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Dreyfus released a schedule of its "stike times," or settlement times, for its funds, including those that will have a floating NAV in October," according to a posting on ICD Portal's "Regulatory" page. Among its Institutional, or floating NAV, funds, the strike times, effective October 10, will be as follows: Dreyfus Cash Management Fund (3pm), Dreyfus Institutional Cash Advantage (9am, 12pm, and 3pm), Dreyfus Institutional Preferred MMF (9am, 12pm, and 3pm), and Dreyfus Tax-Exempt Cash Management (12pm). Furthermore, all the Prime Retail funds will have cutoff times of 5pm, while Muni Retail funds will price at 3pm, except for the BNY Mellon National Muni MMF, which settles at 12pm. The BNY Mellon Govt MMF also strikes at noon. The Dreyfus Government and Treasury funds settle at either 3pm or 5pm. Dreyfus Govt Securities Cash Mgmt, Dreyfus Inst Preferred Treasury Securities MMF, Dreyfus Inst Treasury Securities Cash Advantage, Dreyfus Treasury Securities Cash Management, and General Treasury Securities MMF all settle at 3pm. Dreyfus Govt Cash Management, Dreyfus Inst Preferred Govt MMF, General Govt Securities MMF, Dreyfus Variable Investment Fund Govt Money Market Portfolio, Dreyfus Inst Treasury and Agency Cash Advantage, Dreyfus Treasury and Agency Cash Management, and General Treasury and Agency MMF, all strike at 5pm. The update also lists a number of Dreyfus' fund mergers and liquidations that have taken place recently. In other news, Institutional Investor posted an article, "Why It's Prime Time to Rethink Prime Funds," written by Goldman Sachs Asset Management Managing Directors David Fishman and Kathleen Hughes. They write, "Ahead of new money market regulations taking effect in October 2016, many cash and liquidity investors are examining the potential impact on their investment practices. The biggest change, in our view at Goldman Sachs Asset Management, is a requirement that institutional prime and municipal money market funds, which invest mostly in corporate debt securities and tax exempt securities, respectively, adopt a floating net asset value (NAV), shifting the industry away from a stable $1 price per share." They continue, "But there is another less frequently discussed change whose implications could be surprising for some liquidity investors: the introduction of multiple intraday price points, multiple NAVs, for many prime funds. Multiple NAVs are not a regulatory requirement, but rather they are an attempt by the money market industry to preserve the same-day liquidity benefits that prime funds have historically offered. Intentions aside, we think this change transforms prime funds into a plan-ahead vehicle instead of the traditional same day liquidity role they have long played. We believe that the implementation details of these funds will be too complex for some investors -- at least at the outset -- and that the new features will drive at least some to use government funds, the features of which remain unchanged by the new rules."

Money fund assets increased for the fifth straight week, according to ICI's latest weekly "Money Market Fund Assets" report. It says, "Total money market fund assets increased by $14.21 billion to $2.73 trillion for the week ended Wednesday, May 25, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $17.96 billion and prime funds decreased by $1.44 billion. Tax-exempt money market funds decreased by $2.32 billion." Government assets, including Institutional and Retail (and Treasury and Government), now stand at $1.355 trillion, while Prime assets are at $1.169 trillion. Government fund assets moved ahead of Prime assets earlier this year, fueled by the conversion of $242.1 billion of Prime funds to Govt funds to date (through May 2). The release continues, "Assets of retail money market funds decreased by $3.14 billion to $971.36 billion. Among retail funds, government money market fund assets increased by $1.84 billion to $405.89 billion, prime money market fund assets decreased by $3.42 billion to $402.93 billion, and tax-exempt fund assets decreased by $1.56 billion to $162.54 billion." It adds, "Assets of institutional money market funds increased by $17.34 billion to $1.76 trillion. Among institutional funds, government money market fund assets increased by $16.12 billion to $948.64 billion, prime money market fund assets increased by $1.99 billion to $765.85 billion, and tax-exempt fund assets decreased by $760 million to $47.58 billion." Year-to-date through May 25, MMF assets are down about $26 billion with Inst assets down $58 billion and Retail assets up $33 billion. A Footnote to ICI's release adds, "In anticipation of the Securities and Exchange Commission's (SEC) new money market fund regulations, many advisers are changing their prime money market funds into government money market funds. As a result, there have been, and will continue to be, large shifts in assets from prime funds to government funds before the October 2016 deadline."

