch a new fund for retail investors only, First American Retail Prime Obligations Fund (Retail Prime). Retail Prime will seek to maintain a stable $1.00 per share NAV and will price once daily at 4:30 p.m. (Eastern Time). Beginning October 14, 2016, Retail Prime will be subject to the possibility of liquidity fees and redemption gates. First American also announced today that it intends to change several share class names across its family of funds ... effective October 14, 2016."
The share class name changes are as follows: First American Govt Obligs Institutional Investor Share will be V shares; FA Inst Prime Obligs I Shares will be T shares and Institutional Investor shares will be V shares; FA Treasury Obligs Reserve Shares will be G shares and Institutional Investor shares will be V shares; FA Tax Free Obligs Institutional Investor shares will be V shares; and FA US Treasury MMF Institutional Investor Shares will be V shares.
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.")
MFI: Tell us about ICD's history. Hazard: Institutional Cash Distributors, or ICD, was launched in 2003 by Tom Newton (Chairman), Jeff Jellison (CEO, NA), and Ed Baldry (CEO, EMEA). I joined the company in 2009 and currently serve as President and COO. MFI: How much do you distribute? Hazard: We have over $70 billion in assets in the U.S., and about $8 billion offshore. We have approximately 35 fund families on the portal and about 300 funds. That includes money funds, as well as other types of portfolios. When we saw that changes were [proposed] with money fund reform, we were very active in fighting against onerous over-regulation. We were happy when the rules finally came out [that] they included the simplified tax accounting method. That was, as we saw it, the biggest challenge that was going to face prime money market funds. With that [solved], Institutional Prime money market funds are still going to be a very important part of the portfolios.
MFI: What is your best feature? Hazard: For us, the main attraction is the selection of products. Not only do we have all different types of money market funds in one place for efficient trading, we also offer other funds for clients. We have a federally insured cash account -- several clients are invested in that. You can invest [via] the portal and it flows all the way through to our reporting and our "Transparency Plus." Also, we have several clients that are invested in short duration bond funds that are looking to pick up a little yield, especially in Europe, to offset the [negative yields] that they've been [experiencing]. And we have clients that are invested in SMAs through ICD and, again, those positions are put into the Transparency Plus risk analytics.
Then, through our relationship with Tradeweb, you can purchase Time Deposits through [their] platform, and that is integrated into ICD. So selection is a big part of it. We knew that our clients wanted additional products, so that's what we were focused on over the last year and a half. We're also focused on providing the best VNAV solutions. We'll be able to show throughout the portal various ways to use the new information that is being reported so that our clients can make great decisions -- not only on the right products to purchase, but to do so in a way that is efficient and streamlined for them.
MFI: What are some other attractions? Hazard: A second major benefit would be the streamlined nature of how ICD delivers its product. More than 100 of our clients have integration into 10 different treasury workstation [platforms] -- so we work with all the relevant treasury workstations. We also have "auto-pay" technology, which is helpful in some situations with the settlement. If certain parties need that money quicker, the secure automated payment product is available to them to help streamline that process. The other major benefit is our service. We put together a global trading desk. We have desks that operate in London, Boston, and San Francisco.... So it's been a combination of the service we provide, the products we provide -- the technology products as well as the investment products -- and the integration. Also, we have great relationships with our fund companies.
MFI: Are customers ready for reform? Hazard: Ninety five percent of our clients have not made any changes to their lineups. Just a small portion of them have started to make some moves from prime funds into other products, such as these federally insured accounts or government accounts. It's just the uncertainty, I think, that's causing a small amount of them to do that. We've been going on road shows and meeting with clients in various parts of the country.... What we've found is, when they understand the fees and the gates and look at the value of different investment types versus their objectives, they're finding that Prime funds are still at the top of the list. Say it's a 15 basis point [spread] between Government and Prime funds -- in a billion dollar portfolio would leave over $1 million a year on the table.... They also realize that the fund managers are really, for their own viability, going to manage the assets to keep their weekly liquidity well above that 30%. They know that if they are in a position where they need to impose a fee or a gate, they're going to have a lot of trouble competing with the funds that don't.
