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The November issue of Crane Data's Money Fund Intelligence was sent out to subscribers Friday morning. The latest edition of our flagship monthly newsletter features the articles: "Assets Up 3rd Straight Month; New Products for New Rules?," a look at recent MMF fund flows and the post-reform product landscape; "Invesco's Katz on Adapting to a Changing Liquidity Market," an interview with Invesco's Head of Global Liquidity, Lu Ann Katz; and, "Ultra-Short Bond Funds Attracting Interest, Not Assets," which explores trends and looks at the largest funds in the ultra-short bond fund universe. We also updated our Money Fund Wisdom database query system with October 31, 2014, performance statistics, and sent out our MFI XLS spreadsheet early this morning. (MFI, MFI XLS and our Crane Index products are available to subscribers via our Content center.) Our October Money Fund Portfolio Holdings are scheduled to go out on Tuesday, Nov. 11.
The latest MFI newsletter's "Assets Up 3rd Straight Month; New Products for New Rules?" article comments, "Money market fund reform became "effective" on October 14, which means that funds may now begin to start complying with the new rules before the major stipulations take effect on Oct. 14, 2016. It's the beginning of what will be a period of change in the industry as money fund companies begin exploring, and introducing, new products that will not only comply with the new rules, but thrive in the new environment."
It continues, "Surprisingly, interest in money market funds has not waned since the SEC approved the new rules on July 23. In fact, MMF assets have steadily increased over the last few months. In October, assets increased for the third straight month, rising by $10.2 billion to $2.539 trillion. In September, assets climbed $29.0 billion, after jumping $40.9 billion in August. In the 3 months since the SEC approved its Money Fund Reforms on July 23, assets have increased by $80.0 billion, 3.3%."
In our monthly MFI profile, we discussed a range of topics with Invesco's Lu Ann Katz. She spoke about money fund reforms, the company's veteran 60-day maturity money fund, new fund launches, global and European issues, and the space beyond money market funds. On Invesco's experience managing money funds, she said, "We have deep roots in this industry and launched our first money market fund in 1980. That portfolio is called the Invesco STIC Prime Portfolio [previously AIM STIC Prime] and was launched as an institutionally priced product with a 60-day maximum maturity. Invesco STIC Prime is still in existence today [and maintains its 60-day maturity limit]. We have nearly 35 years managing prime, U.S. Treasury, government, and municipal funds, as well as separately managed accounts. We also manage offshore assets in multiple currencies."
On her background, Katz said, "I came to Invesco in 1992 as a senior analyst after having worked in research and commercial banking. I've been in portfolio management and research for 35 years. I have primarily worked in the U.S., but did spend four years in London overseeing our global investment grade research efforts as well as our offshore fixed income products. In late 2012, I began overseeing what was then our Cash Management business. We have since changed our name to Invesco Global Liquidity as we saw the changing environment and our investor's desire for more comprehensive liquidity management solutions. Additionally, we experienced demand for longer maturity portfolios in Europe as well as in the U.S., so we really felt the market was beginning to move in that direction. We also saw liquidity management going more global -- the disintermediation of money across boundaries. Invesco currently manages fund in nine currencies including three renminbi money funds in China and rupee money funds in India through our joint ventures."
The November MFI article on ultra-short bond funds says, "Ultra-short bond funds have gotten a lot of press over the last few years as investors search for any yield in the near zero interest rate environment, but the buzz continues to outstrip actual asset growth. In the first half of 2014, ultra short bond funds saw net inflows of a mere $2.5 billion, according to a recent article in The Wall Street Journal. That's after inflows of just $10.7 billion in 2013 and $9.5 billion in 2012 (according to Morningstar data)."
