Dramatic asset growth was again the biggest story of the year, as money market fund assets jumped by $800 billion to a record $7.1 trillion (after jumping by over $1.0 trillion last year). With still almost a month to go, money fund asset growth could approach $1.0 trillion by yearend. In 2023, rising yields were the big news. Though yields have begun declining, and are now below 4.5%, yields remained above 5% for most of the past year. So great yields were another theme of 2024. Other major headlines of 2024 included: the implementation (and minor impact) of the SEC's latest Money Fund Reforms, the birth of tokenized money market funds (and money fund ETFs), the continued growth of Social (and shrinkage of ESG) MMFs and the increase in assets and now decline in yields in European and other worldwide markets. Below, we excerpt from a number of our biggest and most representative news stories of 2024 to highlight the major trends of the past year. (Note: As a reminder, register ASAP for our Money Fund University, Dec. 19-20 in Providence, at the Renaissance Providence Downtown. Clients and friends are also welcome to stop by Crane Data's Holiday Cocktail Party at MFU on 12/19 from 5-7:30pm!)
Crane Data's Top 10 Stories of 2024 include (in chronological order): "Dreyfus Liquid Assets Celebrates 50th Birthday; ICI Trends for December" (1/31/24); "American Funds Central Cash to Convert to Govt to Avoid Liquidity Fees" (2/6/24); "BlackRock Launches Private Tokenized Money Fund, BUIDL; BVI Domicile" (3/22/24); "ICI: Worldwide MF Assets Jump in Q4'23, Break $10 Trillion; US Leads" (3/25/24); "Goldman Files to Liquidate Prime Inst MMFs; Barron's: MMFs Tempting" (4/22/24); "More AFP Liquidity Survey: Banks, MMFs, T-Bills Kings of Cash; MMFs Up" (6/27/24); "WSJ, Investment News on Brokerage Deposit, Advisory Sweep Pressures" (7/19/24); "SSGA Sticks w/Prime Inst Money Funds; Discusses Reforms; Benchmarks" (8/29/24); "MMF Assets Break $6.7 Trillion; Crane 100 Falls Below 5.0%; FT on MMFs" (9/24/24); "Bloomberg, ignites on Latest MMF Reforms; Prime Inst Shift a Nonevent" (10/3/24); and, "Money Fund Assets Break Over $7.0 Trillion; S&P on AAA Rated MFs in Q3" (11/13/24).
Our Jan. 31 story, "Dreyfus Liquid Assets Celebrates 50th Birthday; ICI Trends for December," discusses the 50th birthday of Dreyfus's oldest money fund. The piece says, "A press release entitled, 'Dreyfus Celebrates 50 Years of Liquidity Management,' tells us, 'Dreyfus, one of the largest liquidity managers and affiliate of BNY Mellon (BK), celebrates the 50th anniversary of the launch of its first Dreyfus money market fund and the start of its journey as a trusted leader in the space. On January 28, 1974, Dreyfus introduced Dreyfus Liquid Assets, Inc., one of the first money market funds offered to investors. This year, BNY Mellon is also celebrating its 240-year anniversary and position as one of the pioneers of US financial services.'" See also our Jan. 5 story, "Rolling w/Reform Changes V: Little Change in '23 Ahead of MMF Reforms."
Our Feb. 6 story describes the start of the shift from Prime Inst to Government ahead of the SEC's MMF Reforms. The piece, "American Funds Central Cash to Convert to Govt to Avoid Liquidity Fees." It 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 Prime MMF casualty of the latest round of the SEC's pending Money Fund Reforms. A Form N-1A filing for the Capital Group Central Fund Series' American Funds Central Cash M (CMQXX) tells us, 'On or about June 7, 2024 (the 'Effective Date'), the fund intends to operate as a government money market fund pursuant to rule 2a-7 under the 1940 Act.'" See also our Feb. 2 story, "ICI: Money Fund Assets Jump to Record $6.0 Trillion; Ameriprise Q4 Cash."