MFI: Have higher yields restored fees? Hazard: Absolutely. The interest rate hike has helped to restore our margins closer to where we used to be. It's a welcome relief for us, because what we've done over the last several years is we have invested an enormous amount of money in our technology. In doing so, we made the bet that at some point, we would restore fees back to the normal profit margins, and it's been moving in that direction.
MFI: Are investors getting "re-sensitized" to yield? Hazard: If you look at the AFP Liquidity Survey, capital preservation is still the number one goal, with liquidity being number two. Yield is a distant third. But I think yield is a consideration for clients if they can put a portfolio together that has capital preservation and liquidity in mind. If they look at their analytics and their concentrations, there are ways for clients to put portfolios together that will increase yield while reducing risk. We're seeing that happen a lot more. They're looking at how they can optimize their portfolio, which is something that we haven't seen in a long time.
MFI: Tell us about your global investors. Hazard: We offer funds in 8 different currencies for our clients. Some are overseas for strategic reasons and some are overseas because of American tax policy. Each country has its own complexities. In Europe, where banks and money funds have negative yields, we see a lot of clients investing in short duration bond funds to get an overall positive return.
MFI: Are you looking to expand your offerings? Hazard: Absolutely. We have about 20 short duration bond funds on our platform, globally. The way that we've always built out our fund lineup is, if a client requests a particular product or fund, we will go to that fund company and set them up on our platform. We're doing that right now with some of the private funds that are coming on our platform. MFI: Any private funds live on the platform yet? Hazard: Yes.
MFI: What is your outlook for the rest of the year? Hazard: We're extremely excited about 2016 and beyond. We have been working to prepare for this [for some] time. We're getting a little bit of a break on interest rates. Our product lineup is extremely extensive, and we have the VNAV solutions that should lead the industry.... On April 14, we [did] a webinar where we ... showcase[d] the VNAV enhancements to the portal. We're also doing a road show, and we're going to publish a white paper that's going to discuss not only the challenges but the solutions to how corporate treasury is going to trade in this post-regulatory environment.
MFI: How are clients feeling? Are they adjusting to the new reality? Hazard: They actually have become less apprehensive the more they see. We had a road show in Los Angeles last week, [where] we unveiled a lot of the new features that we're including on ICD Portal to help them trade in this new environment. Once they saw the various types of information that they'll be receiving in various different views, they have gotten a lot more comfortable with the October reform requirements and time frame. We've been talking with our clients from the beginning and getting their input on these money market fund reform enhancements in the portal. So they've seen the development over the course of the last six months and we've shared the results with some of our clients. (Contact us to request the full interview in the latest issue of Money Fund Intelligence.)
Crane Data's latest Money Fund Market Share rankings show asset decreases for majority of the largest U.S. money fund complexes in the latest month. Money market fund assets decreased by $22.5 billion, or 0.8%, overall in March, and they've decreased by $7.5 billion, or 0.3%, over the past 3 months YTD. For the past 12 months through March 31, total assets are up $99.2 billion, or 3.9%. The biggest gainer in the past month was Goldman Sachs, which rose by $4.3 billion, or 2.2%. BlackRock, Invesco, First American, Fidelity, and Franklin also increased, rising by $1.5 billion, $1.1B, $1.0B, $968M, and $850M, 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 Money Fund Wisdom subscribers.) We also write below about Invesco, which posted an update that discloses the strike times for its floating NAV money funds (come Oct. 1, 2016).
Goldman Sachs, Northern, Invesco, Federated, and Fidelity had the largest money fund asset increases over the past 3 months, rising by $27.3 billion, $6.4B, $4.7B, $3.3B, and $2.7B, respectively. Over the past year through March 31, 2016, Fidelity showed the largest asset increase (up $44.7B, or 11.1%), followed by Goldman Sachs (up $43.3B, or 28.5%), Morgan Stanley (up $14.8B, or 12.7%), SSGA (up $14.5B, or 18.1%), and Federated (up $9.5B, or 4.6%). Other asset gainers for the past year include: Vanguard (up $7.2B, 4.1%), BlackRock (up $7.0B, or 3.3%), Northern ($5.9B, 6.8%), Schwab (up $4.9B, 3.0%), and Wells Fargo (up $2.5B, or 2.3%).
