The April 2009 issue of Money Fund Intelligence, which was sent to subscribers yesterday, features the articles "ICI's MMWG Writes The Book on MFs," "T. Rowe Price Confident in Money Market Funds," and "Talking Sec Lending with BBH's Poppey." Every issue of MFI ($500 a year) also includes comprehensive money fund news, indexes, performance, and statistics. We also sent subscribers the brochure to our new conference, Crane's Money Fund Symposium, which will be held Aug. 23-25 in Providence, Rhode Island. (Visit www.kinsleymeetings.com/crane/ for more details. Let us know if you'd like to request the full MFI issue or conference brochure.) We share some MFI excerpts below.
Regarding the recently-released ICI Money Market Working Group Report, MFI writes, "Though it's unclear exactly how money market funds and money fund regulation will look later this year, the release of the Investment Company Institute's Money Market Working Group Report appears to have decreased the odds of dramatic changes significantly. While the group's proposed changes are myriad and should reduce the risk in funds significantly, the report strongly opposes radical changes such as floating NAVs, permanent insurance, and capital reserves for money funds."
Our latest monthly newsletter also interviews T. Rowe Price Vice President and Portfolio Manager Joseph Lynagh, who tells us, "Obviously, the current rate environment makes the operation of money funds very challenging. You layer onto that the credit environment, so you have two challenges that run at odds with each other. One is trying to maintain a yield for your investors, and at the same time the universe of viable investments is a lot smaller than it once was given the problems with banks and other corporate issuers, and the breakdown of liquidity, etc. All of these problems are subordinate to the central problem of being in a very low rate environment. You want to provide yield to your shareholders, but certainly the credit environment is the dominant concern right now, which makes product management a real challenge."
Finally, the April Money Fund Intelligence discusses the state of the securities lending business with Brown Brothers Harriman's Thomas Poppey. MFI writes, "Securities lending has been of growing interest to money market funds due to the tremendous investment balances coming from these programs, and due to the stress being felt by some of the 'shadow 2a-7' and 'enhanced cash' reinvestment pools." Poppey tells MFI, "From BBH's perspective, the securities lending business remains fundamentally strong.... Providers that have focused on the 'financing' or reinvestment of cash collateral to generate returns are most likely the ones that have experienced program challenges and in many cases, client losses."
Look for more excerpts in coming days, and let us know if you'd like to see the full issue. Also, look for an update on money fund family participation in the Treasury's Temporary Guarantee Program for Money Funds soon. As we said in MFI, "We expect continued full participation, though more Treasury funds and some Government funds should shed coverage." But we hope to have a more formal count by tomorrow.