In March, we published, "BlackRock Launches Private Tokenized Money Fund, BUIDL; BVI Domicile," which reviews one of the first major 'tokenizations' of an MMF. It states, "A press release entitled, 'BlackRock Launches Its First Tokenized Fund, BUIDL, on the Ethereum Network,' explains, 'BlackRock unveil[ed] its first tokenized fund issued on a public blockchain, the BlackRock USD Institutional Digital Liquidity Fund (BUIDL). BUIDL will provide qualified investors with the opportunity to earn U.S. dollar yields by subscribing to the Fund through Securitize Markets, LLC.' BlackRock's Head of Digital Assets Robert Mitchnick comments, 'This is the latest progression of our digital assets strategy. We are focused on developing solutions in the digital assets space that help solve real problems for our clients, and we are excited to work with Securitize.'" See also our March 20 story, "Vanguard Market Liquidity Fund Files to Go Government, Joins American."
Later in March, we wrote about money fund markets outside the U.S. in, "ICI: Worldwide MF Assets Jump in Q4'23, Break $10 Trillion; US Leads." This piece says, "The Investment Company Institute published, 'Worldwide Regulated Open-Fund Assets and Flows, Fourth Quarter 2023,' last week, which shows that money fund assets globally jumped by $497.0 billion, or 5.1%, in Q4'23 to $10.441 trillion. The increases were led by a sharp jump in money funds in U.S., while Ireland, Luxembourg, France and China also rose. Meanwhile, money funds in Argentina and Belgium were lower. MMF assets worldwide increased by $1.585 trillion, or 19.1%, in the 12 months through 12/31/23, and money funds in the U.S. now represent 56.7% of worldwide assets."
Our April 22 news discussed more shifts away from Prime Inst MMFs and the overall attraction of MMFs in, "Goldman Files to Liquidate Prime Inst MMFs; Barron's: MMFs Tempting." This piece says, "The hits keep coming to the Prime Institutional money fund sector, as Goldman Sachs becomes the latest fund firm to announce an exit from the space. A Prospectus Supplement filing Friday for the $1.6 billion Goldman Sachs Financial Square Money Market Fund and the $2.9 billion Goldman Sachs Financial Square Prime Obligations Fund, including its Administration, Capital, Institutional, Preferred, Select, Service, and Drexel Hamilton Class Shares, explains, 'At a meeting held on April 16-17, 2024, upon the recommendation of Goldman Sachs Asset Management, L.P., the Board of Trustees of Goldman Sachs Trust approved a proposal to liquidate the Goldman Sachs Financial Square Money Market Fund and Goldman Sachs Financial Square Prime Obligations Fund.... The Funds are expected to be liquidated on or about September 16, 2024, pursuant to Plans of Liquidation approved by the Board. The Liquidation Date may be changed without notice at the discretion of the Trust's officers.' This brings the total of Prime Institutional money funds declaring either pending conversions to Government or pending liquidations to 5 funds to date, representing $229.3 billion in assets, or 34.9% of the $657.0 billion total in Prime Inst MMFs (assets as of 3/31/24)."
Crane Data's June 27 News, "More AFP Liquidity Survey: Banks, MMFs, T-Bills Kings of Cash; MMFs Up," states, "We wrote earlier this week on the '2024 AFP Liquidity Survey.' (See our June 24 News, 'AFP 2024 Liquidity Survey: Cash Still King Among Corporates, Increasing.') Today, we continue our excerpts from the annual survey of corporate investors' cash habits. Discussing 'Current Allocations of Short-Term Investments,' AFP says, 'Companies maintain their investments in relatively few vehicles. Organizations invest in an average 2.7 vehicles for their cash and short-term investments -- unchanged from the average reported in 2023. Most organizations continue to allocate a large share of their short-term investment balances -- an average of 83% — in safe and liquid investment vehicles: bank deposits, money market funds (MMFs) and Treasury securities. This result is four percentage points higher than the 79% reported in 2023 -- and the highest percentage on record since AFP began tracking the data. The typical organization currently maintains 47% of its short-term investments in bank deposits. This allocation is the same as reported last year (2023) but is 8 percentage points lower than the 55% reported in 2022.'" See also our June 13 story, "Invesco Files to Liquidate Prime Inst MMFs; UBS MF Converting to Retail."