A press release entitled, "Putnam Investments Offers Investment Strategies for a World of Uncertainty," comments on "Exploring new opportunities at the short end of the yield curve." It says, "Money market funds have long been considered among the very safest investments. New regulations intended to make these investments more liquid also have had the effect of limiting their scope -- shrinking the universe of what is "safe". Moreover, the addition of mechanisms to allow redemption fees and "gates" -- limits on redemptions -- actually could make advance runs more likely if investors fear they will not be able to get their money out quickly in a crisis. Investors may find that their short-term investment vehicles potentially leave them at greater risk than they had thought." Putnam adds, "Advisors may want to `consider short-term investment vehicles that can exploit the space between money markets and ultra-short bond funds, which could offer both a robust capital preservation profile as well as real higher-yield potential." Putnam filed with the SEC to designate its Putnam Money Market Fund as Retail. The filing states, "In connection with the Securities and Exchange Commission's amendments to Rule 2a-7 under the Investment Company Act of 1940, as amended, which governs money market funds, Putnam Money Market Fund intends to operate as a "retail money market fund" as defined by Rule 2a-7. In anticipation of its operation as a retail money market fund, the fund has adopted policies and procedures reasonably designed to limit investments in the fund to accounts beneficially owned by natural persons and may redeem, at its option, all fund shares held by any investor who is not a natural person (an "involuntary redemption").... Effective on or about June 30, 2016, the fund will be closed to any new investor who is not a natural person." It continues, "The fund has also adopted policies and procedures that allow the fund, beginning on or about October 10, 2016, to impose liquidity fees and/or temporarily suspend all redemptions in the event that the fund's liquidity falls below required minimum levels. The fund will notify shareholders of the imposition or termination of any liquidity fee or redemption gate on the fund's website at putnam.com. Announcement of the imposition or termination of a liquidity fee or redemption gate will also be filed with the SEC on Form N-CR." Also, effective October 10, this disclosure will be added to the prospectus: "The fund may not achieve its goal, and is not intended to be a complete investment program. You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the fund’s liquidity falls below certain required thresholds because of market conditions or other factors. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund's sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time."

The Investment Company Institute released its latest "Money Market Fund Holdings" summary (with data as of April 30, 2016), which reviews the aggregate daily and weekly liquid assets, regional exposure, and maturities (WAM and WAL) for Prime and Government money market funds. (See our May 12 News, "Latest MF Portfolio Holdings: Repo, T-Bills Plunge; TDs, CP Increase," for our earlier report on holdings.) In the release, ICI's "Prime and Government Money Market Funds' Daily and Weekly Liquid Assets" table shows Prime Money Market Funds' Daily liquid assets at 31.9% as of April 30, up from 30.4% on March 31. Daily liquid assets were made up of: "All securities maturing within 1 day," which totaled 27.0% (vs. 24.6% last month) and "Other treasury securities," which totaled 5.0% (down from 5.8% last month). Prime funds' Weekly liquid assets totaled 42.0% (vs. 42.3% last month), which was made up of "All securities maturing within 5 days" (36.1% vs. 34.8% in March), Other treasury securities (4.7% vs. 5.7% in March), and Other agency securities (1.2% vs. 1.8% a month ago). The report shows that Government Money Market Funds' Daily liquid assets totaled 56.9% as of April 30 vs. 59.9% the previous month. All securities maturing within 1 day totaled 22.9% vs. 22.9% last month. Other treasury securities added 34.0% (vs. 37.0% in March). Weekly liquid assets for Govt MMFs totaled 72.7% (vs. 76.1%), which was comprised of All securities maturing within 5 days (30.5% vs. 31.5%), Other treasury securities (32.5% vs. 35.3%), and Other agency securities (9.6% vs. 9.3%). ICI's "Prime and Government Money Market Funds' Holdings, by Region of Issuer" table shows Prime Money Market Funds with 37.1% in the Americas (vs. 47.3% last month), 19.3% in Asia Pacific (vs. 18.7%), 43.2% in Europe (vs. 33.7%), and 0.3% in Other and Supranational (vs. 0.3% last month). Government Money Market Funds held 83.7% in the Americas (vs. 91.9% last month), 1.9% in Asia Pacific (vs. 1.0%), 14.4% in Europe (vs. 7.2%), and 0.0% in Supranational (vs. 0.0%). The table, "Prime and Government Money Market Funds' WAMs and WALs" shows Prime MMFs WAMs at 34 days as of April 30, down from 35 days last month. WALs were at 51 days, down from 54 days last month. Government MMFs' WAMs was at 41 days, down from 42 days last month, while Government fund WALs was at 95 days, down from 96 days. The release explains, "Each month, ICI reports numbers based on the Securities and Exchange Commission's Form N-MFP data, which many fund sponsors provide directly to the Institute. ICI's data report for June covers funds holding 94 percent of taxable money market fund assets."

