A press release titled, "XD Fund Advisor Introduces XD Treasury Money Market Fund, Seeking to Deliver Capital Preservation and Income Opportunities," explains, "XD Fund Advisor, an emerging mutual fund management start-up established in 2023, proudly announces the launch of the XD Treasury Money Market Fund. This innovative fund brings two distinctive share classes to investors: Institutional Class (IXDXX) and Investor Class (VXDXX)." (For more on Digital or Blockchain MMFs, see our Feb. 26 News, "WisdomTree Launches Digital Govt MMF; Tradias Tokenizes First Euro MF.)
It continues, "The XD Treasury Money Market Fund is strategically crafted to align with the objectives of investors seeking income consistent with capital preservation and liquidity. Operating as a "Government Money Market Fund" under Rule 2a-7 of the Investment Company Act of 1940, the Fund allocates at least 99.5% of its total assets to U.S. government securities, fully collateralized repurchase agreements, cash, and/or other money market mutual funds operating as Government Money Market Funds."
The release says, "Led by Chief Portfolio Manager Scott Riecke, the Fund is committed to risk management, ensuring adherence to requirements related to maturity, credit quality, and portfolio liquidity. For additional information about the XD Treasury Money Market Fund, please refer to the prospectus dated February 9, 2024, which can be found at www.xdfundadvisor.com or by calling (833) 993-9200."
It adds, "XD Fund Advisor LLC is a Securities and Exchange Commission registered investment advisor, and a Delaware limited liability company that was founded on June 20, 2023. The firm is located in Windsor Locks, Connecticut. XD is a wholly-owned subsidiary of NetXD Inc., a financial-technology company." (See the fund's N1-A registration here.)
In other news, Bloomberg writes on Euro money funds in, "BNP Clients Are Piling ESG Billions Into Money Market Funds." It states, "BNP Paribas Asset Management says ESG clients have been piling into money market funds, drawn by the allure of stable returns in cash-like instruments. There's 'lots of cash' to move around and clients are reacting to 'the volatility of the market in general,' said Thibault Malin, an investment specialist at the fund management arm of Europe's biggest bank. The development coincides with an historic retreat from the more traditional ESG fund market, which has been plagued by lackluster returns."
The article tells us, "Combined with the uncertain outlook for global interest rates, ESG investors have been allocating an ever larger chunk of their money to low-volatility, highly liquid funds. At BNPP AM, assets in money market funds climbed 33% last year to just over €105 billion ($114 billion), with a further €5 billion of inflows in January, Malin said. The vast majority of that was new money going into 12 open-ended funds registered as Article 8, which means they promote environmental, social and governance goals under EU rules."
Bloomberg writes, "BNPP AM's top-performing money market funds currently yield close to 3.8%, according to data compiled by Bloomberg. The current yield on Germany's 10-year bond is about 2.5%. The growing popularity of money funds among sustainable investors feeds into an ongoing debate around what can rightly be called ESG. Morningstar Inc, for example, doesn't include money funds in its ESG analysis. The market researcher says the inclusion of such products in its data would 'distort' the picture because of their cash-like nature."
They say, "For its money funds, BNPP AM says it invests mostly in short-term debt issued by financial institutions with high ESG scores that are included in an ESG index. Among issuers whose securities are held in the asset manager's funds are Barclays Plc, Credit Agricole SA, Sumitomo Mitsui Banking Corp., ING Groep NV and Standard Chartered Plc. Malin said that the average ESG score of the portfolio needs to be above that of its investment universe."
The article adds, "Globally, assets in money funds with an ESG label climbed 11% last year to $1.4 trillion, according to figures compiled by the Association for Financial Markets in Europe. The increase helped erase losses of as much as 32% in other ESG fund strategies and boosted the overall market by 8.7%, the data show. And while Morningstar data show that the global ESG market suffered its first outflows in the fourth quarter of last year, led by a US exodus, the picture looks different when money funds are included."
Finally, it says, "'Investors are more comfortable with having more cash and particularly with cash that pays much more today than what it used to,' says Malin. However, the ESG commercial paper market remains dwarfed by other instruments carrying the label, and that represents 'a big constraint' for how big the ESG money market can grow, he said. 'Clear guidance' on issuance is lacking, according to a January paper co-authored by Citigroup Inc. and the law firm Mayer Brown. As a result, 95% comes from companies that already have ESG-labeled debt. Still, offerings are likely to increase as 'ESG factors are becoming more important in investors' decision-making processes,' according to the paper."