Our July 19 update, "WSJ, Investment News on Brokerage Deposit, Advisory Sweep Pressures," discussed pressures on brokerage sweep accounts. It explains, "We wrote earlier this week on a number of earnings reports which show a continued shift from bank deposits into money market funds. (See our July 17 News, 'Schwab, BlackRock Q2 Earnings: Cash Migration Slowing, But Continues.') The Wall Street Journal covers the topic in, 'Yield-Hungry Wealth Management Clients Are Becoming a Headache for Big Banks.' They explain, 'Brokerage customers are still demanding more for their cash. And banks are scrambling to keep up. Across several banks with large wealth-management businesses, a common theme in second-quarter earnings reports was continuing to have to pay higher rates to hang on to brokerage customers' cash.... Wells Fargo and Morgan Stanley called out increases in some of the rates they pay on certain brokerage account deposit products, and Bank of America noted a rise in rates paid on wealth-management deposits.'" Also check out our July 18 piece, "Schwab, JPM, Meeder Announce Prime Inst Conversions to Government."
Our August 29 News, "SSGA Sticks w/Prime Inst Money Funds; Discusses Reforms; Benchmarks," explains, "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. 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.'" Also, see: "DFA Short-Term Investment Fund Converts to Ultra-Short; FT on Flows" (8/6/24) and "More on SEC Sweeps Scrutiny; Inv News on Sweeps, UBS's Earnings Call" (8/20/24).
Our September 24 story, "MMF Assets Break $6.7 Trillion; Crane 100 Falls Below 5.0%; FT on MMFs," signals the end of 5% yields, stating, "Money market mutual fund assets surged on Thursday and Friday following the Federal Reserve's 50 basis point rate cut, jumping by $81.8 billion over 2 days to a record $6.717 trillion. (They increased another $28.1 billion yesterday, Sept. 23.) Money fund yields slid lower to 4.94% (down 12 bps) on average in the week ended Sept. 20 (as measured by our Crane 100 Money Fund Index, an average of 7-day yields for the 100 largest taxable money funds) after falling 2 bps the week prior. (Yields fell another 7 bps on Monday to 4.87%.) Yields were 5.10% on 8/31, 5.13% on 7/31 and 6/28, 5.14% on 5/31, 5.13% on 4/30, 5.14% on 3/31 and 2/29/24, 5.17% on 1/31/24, 5.20% on 12/31/23, 4.94% on 6/30/23, 4.61% on 3/31/23 and 4.05% on 12/31/22." See also our Sept. 18 piece, "Janus Offers MMF to Support American Cancer Society; Weekly Holdings."
In October, we published, "Bloomberg, ignites on Latest MMF Reforms; Prime Inst Shift a Nonevent," which says, "Bloomberg published an article titled, 'Money-Market Funds Stay in Vogue Even as Reforms Go Into Effect,' which recapped the latest changes to the Prime Institutional money fund space. They write, 'Money-market funds are attracting record amounts of cash, even as a regulatory overhaul pins the industry with costly mandatory fees. The US Securities and Exchange Commission approved measures last year designed to make the $6.42 trillion industry more transparent and prevent investors from yanking money from such funds during market volatility or financial stress like in March 2020. The final piece of the reform requiring fund managers to impose mandatory liquidity fees went into effect on Wednesday.'"
Finally, we cover the year-end surge in MMF assets in "Money Fund Assets Break Over $7.0 Trillion; S&P on AAA Rated MFs in Q3." This article says, "Money market mutual fund assets broke the $7.0 trillion barrier for the first time ever on Wednesday, Nov. 13, according to our Money Fund Intelligence Daily. Assets have jumped following the Federal Reserve's 25 basis point rate cut last Thursday (11/7), increasing by $91.4 billion in the week through Wednesday to a record $7.001 trillion. Money fund assets have increased by $147.3 billion in November month-to-date through 11/13, and they have increased by $709.4 billion (11.3%) year-to-date in 2024."
For more 2024 (and soon 2025) News (and prior years going back to 2006), see Crane Data's News Archives. We'll continue to provide daily updates on the money fund marketplace in the coming year, so `keep reading our News and Link of the Day commentaries in 2025. Let us know if you need web access (unlimited access is for subscribers only), or if you'd like to see our latest Money Fund Intelligence, Bond Fund Intelligence or MFI Daily publications. Thanks to all of our readers and subscribers for your support in 2024, and we wish you all the best in the coming year. Merry Christmas, Happy Holidays and Happy New Year!
