Later this morning, Crane Data's January Money Fund Intelligence newsletter will be e-mailed to subscribers. The new edition contains articles entitled: "Outlook Bleak for 2012, But MMFs See Glimmers," which reviews recent asset and regulatory trends; "Interview w/Schwab MF Strategist Rick Holland," which quotes industry veteran Rick Holland; "Top MMFs of 2011; Our 3rd Annual MFI Awards," which announces the top-performing funds for 2011; and "Treasury Partners Enters Portal Transparency War;" which reviews the latest analytical tool offered to portal investors. We have also updated our Money Fund Wisdom database with December 31, 2011, performance information and are in the process of sending out our monthly Money Fund Intelligence XLS and Crane Index products.
The latest MFI says, "The coming year looks bleak for money market mutual funds, but things are not nearly as challenging as they appeared to be just one month ago. Sure, zero yields and the threat of radical regulatory change are even more threatening than they've been the previous three years. But glimmers of hope and relief appeared on both fronts late in the year, and money fund investors and providers have reason for optimism in 2012."
In our regular fund family article, we write, "Money Fund Intelligence's latest monthly fund family "profile" features Charles Schwab Investment Management's Rick Holland, Schwab's new portfolio strategist for money market funds. We discuss Schwab's history with money funds, current portfolio tactics, recent customer concerns, and the outlook for the money market mutual fund business in general. Our Q&A follows." Look for these product shortly, or watch www.cranedata.com for more excerpts in coming weeks.
In other news, Sunday's New York Times featured the article, "Money Funds Could Face More Changes". It discusses Norwegian lender Eksportfinans and potential pending regulatory changes. The piece says, "About 20 American money market mutual funds -- those trusted staples of institutional and individual cash management -- were caught holding notes issued by the bank, Eksportfinans of Norway. The downgrade put the notes well below the quality threshold set by fund regulators."
The Times explains, "What happened next? The answer depends on whether you're talking to mutual fund executives or to their regulators -- and the gap between the answers explains the regulatory fight that the $2.6 trillion money fund industry faces in 2012. Ask a mutual fund industry executive and you'll hear that the affected funds were quietly bailed out by their sponsors. In fact, fund industry executives say the Eksportfinans episode simply proved that the money fund industry is much safer and resilient because of the reforms put in place after 2008, when the Lehman Brothers bankruptcy set off a panic. But ask a federal regulator about the Eksportfinans event and you'll hear that the financial system dodged a bullet that could have started another ruinous stampede. As regulators see it, the episode is a worrisome reminder that, despite the new rules already in place, money funds still pose too big a risk to the nation's financial stability."
It adds, "The commission is expected to propose steps early in the year that would change the kind of money funds available to individual and institutional investors, and comments are already being filed from all sides. But industry executives and analysts contend that there doesn't seem to be a strong empirical link between the risks the regulators are trying to address and some of the changes they want to make.... Ms. Schapiro has confirmed that some combination of these ideas is likely to be proposed in the first three months of this year, but the fight over what is eventually adopted will be long and loud. Regulators seem to be betting that money funds are so strategically important to big mutual fund families that even the sweeping changes on the drawing board will not kill the funds."