The New York Federal Reserve's "Alternative Reference Rates Committee" announced the release of its "ARRC Interim Report and Consultation." A summary of the 34-page report says, "In response to the Financial Stability Oversight Council's recommendations and the objectives of the Financial Stability Board, the Federal Reserve convened the Alternative Reference Rates Committee (ARRC) on November 17, 2014 in a meeting with representatives of major over-the counter derivatives market participants and their domestic and international supervisors and central banks. The ARRC was convened to identify a set of alternative reference interest rates that are more firmly based on transactions from a robust underlying market and that comply with emerging standards, such as the International Organization of Securities Commission' Principles for Financial Benchmarks, and to identify an adoption plan with means to facilitate the acceptance and use of these alternative reference rates. Over the last year, the ARRC has focused on two main tasks, first, narrowing the set of potential alternative rates that might be chosen and, second, considering potential plans for transition to an alternative rate." It continues, "After extensive discussion, the ARRC has preliminarily narrowed the list of potential rates to two that it considers to be the strongest alternatives, the Overnight Bank Funding Rate and some form of overnight Treasury general collateral repurchase agreement (GC repo) rate. Because of the dominance of LIBOR in U.S. dollar interest rate derivative markets, planning for any transition to either rate poses a host of challenges. While the dealers and central counterparties currently represented in the ARRC play key roles in intermediating these markets, demand for interest rate derivatives is ultimately driven by end users. Therefore, it is key that end users play an integral role in the ultimate choice of an alternative and in an ultimate transition strategy. However, end users cannot be expected to choose or transition to trading a benchmark that does not have at least a threshold level of liquidity. Accordingly, the ARRC has thus far focused on formulating an initial transition strategy (the "paced transition") that could potentially provide this threshold level of liquidity <b:>`_. [F]urther work will be required -- following consultation and close involvement with end users -- both in developing the details of an initial transition strategy and in planning for a full transition strategy that would move a more significant portion of the derivatives markets away from LIBOR to the new rate." It adds, "Following the publication of this interim report, the ARRC intends to consult widely and closely with end users as it seeks to finalize a choice of alternative rate and transition strategies.... Comments on the consultation and any questions on the ARRC's plans can be delivered to `arrc@ny.frb.org. Comments should be received no later than July 15, 2016 and will be posted on the ARRC's website. In addition, the ARRC will host a roundtable at the Federal Reserve Bank of New York on June 21, 2016 and will host other roundtables in coming months if space does not allow for all interested parties to attend the June 21 roundtable."