It explains, "Given the lack of standardization in the space beyond money funds' strict Rule 2a-7 definitions, the differences among various ultra-short bond funds, and even among "enhanced cash" vehicles, are immense. Though the changing landscape created by money fund reform may lead to faster growth in this space, the threat of rising rates later in 2015 could also cause an untimely end to the ultra-short sector.... While it remains to be seen whether there will be substantial demand for ultra-short products, we've nonetheless decided to expand our coverage beyond MMFs. We plan to track ultra-short bond funds and ETFs first, but hope to add separate account information in coming months. We currently estimate the ultra-short bond fund market to be around $100 billion (when you include ultra-short ETFs) and the separately managed account market to be over $300 billion."
Crane Data's November MFI with October 31, 2014, data shows total assets increasing for the third straight month in October, rising $10.2 billion after jumping $27.5 billion in September and climbing $34 billion in August. As of October 31, total money market fund assets stood at $2.538 trillion with 1,235 funds, 12 less than last month. Our broad Crane Money Fund Average 7-Day Yield and 30-Day Yield remained at a record low 0.01% while our Crane 100 Money Fund Index (the 100 largest taxable funds) yielded 0.02% (7-day and 30-day). On a Gross Yield Basis (before expenses were taken out), funds averaged 0.13% (Crane MFA, unchanged) and 0.16% (Crane 100) on an annualized basis for both the 7-day and 30-day yield averages. (Charged Expenses averaged 0.12% and 0.14% for the two main taxable averages.) The average WAM for the Crane MFA and the Crane 100 were 44 and 47 days, respectively. The Crane MFA WAM is up 3 days from last month while the Crane 100 WAM is up 2 days from the prior month. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
Crane Data has released the preliminary agenda for its fifth annual Money Fund University conference, which will be held at The Stamford Marriott in Stamford, CT, January 22-23, 2015. Crane's Money Fund University is designed for those new to the money market fund industry or those in need of a concentrated refresher on the basics. But the event also focuses on hot topics like money market reforms and other recent industry trends. The conference features a faculty of the money fund industry's top lawyers, strategists, and portfolio managers. MFU offers attendees an affordable ($500) and comprehensive one and a half day, "basic training" course on money market mutual funds, educating attendees on the history of money funds, the Fed, interest rates, ratings, rankings, money market instruments such as commercial paper, CDs and repo, plus portfolio construction and credit analysis. At our Stamford event, we will also take a deep dive into the SEC's new money market reforms, with several sessions on the topic.
The morning of Day One of the 2015 MFU agenda includes: History & Current State of Money Market Mutual Funds with Peter Crane, President & Publisher, Crane Data; The Federal Reserve & Money Markets with Brian Smedley, U.S. rates, Bank of America Merrill Lynch; Interest Rate Basics & Money Fund Math with Phil Giles, Adjunct Professor, Columbia University; and, Ratings, Monitoring & Performance with Greg Fayvilevich, Director, Fitch Ratings and Barry Weiss, Director, Standard & Poor's Ratings Services, and Crane Data's Peter Crane.
Day One's afternoon agenda includes: Instruments of the Money Markets Intro with Alex Roever, Managing Director, J.P. Morgan Securities; Repurchase Agreements with Alex Roever and Shaina Negron, Associate, J.P. Morgan Securities; Treasuries & Govt Agencies with Sue Hill, Senior Portfolio Manager, Federated Investors; Commercial Paper & ABCP with Rob Crowe, Director, Citi Global Markets and Jean-Luc Sinniger, Director, Money Markets, Citi Global Markets; CDs, TDs & Bank Debt with Garrett Sloan, Fixed Income Strategist, Wells Fargo Securities and Marian Trano, senior Vice President and Treasurer, Bank Hapoalim; Instruments of the Money Markets: Tax-Exempt Securities, VRDNs, TOBs & Muni Bonds (Speaker TBD); and, Credit Analysis & Portfolio Management with Adam Ackermann, VP & Portfolio Manager, J.P. Morgan Asset Management.
