The June issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Friday morning, features the articles: "Allspring, UBS, Dreyfus, DWS All File Plans to Leave Prime," which covers the continued exodus from Prime Institutional MMFs; "ICI 2024 Fact Book Shows Money Fund Trends in '23," which quotes from ICI's annual compilation of fund statistics; and, "Money Funds Largest Buyers of T-Bills Says JPM; Berkshire," which looks at holders of Treasuries. We also sent out our MFI XLS spreadsheet Friday a.m., and we've updated our Money Fund Wisdom database with 5/31/24 data. Our June Money Fund Portfolio Holdings are scheduled to ship on Tuesday, June 11, and our June Bond Fund Intelligence is scheduled to go out on Monday, June 17. (Note: Register ASAP for our Money Fund Symposium next week in Pittsburgh, June 12-14. We hope you'll join us!)
MFI's "Prime Exit" article says, “Another batch of Prime Institutional money market funds filed to liquidate or convert to Government in May, bringing the total of Prime exits to 10 to date. Allspring, formerly the Wells Fargo Funds, is the latest to announce an exit ahead of the SEC's pending emergency mandatory liquidity fee rules (which go into effect October 2). A Product Alert titled, 'Allspring to Merge Two Money Market Funds' tells us, 'The Allspring Funds Board of Trustees has approved the merger of the [$3.1 billion] Allspring Heritage Money Market Fund into the Allspring Government Money Market Fund. The merger is expected to take place at the close of business on or around August 16, 2024."
The piece continues, "It adds, 'Note that the Service Class of the Heritage Money Market Fund will merge into the Administrator Class of the Government Money Market Fund, and the Administrator Class of the Heritage Money Market Fund will merge into the Institutional Class of the Government Money Market Fund.' (See the Prospectus Supplement for the Allspring Institutional Money Market Funds.)"
We write in our ICI 2024 Fact Book article, “The Investment Company Institute released its '2024 Investment Company Fact Book’ an annual compilation of statistics and commentary on the mutual fund space. Subtitled, 'A Review of Trends and Activities in the Investment Company Industry,' the latest edition tells us, 'Worldwide net sales of money market funds totaled $1.5 trillion in 2023, up from $161 billion in 2022 (Figure 1.7). The increase in worldwide demand for money market funds was spread across all geographical regions but was primarily driven by a substantial increase in net inflows in the United States. Investor demand for money market funds in the United States increased from $1 billion in 2022 to $1.1 trillion in 2023. In the Asia-Pacific region, money market funds experienced net inflows of $136 billion in 2023, about even with the net inflows of $132 billion in 2022.'"
ICI continues, "It explains, 'Investors use money market funds because they are professionally managed, tightly regulated vehicles with holdings limited to high-quality, short-term debt instruments <b:>`_. As such, they are highly liquid, attractive, cash-like alternatives to bank deposits. [D]emand for money market funds is dependent upon their yields and interest rate risk exposure relative to other high-quality fixed-income securities.'"
Our "Treasury Bills" piece says, "J.P. Morgan's most recent 'Short-Term Market Outlook And Strategy' writes that, 'Yes, T-bill demand should remain robust.' They comment, 'While the outcome of the upcoming November election remains highly uncertain, the one thing we know is that the US fiscal deficit will remain large in the coming years, regardless of who wins. As our Treasury strategists note, given Treasury's current net coupon borrowing capacity and their estimates of the budget deficit forecasts over the medium term, Treasury will likely remain underfunded in FY26 and beyond.... Reading between the lines, it appears there is a possibility that the T-bill share of the market could migrate above the current recommended range over time.'"
It tells us, "The piece continues, 'If so, we believe the markets will have no issues digesting the additional T-bill supply, with demand remaining robust. Indeed, even as T-bill outstandings have grown by $2tn over the past year, the impact on T-bill/SOFR spreads has been marginal thanks to the available pool of liquidity at the ON RRP, underscoring the sheer amount of demand for T-bills in the current market environment.... Perhaps more importantly, when we look at the buyer base of the T-bill market, we see the demand from several key buyers remaining substantial, if not expanding, in the near term.'"
MFI also includes the News brief, "MMF Assets Rebound in May." It states, "Money fund assets jumped $79.7 billion to $6.466 trillion in May (after falling $17.6 billion in April and $68.5B in March). Year-to-date, MMFs are up by $147.3 billion, or 2.3%. Over 12 months, money funds have risen by $611.3 billion, or 10.4%."
Another News brief, "Citi's Williams on Impact from MMF Reforms: No Big Deal; Assets Higher. Citi Research recently published a research piece titled, 'Short-End Notes Impact from MMF reform and AUM expectations,' which tells us, 'Do not expect a repeat of 2016 this October.' Author Jason Williams writes, 'We've gotten multiple questions on the front-end impact due to the full implementation of the new money market fund reform, specifically the SEC's liquidity fee which is set to turn on in October.'"
A sidebar, "DWS ESG Fund Liquidating," says, "A Prospectus Supplement filing for the $505 million DWS ESG Liquidity Fund tells us, 'Upon the recommendation of DWS Investment Management Americas, Inc., the investment advisor for DWS ESG Liquidity Fund, the Board of Trustees of Investors Cash Trust has authorized, on behalf of the fund, the fund's termination and liquidation, which will be effective on or about August 14, 2024. Accordingly, the fund will redeem all of its outstanding shares on the Liquidation Date. The liquidation will be effected according to a Plan of Liquidation and Termination. The costs of the liquidation, including the mailing of notification to shareholders, will be borne by the fund but reimbursed by the Advisor, after taking into account applicable contractual expense caps.'"
Our June MFI XLS, with May 31 data, shows total assets increased $79.7 billion to $6.466 trillion, after decreasing $17.6 billion in April, $66.7 billion in March, increasing $50.0 billion in February, $87.0 billion in January, $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 and $20.3 billion in June.
Our broad Crane Money Fund Average 7-Day Yield was unchanged at 5.03%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was up 1 bp to 5.14% in May. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 averaged 5.40% and 5.41%, respectively. Charged Expenses averaged 0.37% and 0.27% for the Crane MFA and the Crane 100. (We'll revise expenses on Monday once we upload the SEC's Form N-MFP data for 5/31/24.) The average WAM (weighted average maturity) for the Crane MFA was 34 days (down 1 bp from previous month) and the Crane 100 WAM was unchanged at 35 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