Reuters published, "Widening U.S. money fund spread sets stage for $400 billion shift." It says, "The difference in yield between prime and government money market funds has widened by 6 basis points since January, according to data released on Wednesday, in a trend expected to accelerate as investors prepare for new rules being rolled out this autumn. Executives at big fund sponsors JPMorgan Chase & Co, Goldman Sachs Group Inc and others expect institutional investors to move perhaps $400 billion out of prime funds, or about half their assets, and into government money funds in coming months. Ensuring a smooth shift will amount to the first major test of how well U.S. regulators have strengthened the $2.7 trillion money fund industry, whose ultra-safe reputation was tarnished during the 2008 financial crisis. Clients like corporate treasurers worry that new rules could lock up some assets during times of stress. As those investors leave prime funds, companies such as banks that sell funds securities will have to offer better terms, said John Tobin, head of portfolio management for the liquidity business of JPMorgan Chase & Co's asset management unit. "They will be compelled to pay more to get those same trades done," Tobin said in a recent interview. The spread between the yields paid by prime and government money funds could widen to close to 40 basis points or more this summer, he said. That would also provide extra returns for investors willing to sit tight. "It's a great opportunity," he said." Reuters' article continues, "Among funds for institutional investors, prime funds' weekly average yield stood at 26 basis points, 17 basis points more than government funds, iMoneyNet said on Wednesday. At the start of the year the prime funds' yield was 15 basis points, or 11 basis points more than government funds. Institutional prime funds now hold $788 billion, while institutional government funds have $938 billion.... Safer-seeming government funds do not face the same rules, which has led asset managers to revamp their product lineups and has already reduced assets in prime funds.... The asset shift is not expected to cause much market disruption, according to analysts and fund executives, thanks to actions by regulators like pushing banks to use longer-term funding sources. Also, Dave Fishman, head of Goldman Sachs' liquidity solutions business, said there is less risk the new rules will push money into unregulated products because of a new overnight repurchase facility offered by the Federal Reserve where government funds can park cash leaving prime funds. Deborah Cunningham, senior portfolio manager for Federated Investors, said she plans for scenarios where the yield difference between prime and government money funds widens to as much as 50 basis points, the most since 2009. Even at that spread, however, many corporate treasurers will move their money, said James Gilligan, assistant treasurer of Great Plains Energy Inc. "Treasurers are going to sacrifice yield for security," he said." In other news, SEC Chair Mary Jo White delivered a keynote address Friday at ICI's General Membership Meeting and mentioned money funds briefly a couple times.

Money fund assets inched higher over the past week, according to ICI's latest weekly "Money Market Fund Assets" report. It says, "Total money market fund assets increased by $4.29 billion to $2.72 trillion for the week ended Wednesday, May 18, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $20.37 billion and prime funds decreased by $15.21 billion. Tax-exempt money market funds decreased by $870 million." Government assets, including Institutional and Retail (and Treasury and Government), now stand at $1.337 trillion, while Prime assets are at $1.170 trillion. Government fund assets moved ahead of Prime assets earlier this year, fueled by the conversion of $242.1 billion of Prime funds to Govt funds to date (through May 2). (We're not aware of any conversions this week though, so are not sure what caused ICI's Prime to Government shift in this latest report.) The release continues, "Assets of retail money market funds decreased by $330 million to $974.50 billion. Among retail funds, government money market fund assets increased by $7.99 billion to $404.05 billion, prime money market fund assets decreased by $7.18 billion to $406.36 billion, and tax-exempt fund assets decreased by $1.14 billion to $164.09 billion." It adds, "Assets of institutional money market funds increased by $4.62 billion to $1.74 trillion. Among institutional funds, government money market fund assets increased by $12.38 billion to $932.52 billion, prime money market fund assets decreased by $8.03 billion to $763.87 billion, and tax-exempt fund assets increased by $270 million to $48.34 billion." `Year-to-date through May 18, MMF assets are down $40 billion with Inst assets down $76 billion and Retail assets up $35 billion. A Footnote to ICI's release adds, "In anticipation of the Securities and Exchange Commission's (SEC) new money market fund regulations, many advisers are changing their prime money market funds into government money market funds. As a result, there have been, and will continue to be, large shifts in assets from prime funds to government funds before the October 2016 deadline." In other news, mutual fund publication Ignites will hold a webinar called, "Counting Down to Money Market Fund Reform" on Tuesday, May 24 at 10:30 a.m. EST. The description says, "Ignites will host its next Exchange webcast: Counting Down to Money Market Fund Reform. The webcast will explore the operational changes that fund shops have begun to implement. The panelists will also discuss the alternative types of products that some may opt to launch in light of the reforms. The panelists will be Peter Crane, president and CEO of Crane Data, and Bud Person, EVP and national director at Federated Investors' wealth-management and cash division. For more information, click here.

