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Federated Investors CEO Chris Donahue Is Hearing About "Rollups". Yesterday, Federated Investors President & CEO J. Christopher Donahue spoke at Citi Investment Research's 2008 Financial Services Conference, and gave an upbeat assesment of the outlook for money market mutual funds. He says of 2007, "This was by far the best year in history for asset growth overall, and for money market asset growth in particular [where assets were up $63 billion, or 36% in '07]." Donahue says, "What they [money fund investors] really want, in their heart of hearts, is daily liquidity at par." He says Federated has been hearing about "rollups," or outsourcing opportunities, on the money fund side. (Reserve Chairman Bruce Bent echoed this sentiment at a talk earlier this week, saying Reserve too has been approached about managing others' money fund assets.) On critical mass for money funds, Donahue said, "Clients want a full array ... products that can handle daily liquidity at par for big bunches of money." Regarding SIVs, he says they all "continue to pay on time and in full" and that remaining holdings will all be gone by summer. On concerns over muni insurers and tax-exempt money funds, Donahue says, "We don't expect these issues to cause any credit or liquidity problems." Donahue also commented on the Rule 2a-7 money fund regulations, "They have withstood stress tests and have shown themselves to be very strong." Finally, he says money fund assets continue to grow strongly. "The customers have decided that these are an excellent place" to weather current market conditions.
