The February issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Wednesday morning, features the articles: "MMF Assets Jump in January; Hitting Record $6.4 Trillion," which reviews the continued inflows into MMFs; "Federated Money Market Celebrates 50th; Q4 Earnings," which covers Federated Hermes' most recent earnings and their 50th year in MMFs; and, "BlackRock, Schwab Shed Light on MMF Shifts in Q4 Earnings," which reviews the latest earnings calls mentioning MMFs. We also sent out our MFI XLS spreadsheet Wednesday a.m., and we've updated our Money Fund Wisdom database with 1/31/24 data. Our February Money Fund Portfolio Holdings are scheduled to ship on Friday, February 9, and our February Bond Fund Intelligence is scheduled to go out on Wednesday, February 14.
MFI's "MMF Assets Jump" article says, "Money fund assets continued their record run in January, normally the weakest month of the year, after rising by a record $1.1 trillion in 2024. Our MFI XLS shows assets rising $87.0 billion, or 1.4%, to a record $6.405 trillion in the latest month. Assets continue higher in February too, rising $18.3B in the first 5 days of the new month, according to our MFI Daily."
It continues, "Over the past 12 months through 1/31/24, money fund assets have jumped by $1.200 trillion, or 23.0%. Taxable Retail MMFs increased by $591.3 billion, or 34.8% to $2.289 trillion, while Taxable Inst MMFs increased by $601.7 billion, or 17.8% to $3.990 trillion. Tax Exempt MFs inched up $7.4 billion, or 6.2% to $126.5 billion <b:>`_."
We write in our Federated 50th article, "Federated Hermes announced the 50th anniversary of Money Market Management, the company's first and one of the industry's oldest money market mutual funds. A press release entitled, 'Federated Hermes, Inc. celebrates 50 years of money market innovation' explains, 'Federated Hermes, Inc. (FHI), a global leader in active, responsible investing, today celebrates 50 years of money market innovations focused on improving client experiences and investment outcomes. Over five decades, Federated Hermes has maintained a steadfast dedication to products and services that are vetted through diligent credit analysis and broad diversification -- providing clients with competitive yields and daily liquidity.'"
It tells us, "President & CEO J. Christopher Donahue comments, 'For 50 years, through seasons of volatility and calm, Federated Hermes has confidently managed money market funds as the ballast in our ship. Our team of investment management professionals has maintained an unwavering focus on providing sound and innovative cash management solutions for our clients. With an average of 25 years of investment experience, the investment professionals on our liquidity team have provided rigorous money market management through a variety of interest-rate environments, regulatory changes, bull and bear economies and changing geopolitical conditions.'"
Our "BlackRock, Schwab" piece states, "BlackRock and Schwab both discussed money funds on their latest earnings calls, and show that 'cash sorting,' or the shift into money funds from bank deposits, remains alive and well. On BlackRock's latest earnings and earnings call, CFO Martin Small explains, 'BlackRock's cash management platform saw $33 billion of net inflows in the fourth quarter and $79 billion of net inflows in 2023. We're pleased with the continued strong growth in our cash and liquidity business. With year-end AUM up 14%, or over $90 billion year on year, we're leveraging our scale and integrated cash offerings to engage with clients who are using these products not only to manage liquidity but also to earn attractive returns.'"
It continues, "During the Q&A, one analyst asked about fixed income inflows, and President Rob Kapito responds, 'I wake up every morning salivating about the $7 trillion that's sitting in money market accounts that's waiting to move. And in order for it to move, you have to have a wide plate of products.... ETFs are becoming the investor's preferred vehicle with access to investments.... So, I think there's a huge, huge runway for fixed income.... The wind is right behind our back for that.'"
MFI also includes the News brief, "American Funds Central Cash to Convert to Govt to Avoid Liquidity Fees." which says, "Capital Group's $144.4 billion American Funds Central Cash fund, the largest Prime Inst money market fund, has filed to convert to a Government MMF, making it the first major casualty of the latest round of the SEC's pending Money Fund Reforms. Its Form N-1A filing tells us, 'On or about June 7, 2024, the fund intends to operate as a government money market fund pursuant to rule 2a-7 under the 1940 Act.'"
Another News brief quotes, "Investors' Business Daily on 'How The Best Online Brokers Boost Your Cash Holdings.' They state, 'Online brokers face stiff competition when it comes to paying clients to park their idle cash. They've had to up the ante as interest rates have risen and investors had plenty of cash ... options to choose from. Cash management options are a priority for online investors.'"
A third News brief, "The WSJ's 'Charles Schwab Just Survived a Year From Hell. The Trouble Isn’t Over Yet,' tells us, 'Schwab, founded some 50 years ago, grew from a discount brokerage for Main Street into a personal-finance supermarket.... While Schwab cut fees and made less revenue from trading, it minted money sweeping cash from its brokerage customers into bank deposits that paid out little interest. When rates were low, it worked well for Schwab. Customers were content keeping their money at the bank when there were few alternatives for better yield.'"
A sidebar, "Worldwide MF Assets $9.9T," says, "The Investment Company Institute's, 'Worldwide Regulated Open-Fund Assets and Flows, Third Quarter 2023' shows that money fund assets globally jumped by $225.3 billion, or 2.3%, in Q3'23 to $9.944 trillion. The increases were led by a sharp jump in money funds in U.S., while Ireland, Luxembourg, Mexico and Canada also rose. Meanwhile, money funds in China and Australia were lower. MMF assets worldwide increased by $1.639 trillion, or 19.7%, in the 12 months through 9/30/23, and money funds in the U.S. now represent 57.1% of worldwide assets."
Our February MFI XLS, with January 31 data, shows total assets increased $87.0 billion to a record $6.405 trillion, after increasing $24.5 billion in December and $219.8 billion in November. Assets decreased $39.3 billion in October, but increased $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 and $56.0 billion in February."
Our broad Crane Money Fund Average 7-Day Yield was down 2 bps to 5.06%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was down 3 bps to 5.17% in January. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 both averaged 5.43%. Charged Expenses averaged 0.37% and 0.26% for the Crane MFA and the Crane 100. (We'll revise expenses on Thursday once we upload the SEC's Form N-MFP data for 1/31/24.) The average WAM (weighted average maturity) for the Crane MFA was 38 days (up 1 day from previous month) and the Crane 100 WAM was also unchanged at 38 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