The Federal Reserve released the Minutes from its April 26-27 FOMC meeting yesterday. They state, "Participants agreed that their ongoing assessments of the data and other incoming information, as well as the implications for the outlook, would determine the timing and pace of future adjustments to the stance of monetary policy. Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen, and inflation making progress toward the Committee's 2 percent objective, then it likely would be appropriate for the Committee to increase the target range for the federal funds rate in June. Participants expressed a range of views about the likelihood that incoming information would make it appropriate to adjust the stance of policy at the time of the next meeting. Several participants were concerned that the incoming information might not provide sufficiently clear signals to determine by mid-June whether an increase in the target range for the federal funds rate would be warranted. Some participants expressed more confidence that incoming data would prove broadly consistent with economic conditions that would make an increase in the target range in June appropriate." The minutes continue, "Against the backdrop of its discussion of current conditions, the economic outlook, and the risks and uncertainties surrounding the outlook, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent at this meeting.... One member, however, preferred to raise the target range for the federal funds rate at this meeting, noting that downside risks to the outlook had diminished and that the outlook was for outcomes consistent with the Committee's objectives.... The Committee expected that economic conditions would evolve in a manner that would warrant only gradual increases in the federal funds rate, and that the federal funds rate was likely to remain, for some time, below levels that were expected to prevail in the longer run. Regarding the possibility of adjustments in the stance of policy at the next meeting, members generally judged it appropriate to leave their policy options open and maintain the flexibility to make this decision based on how the incoming data and developments shaped their outlook for the labor market and inflation as well as their evolving assessments of the balance of risks around that outlook.... Some members expressed concern that the likelihood implied by market pricing that the Committee would increase the target range for the federal funds rate at the June meeting might be unduly low. Ms. [Esther] George dissented because she believed that a 25 basis point increase in the target range for the federal funds rate was appropriate at this meeting." In other news, Treasury Strategies and Fitch Ratings are holding a webinar on May 19 at 11:00 am, entitled, "Corporate Investing Following Money Market Fund Reform: Are you ready for the new cash management landscape?" Panelists are Ian Rasmussen of Fitch Ratings and Tony Carfang of Treasury Strategies.

Fidelity Investments released a "primer" entitled, "Money Markets: Repurchase Agreements," whose "Key Takeaways" include: Repurchase agreements (repos) are used by money market funds as short-term investments; Variations of repos are characterized by different types of collateral, including Treasury, government agency, and nontraditional collateral; and, Fidelity's money market mutual funds enter into repos with only counterparties that Fidelity's research team determines to represent minimal credit risk." Fidelity's `Michael Morin writes, "Repurchase agreements, "repos," are contracts for the sale and future repurchase of a pool of securities. On the termination (repurchase) date, the seller repurchases the securities and pays interest for the use of the buyer's funds. Fidelity's money market mutual funds primarily use tri-party repos, which consist of a buyer, a seller, and a tri-party clearing bank.... A majority of the repos executed across the industry comprise overnight investments in which the securities are repurchased by the seller on the next business day. Fidelity's taxable money market funds use overnight repos to help satisfy the Rule 2a-7 requirement to hold a 10% minimum of total assets in one-day liquid assets. Fidelity's money market funds also enter into term repos <b:>`_." The piece explains, "In money market investing, Treasury repos, government