The January issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Monday morning, features the articles: "Record '23 for Money Funds: Assets, Revenues & Dividends," which reviews the record-setting year for MMFs in 2023; "Wall Street's Enthralled by $6 Trillion in MMFs, But Mirage," which attempts to debunk the "Wall of Cash" theory; and, "Top Money Funds of 2023; 15th Annual MFI Awards," which reviews the best performing MMFs of 2023. We also sent out our MFI XLS spreadsheet Monday a.m., and we've updated our Money Fund Wisdom database with 12/31/23 data. Our January Money Fund Portfolio Holdings are scheduled to ship on Wednesday, January 10, and our January Bond Fund Intelligence is scheduled to go out on Tuesday, January 16.
MFI's "Record '23" article says, "Money funds had perhaps the best year in their 52-year history in 2023, with assets surging $1.1 trillion to record $6.3 trillion, yields rising to over 5% and revenues jumping to well over $15.0 billion. Money fund investors collected more in dividends this year than they had in the prior 15 years combined (almost $300 billion), and, predictions of Fed cuts and outflows notwithstanding, the party shows no signs of stopping."
It continues, "The Financial Times' article, 'Stampede Into Money Market Funds Sparks Fee Bonanza for Asset Managers' explains, 'Record inflows into US money market funds in 2023 have triggered a multi-billion-dollar fee bonanza for the asset management industry, which for years treated the product as a loss-leader. US money market fund providers -- such as Fidelity, Vanguard and Charles Schwab -- collectively earned $7.6bn in fees in 2023 as assets passed $6.3tn, according to government figures. That was more than $1bn higher than in 2022 and a jump of around 35% from 2021, before US interest rates began to rise, according to the data from the Office for Financial Research.'"
We write in our Wall Street's Enthralled article, "Over the past month, a myriad of articles and financial news shows have cited the $6 trillion in money funds as a reason stocks will go higher. We've been hearing this 'Wall of Cash' theory for decades, and still don't buy it. (They never mention the $17 trillion in bank deposits nor the fact that almost 2/3 of the MMF total is Institutional.) Below, we quote from a number of the recent mentions, and look at whether they have any merit."
It tells us, "One of the few that gets it right is Bloomberg's 'Stock Skeptics Say $6 Trillion Cash Waiting on Sidelines Is a Mirage.' It says, 'One often-made argument in favor of stocks says investors should dive in before roughly $6 trillion of money-market cash gets redeployed into equity assets globally. But buying the theory requires a big leap of faith -- there's significantly less out there to actually fund riskier gambles. So say a pack of stock skeptics who, while not counseling selling out of the market, warn that some of the bull cases going around suffer from some optimistic framings.'"
Our "Top Money Funds" piece states, "This issue recognizes the top performing money funds, ranked by total returns, for calendar year 2023, as well as the top funds for the past 5‐year and 10‐year periods. We present the funds below with our annual Money Fund Intelligence Awards. These are given to the No. 1‐ranked funds based on 1‐year, 5‐year and 10‐year returns, through Dec. 31, 2023, in each of our major fund categories -- Prime Institutional, Government Institutional, Treasury Institutional, Prime Retail, Government Retail, Treasury Retail and Tax‐Exempt."
It continues, "The Top-Performing Prime Institutional fund (and fund overall) was BlackRock Cash Inst MMF SL (BISXX), which returned 5.38% <b:>The Top-Performing Prime Institutional fund (and fund overall) was BlackRock Cash Inst MMF SL (BISXX), which returned 5.38%. Excluding private and internal funds, the best performer in 2023 was Western Asset Prem Inst Liquid Res Capital (WAAXX) with a return of 5.35%. Among Prime Retail funds, Allspring Money Market Fund Premier (WMPXX) had the best return in 2023 (5.28%). (Our Crane 100 Money Fund Index returned 4.90% in 2023.)"
MFI also includes the News brief, "MF Assets Continue Record Run," which says, "Our MFI XLS shows assets rising $24.5 billion, or 0.4%, to a record $6.312 trillion in December. For 2023, MMFs are up $1.143 trillion (22.1%) with Taxable Retail MMFs up $603.3B (36.9) and Taxable Inst MMFs up $528.0B (15.5%). Assets continue jumping in January too, rising $66.5B to a record $6.367T in the first 4 days of the New Year, according to our MFI Daily."
Another News brief states, "Bloomberg Interviews Wells Fargo's Vanessa McMichael in, '2023 the Year for Money Market Funds.' McMichael says, 'This year has undoubtedly been the year of the money market funds. Right now, money market funds are sitting at about $6 trillion.... At the end of 2019, total money market fund assets were only $3 trillion.... There's been about $1 trillion in cash that has flown into money market funds throughout this year.... You can't deny the value.... Over the past couple of months, money market fund yields have remained stable while the rest of the curve has continued ... to decline.... But ... we think that [corporate] investors do need to think about extending duration.'"
A third News brief, "Dec. Portfolio Holdings: Treasuries Jump Again, Repo Slides," says, "Our latest Money Fund Portfolio Holdings statistics show that Treasury holdings surged again in November while Repo fell. Treasuries jumped by over $250 billion, ranking in the No. 2 spot. Agencies were the third largest segment, CP remained fourth, ahead of CDs, Other/Time Deposits and VRDNs."
A sidebar, "Reuters on $6 Tril. Cash Hoard," says, "Reuters' 'A $6 trillion cash hoard could fuel more U.S. stock gains as Fed pivots,' explains, 'Investors wondering whether markets can continue their torrid rally are eyeing one important factor that could boost assets: a nearly $6 trillion pile of cash on the sidelines. Soaring yields have pulled cash into money markets and other short-term instruments.... Total MMF assets hit a record $5.9 trillion on Dec. 6, according to ICI.'"
Our January MFI XLS, with December 31 data, shows total assets increased $24.5 billion to $6.312 trillion, after increasing $219.8 billion in November, decreasing $39.3 billion in October, increasing $77.8 billion in September, $104.2 billion in August, $21.0 billion in July, $20.3 billion in June, $152.7 billion in May, $56.5 billion in April, $345.1 billion in March, $56.0 billion in February and $22.5 billion in January."
Our broad Crane Money Fund Average 7-Day Yield was unchanged at 5.08%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was unchanged at 5.20% in December. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 both averaged 5.46%. Charged Expenses averaged 0.37% and 0.26% for the Crane MFA and the Crane 100. (We'll revise expenses on Tuesday once we upload the SEC's Form N-MFP data for 12/31/23.) The average WAM (weighted average maturity) for the Crane MFA was 37 days (up 2 days from previous month) and the Crane 100 WAM was also up 3 at 38 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