Day Two's agenda includes: Money Fund Regulations: 2a-7 Basics & History with John Hunt, Partner, Nutter, McClennan & Fish LLP and Joan Swirsky, Of Counsel, Stradley Ronon; Regulations II: New MMF Reforms with Stephen Keen, Partner, Reed Smith and Jack Murphy, Partner, Dechert LLP; Regulations III: More Reforms, Hot Topics with Steven Keen and Jack Murphy; and Money Fund Data and Wisdom Demo with Peter Crane. The conference ends with its annual MFU "Graduation" ceremony (where diplomas are given to attendees).
New portfolio managers, analysts, investors, issuers, service providers, and anyone interested in expanding their knowledge of "cash" investing should benefit from our comprehensive program. Even experienced professionals may enjoy a refresher course and the opportunity to interact with peers in an informal setting. Attendee registration for Crane's Money Fund University is just $500, exhibit space is $2,000, and sponsorship opportunities are $3K, $4K, and $5K. A block of rooms has been reserved at the Stamford Marriott. The conference negotiated rate of $159 plus tax is available through December 20th.
We'd like to thank our MFU sponsors -- G.X. Clarke & Co., Fitch Ratings, Fidelity Investments, Dreyfus/BNY Mellon CIS, J.P. Morgan Asset Management, Invesco, BofA Global Capital, Standard & Poor's Ratings Services, and State Street -- for their support, and we look forward to seeing you in Stamford in January. E-mail Pete Crane (email@example.com) for the latest brochure or visit www.moneyfunduniversity.com) to register or for more details.
Crane Data is also preparing to publish the preliminary agenda for its big show, Money Fund Symposium, which will be held June 24-26, 2015, at the Minneapolis Hilton in Minneapolis, Minn. Finally, we're also making preparations for our 3rd European Money Fund Symposium. Our "offshore" money fund event is tentatively scheduled for Sept. 17-18, 2015, in Dublin, Ireland. Let us know if you'd like more information on any of our upcoming conferences, and watch for more information in coming weeks.
Crane Data published its latest Money Fund Intelligence Family & Global Rankings Wednesday, which ranks the asset totals and market share of managers of money funds in the U.S. and globally. The September edition, with data as of August 31, shows sizeable asset increases for the majority of money fund complexes in the latest month, and modest gains over the past three months and year. This comes after several months of decreases. (These "Family" rankings are available to our Money Fund Wisdom subscribers.) JP Morgan, BlackRock, Federated, Fidelity, and Morgan Stanley were the biggest gainers in August, rising by $7.3 billion, $6.9 billion, $5.5 billion, $5.3 billion, and $4.8 billion respectively, while Morgan Stanley, BofA Funds, Wells Fargo, Franklin, and Fidelity led the increases over the 3 months through August 31, 2014, rising by $4.2B, $3.8B, $2.5B, $2.3B, and $1.5 billion respectively. Money fund assets overall jumped by $40.8 billion in August, increased by $6.6 billion over the last three months, and increased by $15.2 billion over the past 12 months (according to our Money Fund Intelligence XLS).
Our latest domestic U.S. money fund Family Rankings show that Fidelity Investments remained the largest money fund manager with $410.0 billion, or 16.4% of all assets (up $5.3B in August, up $1.5B over 3 mos. and down $16.9B over 12 months), followed by JPMorgan's $238.5 billion, or 9.5% (up $7.3B, down $269M, and down $908M for the past 1-month, 3-months and 12-months, respectively). Federated Investors ranks third with $202.4 billion, or 8.1% of assets (up $5.5B, down $1.8B, and down $20.0B), BlackRock ranks fourth with $188.4 billion, or 7.5% of assets (up $6.9B, down $1.4B, and up $41.4B), and Vanguard ranks fifth with $171.9 billion, or 6.9% (up $592M, down $125M, and down $1.7B).