The biggest decliners over 12 months include: Dreyfus (down $17.4B, or -10.3%), JP Morgan (down $15.1B, or -6.1%), Deutsche (down $6.8B, or -20.7%), RBC (down $4.8B, or -29.4%), and BofA (down $4.0B, or -8.5%). BofA's assets decreased $9.8 billion in March, the bulk of which was due to the liquidation of its Municipal MMFs. These weren't part of the pending merger into BlackRock's MMFs, which is scheduled to take place April 15. (Note that money fund assets are volatile month to month.)
Our latest domestic U.S. Money Fund Family Rankings show that Fidelity Investments remains the largest money fund manager with $448.2 billion, or 16.8% of all assets (down $968 million in March, up $2.7B over 3 mos., and up $44.7B over 12 months). Fidelity was followed by JPMorgan with $232.8 billion, or 8.7% market share (down $6.0B, down $11.9B, and down $15.1B for the past 1-month, 3-mos. and 12-mos., respectively). BlackRock remained the third largest MMF manager with $222.6 billion, or 8.3% of assets (up $1.5B,down $2.4B, and up $7.0B). (Note, it should move ahead of JP Morgan next month after it merges in the BofA funds.) Federated Investors was fourth with $215.2 billion, or 8.0% of assets (up $515M, up $3.3B, and up $9.5B). Goldman Sachs remained in 5th place, after surpassing Vanguard in February, with $195.0 billion, or 7.3% of assets (up $4.3B, up $27.3B, and up $43.3B).
Vanguard stayed in sixth place with $180.9 billion, or 6.8%, (down $347M, up $1.6B, and up $7.2B). Schwab ($165.5B, 6.2%) was in seventh place, followed by Dreyfus in eighth place with $152.4B (5.7%), Morgan Stanley in ninth place with $130.7B (4.9%), and Wells Fargo in tenth place with $113.0B (4.2%). The eleventh through twentieth largest U.S. money fund managers (in order) include: SSGA ($94.6B, or 3.5%), Northern ($91.7B, or 3.4%), Invesco ($56.3B, or 2.1%), BofA ($43.5B, or 1.6%), Western Asset ($42.9B, or 1.6%), First American ($40.4B, or 1.5%), UBS ($38.0B, or 1.4%), Deutsche ($25.9B, or 1.0%), Franklin ($23.8B, or 0.9%), and American Funds ($16.1B, or 0.6%). Crane Data currently tracks 65 U.S. MMF managers, the same number as last 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 6) and SSGA breaking into 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 ($448.2 billion), JPMorgan ($349.3 billion), BlackRock ($324.1 billion), Goldman Sachs ($282.5 billion), and Federated ($223.8 billion). Vanguard ($180.9B) was sixth, followed by Dreyfus/BNY Mellon ($177.2B), Schwab ($165.5B), Morgan Stanley ($149.5B), and SSGA ($114.9B) round out the top 10. These totals include "offshore" US Dollar money funds, as well as Euro and Pound Sterling (GBP) funds converted into US dollar totals.
Finally, our April Money Fund Intelligence and MFI XLS show that both net and gross yields continued to rise in March. The Crane Money Fund Average, which includes all taxable funds covered by Crane Data (currently 799), rose 1 basis point to 0.12% for the 7-Day Yield (annualized, net) Average, while the 30-Day Yield also went up 1 basis point to 0.11%. The Gross 7-Day Yield was 0.40% (up 2 basis points), while the Gross 30-Day Yield was 0.39% (up 2 basis points).
Our Crane 100 Money Fund Index shows an average 7-Day (Net) Yield of 0.22 (up 1 basis point) and an average 30-Day Yield of 0.22% (up from 0.20%). The Crane 100 shows a Gross 7-Day Yield of 0.46% (up 2 basis points), and a Gross 30-Day Yield of 0.46% (up 3 basis points). For the 12 month return through 3/31/16, our Crane MF Average returned 0.04% (unchanged) and our Crane 100 returned 0.08% (up 1 basis point). The total number of funds, including taxable and tax-exempt, fell to 1,103, down a whopping 58 from last month.
