Yesterday, we released the latest copy of our flagship Money Fund Intelligence publication. The December issue features the articles, "Comeback Kid: Support Helping Money Funds" and "Zero Yield Threshold: Severe Pain for MFs?" These discuss the startling surge in money fund assets and the potential damage wrought to money fund revenues by lower interest rates, respectively. We also interview the managers of the formerly-named American Performance Funds in our monthly portfolio manager interview entitled, "Low Profile OK With Cavanal Hill Funds."
The lead story in the new MFI says, "The barrage of support measures taken by the U.S. Treasury, Federal Reserve, and other Government entities appears to have money market mutual funds well on the road to recovery. Though Government and Treasury funds continue to gain the majority of inflows, overall money fund assets have risen for 10 straight weeks and have hit new record highs the past 7 weeks in a row."
Crane Data also doesn't believe the damage will be severe with additional Fed rate cuts. While we don't believe the Fed will cut any lower due to sensitivity to money fund and money market concerns, "we don't believe another 1/4-point, or even a 1/2-percent move, would cause critical damage to money funds' revenue streams," says the December issue. "Money funds with yields of 0.25% or lower represent just 2.2% of money fund assets," says the new MFI.
Finally, our monthly Crane Index series shows that yields and returns continued lower in November. The Crane 100 7-day yield was 1.61% as of Nov. 30, while the broader Crane Money Fund Average fell to 1.13%. The Crane Institutional MF Index fell to 1.28%, the Crane Individual MF Index fell to 0.99%, and the Crane Tax-Exempt MF Index fell to 0.83%. Look for more from our latest monthly issue in coming days. (To request the latest issue of Crane Index or Money Fund Intelligence, call 508-439-4419.)