The sixth through tenth largest U.S. managers include: Schwab ($159.6B, 6.5%), Dreyfus ($157.0B, or 6.3%), Goldman Sachs ($133.3B, or 5.3%), Wells Fargo ($111.9B, or 4.5%), and Morgan Stanley ($106.1B, or 4.2%). The eleventh through twentieth largest U.S. money fund managers (in order) include: SSgA ($83.1B, or 3.3%), Northern ($76.2B, or 3.0%), Invesco ($59.5B, or 2.4%), BofA ($50.7B, or 2.0%), Western Asset ($40.7B, or 1.6%), UBS ($36.3B, or 1.5%), First American ($36.1B, or 1.4%), Deutsche ($32.2B, or 1.3%), Franklin ($20.7B, or 0.8%), and RBC ($18.2B, or 0.7%). Crane Data currently tracks 74 managers, the same number as last month.
Over the past year, BlackRock showed the largest asset increase (up $41.4B, or 28.3%; note that most of this though is due to the addition of securities lending shares to our collections), followed by Goldman Sachs (up $12.8B, or 10.0%), and Morgan Stanley (up $11.4B, or 12.1%). Other gainers since August 31, 2013, include: BofA (up $9.4B, or 22.2%), SSgA (up $6.6B, or 8.6%), American Funds (up $4.3B, or 30.9%), and SEI (up $1.7B, or 14.8%). The biggest declines over 12 months include: Federated (down $20.0B, or -9.1%), Fidelity (down $16.9B, or -4.0%), UBS (down $11.1B, or -22.8%), and Deutsche (down $7.8B, or -18.6%). (Note that money fund assets are very volatile month to month.)
When "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 BlackRock moving up to No. 3, Goldman moving up to No. 4, and Western Asset appearing on the list at No. 9. (displacing Wells Fargo from the Top 10). Looking at these largest Global Money Fund Manager Rankings, the combined market share assets of our MFI XLS (domestic U.S.) and our MFI International ("offshore), we show these largest families: Fidelity ($416.4 billion), JPMorgan ($361.4 billion), BlackRock ($311.2 billion), Goldman Sachs ($213.8 billion), and Federated ($210.9 billion). Dreyfus ($180.9B), Vanguard ($171.9B), Schwab ($160.8B), Western ($137.6B), and Morgan Stanley ($125.3B) round out the top 10. These totals include offshore US dollar funds, as well as Euro and Sterling funds converted into US dollar totals.
In other news, our August 2014 Money Fund Intelligence and MFI XLS show that both net and gross yields remained at record lows for the month ended August 31, 2014. Our Crane Money Fund Average, which includes all taxable funds covered by Crane Data (currently 848), remained at a record low of 0.01% for both the 7-Day and 30-Day Yield (annualized, net) averages. (The Gross 7-Day Yield was also unchanged at 0.13%.) Our Crane 100 Money Fund Index shows an average yield (7-Day and 30-Day) of 0.02%, also a record low, down from 0.03% a year ago. (The Gross 7- and 30-Day Yields for the Crane 100 remained unchanged at 0.16%.) For the 12 month return through 8/31/14, our Crane MF Average returned a record low of 0.01% and our Crane 100 returned 0.02%.
Our Prime Institutional MF Index yielded 0.02% (7-day), the Crane Govt Inst Index yielded 0.01%, and the Crane Treasury Inst, Treasury Retail, Govt Retail and Prime Retail Indexes all yielded 0.01%. The Crane Tax Exempt MF Index also yielded 0.01%. (The Gross Yields for these indexes were: Prime 0.18%, Govt 0.9%, Treasury 0.06%, and Tax Exempt 0.12% in August.) The Crane 100 MF Index returned on average 0.00% for 1-month, 0.00% for 3-month, 0.01% for YTD, 0.02% for 1-year, 0.04% for 3-years (annualized), 0.05% for 5-year, and 1.61% for 10-years.