Our Prime Institutional MF Index (7-day) yielded 0.26% (up 2 bps) as of March 31, while the Crane Govt Inst Index was 0.12% (unchanged) and the Treasury Inst Index was 0.10% (up 1 bp). The Crane Prime Retail Index yielded 0.08% (up 1 bp), while the Govt Retail Index yielded 0.03% (unchanged) and the Treasury Retail Index was 0.02% (unchanged). The Crane Tax Exempt MF Index yielded 0.03% (up 2 bps).
The Gross 7-Day Yields for these indexes in March were: Prime Inst 0.54% (up 3 basis points from last month), Govt Inst 0.36% (up 1 bp), Treasury Inst 0.32% (up 2 bps), Prime Retail 0.44% (up 1 bp), Govt Retail 0.32% (up 2 bps), Treasury Retail 0.27%(up 3 bps), and Tax Exempt 0.19% (up 11 bps). The Crane 100 MF Index returned on average 0.02% for 1-month, 0.05% for 3-month, 0.05% for YTD, 0.08% for 1-year, 0.04% for 3-years (annualized), 0.05% for 5-year, and 1.17% for 10-years. (Contact us if you'd like to see our latest MFI XLS, Crane Indexes or Market Share report.)
In other news, Invesco published a "Money Market Regulatory Reform" update, which says, "Since July 2014, when the U.S. Securities and Exchange Commission (SEC) issued new rules for money market funds, Invesco has been thoughtfully evaluating the impact.... In order to best serve our investors, we began to outline our money market fund product line in November 2015.... Today, we announce our intended strike times for our floating net asset (FNAV) funds." (See our Nov. 10, 2015 News, "Schwab Files Variable NAV Money Fund; Invesco Announces Changes.")
The piece explains, "Under new SEC rules, prime and municipal money market funds, available to both institutional investors and retail investors, will be required to transact at a floating net asset value by October 14, 2016. The following Invesco funds, which intend to transact as FNAV funds, plan to offer the following intraday price times in order to provide same-day settlement and intraday liquidity to our investors: Liquid Assets Portfolio – 9am, 12pm, 3pm; STIC Prime Portfolio – 3pm; Premier Tax-Exempt Portfolio – 3 pm."
Finally, Invesco adds, "All these portfolios plan to begin transacting at a FNAV no earlier than October 1, 2016. We will announce more detail on specific timing in the future. At this time, Invesco's government and Constant NAV (CNAV) money market funds ... intend to maintain their current settlement times."
The April issue of our flagship Money Fund Intelligence newsletter was sent to subscribers Thursday morning. It features the articles: "Money Fund Reforms Phase II; Disclosures: MNAV, DLA, WLA," which reviews the regulatory changes that go into effect April 14; "ICD Portal's Tory Hazard on Prime MMFs, Alternatives," which profiles Tory Hazard from Institutional Cash Distributors; and "Brokerage Sweeps Go Govt, FDIC; $1 Trillion Still at 0%," which briefly examines trends in the brokerage sweep market. We have also updated our Money Fund Wisdom database query system with March 31, 2016, performance statistics, and sent out our MFI XLS spreadsheet Thursday morning. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our April Money Fund Portfolio Holdings are scheduled to ship Monday, April 11, and our April Bond Fund Intelligence is scheduled to go out Thursday, April 14.
MFI's lead article on "Money Fund Reforms Phase II," says, "On April 14, "Phase Two" of the SEC's Money Market Fund Reforms take effect, requiring firms to make several important changes to the way they report information on, and run, their money market funds. The major new requirements deal with portfolio diversification, website disclosure, reporting, and stress testing. We believe the website disclosures generate the most interest, but a host of other changes will soon go live too. Law firms Dechert and Perkins Coie issued summaries of the upcoming April 14 changes in recent legal updates. We review the imminent changes and excerpt from Dechert and Perkins' briefs below."
