BlackRock TempFund, one of the nation's largest (over $48 billion) and oldest money market mutual funds, celebrates its 40th birthday this week, milestone that only a handful of money funds have reached. Yesterday, we interviewed Managing Director Rich Hoerner and Ellen Bockius to get some thoughts on the fund's anniversary and to congratulate them on the fund's longevity. We first asked, "When was BlackRock TempFund launched? Why was it launched? They answered, "TempFund was launched in October of 1973 to meet the needs of institutional clients, primarily bank trust clients, and was intended to be an alternative to Treasury Bills and Master notes that were the primary vehicles for cash investing at the time. Institutional investors were looking for a solution to meet their needs of safety, liquidity and yield while also achieving investment diversification."
We also queried, "Can you tell us a little bit about its history and BlackRock's history in money funds? BlackRock told us, "TempFund was launched by Provident National Bank (prior to its merger with Pittsburgh National Bank to form PNC). By 1998, BlackRock had successfully integrated all of PNC's investment management entities (equity, fixed income, and liquidity funds) into a single platform under BlackRock. Many of the professionals who are part of our current cash management team were employees of either Provident or PNC prior to becoming a part of BlackRock. Today, we have a dynamic platform that was built over the last 40 years to meet the evolving needs of our clients. We offer a broad range of solutions from money market funds to short duration products across multiple currencies."
Crane Data asked, "How have the money markets changed during this time? They responded, "The industry has experienced tremendous growth over the last forty years, and has also weathered multiple interest rate and credit cycles and extreme market events. We've seen changes in market dynamics and tremendous growth in the appreciation and use of money market funds across a wide spectrum of clients."
Finally, we asked, "What are the fund's biggest challenges today? Hoerner and Bockius said, "Obviously, regulatory reform remains the biggest headwind and challenge for the industry. We have remained constructive in this conversation, recognizing the benefits of protecting money market fund investors and the broader financial system and urging policymakers to retain the benefits of money market funds for institutional and retail investors who rely on these products for short-term investments and liquidity. We are optimistic for the future of cash investing and are committed to helping our clients navigate this new environment by introducing new ideas to meet their cash needs; perhaps some that we'll celebrate forty years from now."
The company said in its recent SEC Comment Letter, "BlackRock and its predecessor companies have been involved in the management of MMFs since 1973, and today, BlackRock manages approximately $192.6 billion (as of June 30, 2013) in Rule 2a-7 MMF assets regulated by the Commission. BlackRock also manages substantial cash management assets in bank collective funds regulated by the Office of the Comptroller of the Currency and in Undertakings for Collective Investment in Transferable Securities products regulated by the European Securities and Markets Authority. Our success in building this business came not because we always offer the highest yield; we have grown because we have earned our clients' trust through multiple interest rate cycles and a wide variety of market events."
Finally, it added, "We believe cash management is a distinct investment category, different from other fixed income strategies. We understand the importance of putting safety and liquidity first, not as a marketing message, but as the foundation of our investment philosophy. At BlackRock, we have investment, credit research and risk management personnel and processes that are dedicated to our liquidity business." As of Sept. 30, Crane Data ranks BlackRock as the 3rd largest manager of money funds globally with $244 billion and the 7th largest manager of U.S. money market funds with $146 billion. The manager merged with Barclays Global Investors in December 2009 (see our 12/2/09 News, "Merged BlackRock, BGI Form World's 3rd Largest Money Fund Manager").