repos, and nontraditional repos are distinguished by the type of collateral subject to the repo. Collateral for Treasury repos is limited to securities issued by the U.S. Treasury, whereas collateral for government repos includes Treasury securities as well as securities issued or guaranteed by government agencies, including, among others, Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. Nontraditional repos involve a wider range of collateral, including, without limitation, investment-grade and non-investment-grade fixed income securities, equities, and money market securities." Finally, Morin comments, "In 2009, the Federal Reserve Bank of New York (FRBNY) requested that a group be formed to address weaknesses in the tri-party repo market that became apparent during the financial crisis. The Tri-Party Repo Infrastructure Reform Task Force (the Task Force) was organized to address concerns associated with the infrastructure supporting that market. The group included representatives from a diverse range of participants in the tri-party repo market. In May 2010, the Task Force issued a report with recommendations to modify tri-party repo settlement processes to reduce dependency on the intraday credit provided by triparty repo clearing banks (J.P. Morgan Chase and The Bank of New York Mellon).... A great deal of progress has been made in this area. The share of tri-party repo volume that is now financed with intra-day credit from a clearing bank has dropped markedly, from 100% as recently as 2012, to a level averaging 3% to 5% at the end of April 2016 (as compared with the Task Force's original target of no more than 10%). Clearing banks, dealers, and investors all made changes to their practices and processes, which helped to achieve this goal.... However, a remaining policy concern of the New York Fed, which was not addressed by the Task Force's roadmap for reform, is the risk of fire sales of collateral by a dealer that is losing access to repo financing (pre-default), or by creditors of a dealer once it has defaulted (post-default)." It adds, "Substantial progress has been observed to date with respect to pre-default fire sales, because of capital and liquidity regulations that have prompted dealers to extend the tenor of their financing for less liquid assets." Morin concludes, "Repurchase agreements offer money market investors a liquid and collateralized short-term investment."

The Illinois State Board of Investment put out a "Request for Competitive Proposal: Government Securities Money Market Fund." It reads, "The Illinois State Board of Investment ("ISBI") hereby issues a request for competitive proposals ("RFP") from qualified defined contribution government securities money market fund providers ("Respondent") on behalf of the State of Illinois Deferred Compensation Plan. The benchmark for this allocation will be the 90-day Treasury Bill. All forms needed for submitting a response to this RFP are available on ISBI's website at http://www.illinois.gov/isbi/Pages/RFP.aspx.... The deadline to Submit Written Questions is May 20, 2016, Noon CDT. The final Filing Date is May 30, 2016, 9:00AM CDT. The plan has a total of $4.1 billion in assets." Under Scope of Services it says, "The selected Respondent will provide a government securities money market fund for the Plan benchmarked to 90-day Treasury Bill. T. Rowe Price is currently the record-keeper for the Plan. The government securities money market fund selected and its transfer agent must enter into an agency agreement with T. Rowe Price Retirement Plan Services, Inc.... The agency agreement establishes roles, responsibilities and procedures governing the trading within the Plan." In other news, a press release entitled, "Federated Investors, Inc. Appoints New Head of Sales." It reads, "Federated Investors, Inc., one of the nation's largest investment managers, today announced the appointment of Paul A. Uhlman as president of Federated Securities Corp., Federated's distribution arm for domestic markets, effective June 15, 2016. The announcement was made by J. Christopher Donahue, president and chief executive officer of Federated Investors, Inc. Uhlman will replace Thomas E. Territ who will remain with Federated and participate in the transition of duties over the next three months before retiring later in the third quarter."