It continues, "Among the pending website disclosures are: percentages of daily and weekly liquid assets (DLA and WLA); daily net inflows and outflows; and, the current market NAV (or MNAV) rounded to four decimal places. Funds must also include 6-months worth of data in a chart or graph. The changes will also remove the 2-month lag on the SEC's Form N-MFP; this form will undergo minor changes. (See our Aug. 6, 2014 News, "SEC Money Fund Reform Disclosure Requirements Not Quite Kitchen Sink," and see the SEC's full "MMF Reform Final Rules.") Note that our Money Fund Intelligence Daily has been tracking MNAVs, DLAs and WLAs for over a year now, but that only some of the large Institutional MMFs have been reporting until now."
Our ICD Portal Profile reads, "This month, Money Fund Intelligence profiles Tory Hazard, President and COO at Institutional Cash Distributors, or ICD. Hazard talks about the growing ICD Portal, which has expanded beyond money funds to include Short-Term Bond Funds, SMAs, Private Funds, and some bank deposit products. He tells us, "Institutional Prime money market funds are still going to be a very important part of the portfolios." Hazard also discusses new enhancements to the ICD Portal that are slated to debut later this month that will help investors deal with upcoming money market reforms. He says, "We're extremely excited about 2016 and beyond. We have been working to prepare for this time."
Responding to the question How much do you distribute? Hazard says, "We have over $70 billion in assets in the U.S., and about $8 billion offshore. We have approximately 35 fund families on the portal and about 300 funds. That includes money funds, as well as other types of portfolios. When we saw that changes were happening with money fund reform, we were very active in fighting against onerous over-regulation. We were happy when the rules finally came out [that] they included the simplified tax accounting method. That was, as we saw it, the biggest challenge that was going to face prime money market funds. With that in play, Institutional Prime money market funds are still going to be a very important part of the portfolios."
The "Brokerage Sweeps" article explains, "With the major elements of money fund reform approaching, brokerage "sweep" providers are tweaking their offerings, moving away from Prime funds and into Govt MMFs or FDIC insured bank deposit programs. They also continue to add features for brokerage customers, but yields remain pinned to zero. We review some of the recent changes in this market below, which we estimate is around $1 trillion in size (bank deposits & MFs combined)."
It adds, "Schwab, UBS, Morgan Stanley, Merrill and others have all made changes to sweep funds or options. UBS filed with the SEC to state that it would no longer be offering several funds on sweep platforms. The filing says, "Later this year, but before the October 2016 compliance deadline, [funds] may no longer be offered as a sweep fund as part of certain distributor platforms. As a result, the Fund's shareholders would be transitioned to an alternative money market sweep fund." UBS also converted its Liquid Assets sweep option from Prime to Govt."
In a sidebar, we also discuss, "Yet More Prime to Govie." This brief says, "SEI Investments and Wilmington Trust are the latest firms to make a major retreat from the money fund space and "go government." Also, we do a sidebar on "Federated, Edward Jones Restructure Deal," which says, "One of the largest "private label" relationships in the money fund business is changing after over 3 1/2 decades. Federated Investors and brokerage firm Edward Jones will alter the terms of their money fund management agreement later this year." Finally, as we do every month, we review all the important "Money fund News."
Our April MFI XLS, with March 31, 2016, data, shows total assets decreasing $22.2 billion in March to $2.676 trillion, after increasing $37.4 billion in February decreasing $22.4 billion in January, and increasing $44.2 billion in December. Our broad Crane Money Fund Average 7-Day Yield climbed by 1 bps to 0.12% for the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) increased 1 basis point to 0.22% (7-day).
On a Gross Yield Basis (before expenses were taken out), funds averaged 0.40% (Crane MFA, up 2 basis points) and 0.47% (Crane 100, up 3 bps). Charged Expenses averaged 0.29% (up 2 bps) and 0.25% (up 1 bp) for the Crane MFA and Crane 100, respectively. The average WAM (weighted average maturity) for the Crane MFA was 36 days (down 1 day from last month) and for the Crane 100 was 37 days (unchanged). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)