The November issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Thursday morning, features the articles: "Tokenized Money Funds Gain Momentum; Issues Remain," which reviews the latest releases and news on MMFs on the blockchain; "Federated Hermes, Schwab Earnings Calls Highlight MMFs," which quotes from recent earnings call MMF comments; and, "BNY, UBS Latest to Liquidate Municipal Money Funds," which recaps the thinning among Tax-Exempt Money Funds. We also sent out our MFI XLS spreadsheet Thursday a.m., and we've updated our Money Fund Wisdom database with 10/31/24 data. Our Nov. Money Fund Portfolio Holdings are scheduled to ship on Tuesday, November 12, and our Nov. Bond Fund Intelligence is scheduled to go out on Friday, November 15 (a day late due to the Veterans Day Holiday). (Note: Please join us for our "basic training" event, Money Fund University, which takes place Dec. 19-20 in Providence, R.I.)
MFI's "Tokenized Money Funds" article says, "We've seen more `press releases and articles on tokenized money market funds in the last month than we've seen over the previous year. While most tout the promise, major obstacles remain before tokenized money funds become more than just an experiment. The Block writes, 'Regulatory uncertainty is a barrier to the institutional adoption of tokenized money market funds: analyst,' which says, 'The risk of adverse regulatory intervention remains a major obstacle to the broader adoption of tokenized money market funds among institutional players, an analyst said.'"
It continues, "They quote, 'Tokenized money market funds are under constant threat of adverse regulatory action, curbing investors' appetite,' Rho Labs founder Alex Ryvkin told The Block.... I can confirm that widespread tokenized RWA-readiness is, although inevitable, still a couple of years away.' Ryvkin explained that while awareness and interest in tokenized real-world assets have grown, progress on regulatory clarity and infrastructure development will be necessary before these products achieve mass adoption. He noted that the current adoption stage remains in the 'experimentation phase,' with the usage of tokenized money market products still lagging far behind their traditional finance counterparts."
We write in our Earnings Calls article, "On Federated Hermes' Q3'24 earnings call, CEO J. Christopher Donahue, comments, 'We reached another record high for money market fund assets of $440 billion and total money market assets of ... $593 billion.... We believe a late quarter jump in SOFR rates led to certain investors shifting some assets into the direct market. We also saw certain large clients using money fund assets to pay down debt going into quarter end.'"
It states, "He explains, 'Q3 saw the first of several expected reductions in the Fed funds target rate, driving substantial growth in industry money market fund asset levels, particularly in August and September. Looking ahead for the rest of '24 and into '25, we believe that market conditions for money market strategies will continue to be favorable and that money market fund yields will continue to be attractive compared to the direct market and bank deposit rates.'"
Our "BNY, UBS Liquidate" piece says, "The number of Tax-Exempt and Muni Money Funds, particularly Institutional T-E MMFs, continues to shrink. A Prospectus Supplement filing for BNY Mellon National Municipal Money Market Fund states, 'The Board of Trustees of BNY Mellon Funds Trust has approved the liquidation of BNY Mellon National Municipal Money Market Fund, a series of the Trust, effective on or about October 21, 2024. Before the Liquidation Date, and at the discretion of Fund management, the Fund's portfolio securities will be sold and/or allowed to mature in their normal course and the Fund may cease to pursue its investment objective and policies. The liquidation of the Fund may result in one or more taxable events for shareholders subject to federal income tax.'"
The piece states, "It says, 'Accordingly, effective on or about Sept. 18, 2024, the Fund will be closed to any investments for new accounts, except that new accounts may be established for 'sweep accounts' and by participants in group retirement plans, provided the plan sponsor has been approved by BNY Mellon Investment Adviser, in the case of BNYM Adviser-sponsored retirement plans, or BNY Wealth, in the case of BNYW-sponsored retirement plans, and has established the Fund as an investment option in the plan before the Closing Date.'"
MFI also includes the News brief, "Money Fund Assets Break $6.9 Tril.," which says, "Crane Data's MFI Daily asset series broke $6.9 trillion for the first time ever, hitting a record $6.919 trillion on Tuesday (11/5). Our monthly MFI XLS series shows MMFs rising $89.9 billion in October to a record $6.865 trillion. ICI's last weekly 'Money Market Fund Assets' report shows money funds dipping $2.2 billion to $6.506 trillion in the week ended 10/30 after breaking the $6.5 trillion barrier the prior week."
Another News brief, "The WSJ Says, 'Cash Is No Longer King, but It's Hardly Trash. That's Trouble for Brokers,' tells us, 'Since the Federal Reserve began raising interest rates in 2022, brokerages have seen a key revenue source come under big pressure: What they can earn on customers' uninvested cash. When rates were super low, brokers could earn a good margin by sweeping that money into banks.'"
A third News brief, "Yahoo Writes, 'Cash Doesn't Always Come Off The Sidelines,' They explain, 'The Federal Reserve held interest rates ... high for more than a year. Investors took notice, piling into money market accounts to grab yields that haven't been available in more than a decade. But since the Fed slashed rates by 0.5% on Sept. 18, the flows into money market accounts haven't stopped. In fact, through Oct. 10, ... assets have increased by ... $180 billion since the Fed began cutting.' (See also, Reuters' 'The peculiar 'no show' from US cash funds.')"
A sidebar, "NYT: Money Funds Still Hot," says, "The New York Times writes, 'Money Market Rates Are Lower, Yes. But Compared to What?' Subtitled, 'Even with further Fed rate cuts likely, money market funds are a good alternative for stashing cash, and investors are still flocking to them, our columnist says,' the piece states, 'When money market interest rates broke above 5% last year, it was a wake-up call for many investors who had grown accustomed to getting almost nothing for their money at banks. Hundreds of billions of dollars flowed into the funds…. Now that the Federal Reserve has begun cutting short-term interest rates ... you may expect that these funds would be less appealing. But nothing could be further from the truth. The 'wall of cash' in money market funds isn't flowing into the stock market or other risky investments. It is, for the most part, staying where it is -- and growing larger.'"
Our November MFI XLS, with Oct. 31 data, shows total assets increased $89.9 billion to a record $6.865 trillion, after increasing $155.2 billion in September, $105.6 billion in August, $19.7 billion in July, $11.8 billion in June and $79.7 billion in May. They decreased $17.6 billion in April and $66.7 billion in March, but increased $50.0 billion in February, $87.0 billion in January, $24.5 billion in December and $219.8 billion in November.
Our broad Crane Money Fund Average 7-Day Yield was down 10 bps at 4.55%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was also down 11 bps at 4.64% in October. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 averaged 4.93% and 4.91%. Charged Expenses averaged 0.38% 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 10/31/24 on Friday, 11/8.) The average WAM (weighted average maturity) for the Crane MFA was 34 days (up 3 bps) and the Crane 100 WAM was up 6 bps from the previous month at 36 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