Ignites posted an article, "Morgan Stanley's Ultra-Short Aims to Eat Money Funds' Lunch." It says, "Morgan Stanley Investment Management has launched its Ultra-Short Income Portfolio, which the firm is marketing as an alternative to money market funds, as those products are expected to see big asset shifts in coming months.... In addition, when the SEC reforms are in effect, prime funds will have to manage to shorter duration targets and maintain greater liquidity, which will likely cause yields to decrease, Jonas Kolk, CIO for global liquidity and one of the fund's two portfolio managers, tells Ignites. Morgan Stanley's ultra-short fund may "fill a void" in this new environment by providing a return that is similar to what prime funds have historically delivered but probably will not be able to muster once the reforms take effect, says Kolk.... Morgan Stanley's new fund is an "old-style money fund," says Peter Crane, CEO of Crane Data, referring to the fact that it has a maximum weighted average maturity of 90 days. The SEC's 2010 reforms lowered the required maximum 90-day WAM to a 60-day WAM. Conservative ultra-short funds are an emerging subset within the broader ultra-short category, and Morgan Stanley's new offering is among the first of its kind, says Crane. Crane Data has launched a conservative ultra-short bond fund index that contains 18 products, but the company may further segment this group because of substantial differences among products within it, says Crane. "We would argue that there are nowhere near 18 competitor funds that have the same type of conservative investment standards that we do," says Morgan Stanley's Kolk. The fund's conservative approach is a "tremendous marketing tool," he says, noting that Fitch has given it a triple-A rating. `State Street and Deutsche have similar products in registration, says Crane. Many firms are waiting to see how existing conservative ultra-short funds perform and whether they attract assets before moving ahead with their own rollouts, he says. "There are some out there that think these are going to be more popular than prime institutional money market funds," he says. Rising interest rates could also spur more conservative ultra-short funds to come to market, says Sarah Bush, head of Morningstar's fixed-income manager research analyst team. The 18 funds that make up Crane Data's Conservative Ultra-Short Index have returned 0.26% year-to-date through March, 0.43% for the one-year period, 0.40% for the three-year period and 0.54% for the five-year period. The group represents $26.6 billion in total assets. The broader category of ultra-short bond funds represents $71.5 billion, Morningstar data shows.... Fidelity's Conservative Income Fund, launched in 2011, is among the biggest of the so-called conservative ultra-short funds in Crane Data's index. That fund represented more than $4 billion in assets as of the end of March, according to Crane Data. Among the new launches in the subcategory of ultra-shorts is Invesco's Conservative Income Fund, which went live in July 2014 and has $83 million in assets, according to Crane Data."

Money fund assets increased for the third straight week, up $5.7 billion, according to the latest weekly "Money Market Fund Assets" report. ICI says, "Total money market fund assets increased by $5.67 billion to $2.71 trillion for the week ended Wednesday, May 11, the Investment Company Institute reported today. Among taxable money market funds, government funds decreased by $1.37 billion and prime funds increased by $9.66 billion. Tax-exempt money market funds decreased by $2.61 billion." Government assets, including Institutional and Retail (and Treasury and Government), now stand at $1.316 trillion, while Prime assets are at $1.185 trillion. Government fund assets moved ahead of Prime assets earlier this year, fueled by the conversion of $242.1 billion of Prime funds to Govt funds to date (through May 2). The release continues, "Assets of retail money market funds decreased by $2.41 billion to $974.83 billion. Among retail funds, government money market fund assets decreased by $2.62 billion to $396.06 billion, prime money market fund assets increased by $1.98 billion to $413.54 billion, and tax-exempt fund assets decreased by $1.77 billion to $165.23 billion." It adds, "Assets of institutional money market funds increased by $8.08 billion to $1.74 trillion. Among institutional funds, government money market fund assets increased by $1.25 billion to $920.14 billion, prime money market fund assets increased by $7.67 billion to $771.90 billion, and tax-exempt fund assets decreased by $840 million to $48.07 billion." Year-to-date through May 11, MMF assets are down $44 billion with Inst assets down $80 billion and Retail assets up $36 billion. A Footnote to ICI's release adds, "In anticipation of the Securities and Exchange Commission's (SEC) new money market fund regulations, many advisers are changing their prime money market funds into government money market funds. As a result, there have been, and will continue to be, large shifts in assets from prime funds to government funds before the October 2016 deadline." In other news, Fitch issued a press release, "Fitch Withdraws BofA Money Market Funds' Ratings." It says, "Fitch Ratings has withdrawn the ratings of the following five money market funds managed by BofA Global Capital Management: BofA Government Plus Reserves, BofA Government Reserves, BofA Money Market Reserves, BofA Municipal Reserves, BofA Treasury Reserves. All of the funds were rated 'AAAmmf' prior to the withdrawal. Fitch is withdrawing the ratings of the five money funds as they no longer exist. BofA Municipal Reserves was liquidated and the remaining funds were merged into money funds managed by Blackrock Advisors, LLC, following the acquisition of the Bank of America money-market fund business by Blackrock. Accordingly, Fitch will no longer provide ratings or analytical coverage for the funds."

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