The September issue of Crane Data's Money Fund Intelligence was sent out to subscribers Monday morning. The latest edition of our flagship monthly newsletter features the articles: "MMF Assets Jump in August; SEC Reforms Loom in 10/16," which discusses how MMF assets have increased since new regulations were passed; "IMMFA's Susan Hindle Barone on MMFs in Europe," our monthly "profile" with the Secretary General of the Institutional Money Market Fund Association; and, "MFI Intl Review: Sterling, USD MFs Gain; Euro Down," which looks at assets, market share, and trends among "offshore" money market funds. We also updated our Money Fund Wisdom database query system with August 31, 2014, performance statistics, and sent out our MFI XLS spreadsheet this morning. (MFI, MFI XLS and our Crane Index products are available to subscribers via our Content center.) Our August 31 Money Fund Portfolio Holdings are scheduled to go out on Wednesday, Sept. 10.
The latest MFI newsletter's lead article comments, "When the Securities & Exchange Commission adopted money market fund reforms on July 23rd -- and subsequently posted in the Federal Register on August 14 -- there was an expectation among many that the new rules would result in outflows from money market funds. But here we are, about a month and a half later, and we haven't seen any yet. In fact, there have actually been inflows into money market funds, and more specifically, prime institutional MMFs, since July 23. Of course, the new rules have not yet kicked in and won't until October 2016. But still, it's a development that not everyone expected, given the level of concerns about the SEC proposal."
Our monthly "profile" featuring IMMFA's Susan Hindle Barone. "Tell us about the history of IMMFA? How long have you been promoting money funds? IMMFA was set up in 2000. The original thought behind it was, some standardization would be good for the product in the sense that if investors were more familiar with what money funds were, what they represent, than it would be good for the product overall. A lot of the people that were involved then are involved today. Some of the original members are people like Peter Knight and David Hynes; Mark Hannam was involved back then; so was Jonathan [Curry]. So it's a good gang of people. Back in 2000, I was working at Goldman Sachs on the short-term debt desk, but I knew of them. I've only been working for them since June of 2012."
She continued, "We have been hugely focused on the regulatory debate. IMMFA only represents CNAV triple A rated funds yet there's a possibility that they just won't exist in two years, so we're very conscious of that. We've also been thinking about what does IMMFA represent? Does it represent the short term fund industry? Does it represent the funds that are CNAV? Does it represent only Europe? Does it represent anything to do with short-term investing? We've been throwing around a lot of ideas of what we think IMMFA should do and what people want it to do. Does it exist on a standalone basis? Are there other trade associations out there that cover our space but not with the same focus? It's definitely still evolving. We can't really come to any conclusions until we know what the regulations are going to look like."
The September MFI article on international money market trends says, "With Crane's 2nd Annual European Money Fund Symposium just around the corner, we thought we'd look at the international money fund management landscape -- from largest managers, to largest funds, to the regulatory environment. Of course, the international money market industry will be discussed in depth at the Euro Symposium, which will be held Sept. 22-23 at the Hilton London Tower Bridge in London, England. Visit www.euromfs.com for more details."
Crane Data's September MFI with August 31, 2014, data shows total assets increasing $40.1 billion (after decreasing by $20.9 billion in July and decreasing by $20.6 billion in June) to $2.499 trillion (1,245 funds, 7 more than last month). Our broad Crane Money Fund Average 7-Day Yield and 30-Day Yield remained at a record low 0.01% while our Crane 100 Money Fund Index (the 100 largest taxable funds) yielded 0.02% (7-day and 30-day). On a Gross Yield Basis (before expenses were taken out), funds averaged 0.13% (Crane MFA, unchanged) and 0.16% (Crane 100) on an annualized basis for both the 7-day and 30-day yield averages. (Charged Expenses averaged 0.12% and 0.14% for the two main taxable averages.) The average WAM for the Crane MFA and the Crane 100 were 42 and 45 days, respectively, unchanged from the prior month. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
Finally, last-minute preparations are being made for our European Money Fund Symposium, which will take place Sept. 22-23 in London at the Hilton London Tower Bridge. Though there has been no word from European regulators and the newly elected European Parliament has yet to even commence, we expect them to eventually craft legislation similar to the SEC's. This will be a main topic of discussion at Euro MFS, along with other issues impacting Euro, Sterling, USD and "offshore" money market funds domiciled in Dublin, Luxembourg and other European and global financial centers.