The September issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Monday morning, features the articles: "SSGA, Columbia Stick with Prime Inst MMFs; Changes," which breaks down the latest news in the Prime Inst space; "MMFs Hit Record $6.68 Trillion; Falling Rates Driving Inflows," which covers the recent (and pending) asset surge; and, "More Scrutiny on Sweeps; Investment News, UBS," which follows the most recent news on brokerage sweeps. We also sent out our MFI XLS spreadsheet Monday a.m., and we've updated our Money Fund Wisdom database with 8/31/24 data. Our Sept. Money Fund Portfolio Holdings are scheduled to ship on Wednesday, September 11, and our Sept. Bond Fund Intelligence is scheduled to go out on Monday, September 16. (Note: We're still taking registrations for our upcoming European Money Fund Symposium, which will be held Sept. 19-20, 2024 in London, England. See you in London next week!)
MFI's "Prime Inst" article says, "State Street Global Advisors (SSGA) recently confirmed that they'll be sticking with their Prime Institutional money fund offering. They published an update titled, 'Money Market Reform 2024,' which reviews the current round of regulatory changes impacting money market mutual funds. It explains, 'During March of 2020 and the onset of the pandemic, there was broader stress in the short‐term funding markets and significant redemptions of Prime Fund assets. In response, the SEC proposed additional regulations to further strengthen the Institutional Prime Fund space during periods of volatility with the goal to disincentivize any first mover advantage.'"
They continue, "SSGA writes, 'In October 2024, the final wave of the SEC's money market fund reform rule changes will take effect, marking the most substantial shift since the 2016 reforms. These changes are set to redefine the landscape of Institutional Prime Money Market funds. This transition signifies a pivotal moment for the industry, reflecting the evolving regulatory environment and the drive for greater stability and transparency in the financial markets.'"
We write in our MMFs Hit Record $6.68 Tril.; Falling Rates Driving Inflows article, "Crane Data's Money Fund Intelligence Daily series shows that money fund assets have surged by $66.9 billion in the first 5 days of September (through 9/5) to a record $6.682 trillion. According to our monthly MFI XLS, assets rose by $105.6 billion in August (to a record $6.620 trillion), $16.6 billion in July, $15.7 billion in June and $91.4 billion in May, but they fell $15.8 billion in April and $68.8 billion in March."
It tells us, "Everyone within the money fund space knows that assets will jump following rate cuts (though people outside apparently believe the opposite). But the question is by how much? We looked at Institutional money fund assets on a monthly basis compared to the Fed funds effective rate going back to 1990. Money fund assets increased by an average of 3.79% a month during months with interest rate cuts, which would push assets up a massive $253.2 billion in September. (We of course could already be seeing some of these flows since direct market rates have already begun falling.)"
Our "Sweeps" piece says, "Brokerage sweep accounts using low‐yielding bank deposit options continue to attract the interest of regulators, lawyers and the financial press. A new posting on the website JDSupra from lawyers at Katten, Muchin, Rosenman, titled, 'SEC Scrutiny into Cash Sweep Programs: What Investment Advisers Need to Know,' explains, 'In recent years, the `US Securities and Exchange Commission (SEC) has initiated several probes into how advisory firms manage their cash sweep programs.... While broker‐dealers also provide cash sweep programs, the SEC probes have been limited to an investment advisor's use of cash sweep accounts and potential breaches of an advisor's fiduciary duty to its managed accounts.'"
The piece states, "It continues, '[T]he SEC also took a deep interest in disclosures and conflicts related to cash sweep arrangements, with a particular focus on the potential for breaches of fiduciary duties, undisclosed conflicts, and revenue‐sharing payments received in connection with cash sweep programs. In recent weeks, there have been reports of ongoing probes by the SEC into how advisory firms are managing their bank deposit sweep programs.'"
MFI also includes the News brief, "Cash Investors Digging In. Reuters writes 'Cash‐loving investors dig in even as US rate cuts threaten payouts,' which tells us, 'A golden era for cash may be winding down as the Federal Reserve gets ready to cut interest rates. Many fans of the investment class are staying put anyway. Assets in U.S. money markets hit a record $6.24 trillion this month, data from the Investment Company Institute showed on Aug. 21, even as markets became increasingly confident that the Fed was gearing up to lower rates.'"
Another News brief, "Barron's Writes 'JPMorgan Is Latest Brokerage Hit With Cash‐Sweep Lawsuit.' They state, 'JPMorgan Chase and its subsidiary J.P. Morgan Securities are the latest targets of a proposed class‐action lawsuit involving their interest payments on clients' uninvested cash.'"
A third News brief, "Dreyfus NY Muni MMF Liquidating," tells readers, "A Prospectus Supplement filing tells us, 'The Board of Trustees of General New York Municipal Money Market Fund has approved the liquidation of Dreyfus New York Municipal Money Market Fund ... effective on or about October 28, 2024.' See also our Jan. 26, 2024 News, 'More Muni MMF Liquidations.'"
A sidebar, "'T‐Bill and Chill' Still Cool," says, "Bloomberg writes 'T‐Bill and Chill' Is a Hard Habit for Investors to Break,' which is more about money market funds and cash investing than T‐bills. They tell us, 'It's been the ultimate no‐brainer for more than a year: Park your money in super‐safe Treasury bills, earn yields of more than 5%, rinse and repeat.... Even now, with Federal Reserve officials poised to ease benchmark interest rates from a two‐decade high -- a move that would instantly push down yields on bills and other short‐term debt -- money‐market funds are thriving. They raked in $106 billion this month alone and their balances, at $6.24 trillion, have never been higher.'"
Our September MFI XLS, with Aug. 31 data, shows total assets increased $105.6 billion to $6.620 trillion, after increasing $19.7 billion in July, $11.8 billion in June, $79.7 billion in May, 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.
Our broad Crane Money Fund Average 7-Day Yield was down 3 bps at 4.99%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was also down 3 bps at 5.10% in August. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 averaged 5.36% and 5.37%. Charged Expenses averaged 0.37% and 0.27% for the Crane MFA and the Crane 100. (We'll revise expenses once we upload the SEC's Form N-MFP data for 8/31/24 on Tuesday, 9/10.) The average WAM (weighted average maturity) for the Crane MFA was 33 days (down 1 bp) and the Crane 100 WAM was unchanged from previous month at 33 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
