The March issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Friday morning, features the articles: "MF Assets Break $7.3 Trillion After Pause; ICI Tops $7.0 Tril," which discusses the recent resurgence in MMF flows; "ICI: SEC's MMF Reforms Push $309 Billion from Prime Inst," which looks at a paper on last year's rule changes; and, "Stablecoin Battle Heats Up, as Tokenization Launces Spread" which reviews the latest news on stablecoins and tokenized MMFs. We also sent out our MFI XLS spreadsheet Friday a.m., and we've updated our Money Fund Wisdom database with 2/28/24 data. Our March Money Fund Portfolio Holdings are scheduled to ship on Tuesday, March 12, and our March Bond Fund Intelligence is scheduled to go out on Monday, March 17.
MFI's "$7.3 Trillion" article says, "After treading water for much of January and February 2025, money market mutual fund assets recently surged higher, rising $90.4 billion in February to a record $7.325 trillion. In March month-to-date through 3/5, total money fund assets have increased by another $35.7 billion to $7.357 trillion, according to Crane Data's MFI Daily. Our MFI XLS monthly shows money fund assets rising $851.2 billion, or 13.1%, over 12 months through 2/28."
It continues, "Money fund assets rose by $94.2 billion in February, $52.8 billion in January, $110.9 billion in December, $200.5 trillion in November, $97.5 billion in October, $149.8 billion in September, $109.7 billion in August, $16.6 billion in July, $15.7 billion in June and $91.4 billion in May. They declined by $15.8 billion in April and $68.8 billion in March 2024."
We write in our ICI on SEC Reforms article, "Last month, ICI published 'Sold Under False Pretenses: The SEC's Money Market Fund Reform is Causing Damage,' which explains, 'In response to pandemic-induced stress in money markets three years earlier, the Securities and Exchange Commission (SEC) adopted rule amendments in July 2023 that required significant changes to prime money market funds (MMFs). While strengthening the resiliency of MMFs was a worthy objective, the SEC adopted these amendments without seeking public input on specific elements of the amendments' most consequential change: the imposition of a first-ever mandatory liquidity fee on prime institutional funds."
ICI says, "MMFs serve as an attractive cash management option and have surged in popularity as investors have taken advantage of higher yields in recent years. But the prime institutional segment of the MMF market has experienced significant consolidation and reduced competition as a direct consequence of the SEC's flawed rule."
Our "Stablecoin Battle" piece says, "A recent Wall Street Journal article, 'The Titans Battling for Control of the Crypto Future,' discusses the competition between stablecoins Tether and Circle USDC. It tells us, 'Tether is the clear industry leader -- its stablecoin is used in four out of five cryptocurrency transactions. Tether's holding company ... said it earned $13 billion in profit last year, double that of BlackRock and mostly generated from the pile of supersafe Treasury bills that Tether owns to back its currency 1-to-1 with the dollar. [But Circle Founder Jeremy] Allaire has regularly testified in Congress to call for greater regulation that would benefit Circle at Tether's expense.... WSJ reported in October that the Justice and Treasury Departments were investigating Tether for possibly violating financial crime laws.'"
The piece continues, "The article tells us, 'In letters to authorities in the U.S. and elsewhere, Circle raised the alarm about how unregulated stablecoins could harm consumers. Circle that July flagged to the Financial Stability Board ... an incident that happened two years earlier in which tether temporarily lost its dollar peg because authorities seized a chunk of its reserves as part of a money-laundering investigation. Circle said this showed how such stablecoins could potentially fail, wiping out consumers' crypto holdings."
MFI also includes the News brief, "Crane 100 Index Inches Lower to 4.16%," which says, "Money fund yields were down 3 bps to 4.16% on average during the month ended Feb. 28 (as measured by our Crane 100 Money Fund Index). Fund yields should remain roughly flat until and if the Fed moves rates again."
Another News brief, "EFAMA: '2024 was a record year for ETFs and MMFs,'" tells us, "The European group says, 'Money market funds (MMFs) achieved a record-breaking year, with net inflows reaching an all-time high of EUR 223 billion. The surge was largely driven by an inverted yield curve, which persisted for much of 2024.'"
A third News brief, "Investment News Writes 'Pershing Discussing Move to Control Portion of Broker-Dealers' Cash," states, "The financial advice industry's skirmish over cash sweep accounts is taking another turn, with clearing giant Pershing evaluating plans to create a new charge, akin to a tax, on cash held by its broker-dealer clients. Pershing is discussing with broker-dealers that use its platform plans to get first dibs on cash -- up to $10,000 -- held in their customers' accounts."
A sidebar, "Federated 10-K Talks Regs," summarizes, "Federated Hermes' latest '10-K Annual Report' tells us, 'Of the 176 Federated Hermes Funds, Federated Hermes' ... managed as of Dec. 31, 2024, 22 money market funds with $461.7 billion.' On the 'Current Regulatory Environment,' they write, 'Regarding deregulation, the investment management industry is expected to request the SEC to repeal or modify certain regulatory requirements previously promulgated by the SEC and to adopt more investor- and industry-friendly regulatory requirements."
Our March MFI XLS, with Feb. 28 data, shows total assets increased $90.4 billion to a record $7.325 trillion, after increasing $47.9 billion in January, $113.0 billion in December, $196.1 billion in November, $89.9 billion in October, $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.
Our broad Crane Money Fund Average 7-Day Yield was down 4 bps at 4.05%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was down 3 bps at 4.16% in January. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 averaged 4.43% and 4.43%. 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 2/28/25 on Monday, 3/10.) The average WAM (weighted average maturity) for the Crane MFA was 35 days (down 2 days) and the Crane 100 WAM was down 2 days from the previous month at 36 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
