The March issue of Crane Data's Money Fund Intelligence was sent out to subscribers Friday morning. The latest edition of our flagship monthly newsletter features the articles: "Money on the Move? Keeping Up With Pending Changes," which estimates how much money will shift to various fund types and discusses other changes in the money fund world; "JP Morgan Sticks to Program; Announces Lineup Changes," about how JP Morgan is standing pat with its large Prime Institutional fund; and "Max 60-Day Maturity Funds: Federated Goes Its Own Way," a look at how Federated is changing its fund lineup with 60-Day maximum maturity funds. We also updated our Money Fund Wisdom database query system with Feb. 28, 2015, performance statistics, and sent out our MFI XLS spreadsheet shortly. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our March Money Fund Portfolio Holdings are scheduled to go out on Tuesday, March 10, and our March Bond Fund Intelligence is scheduled to ship next Friday, March 13.
The lead article in the latest issued of MFI is "Money on the Move? Keeping Up With Pending Changes." It says, "If the first couple of months of the year are any indication, 2015 will be filled with changes in the money fund world. As we have written about in MFI and on www.cranedata.com, money fund managers are not wasting any time getting ready for SEC reforms, which kick in October 2016. New funds are being announced, old funds are being converted, and that means money will be moving -- some in, some out, and some shuffling within. Let's take a look at the some of the recent changes and possibilities."
On the "Prime to Government Shift," the article comments, "Fidelity announced in late January that it was converting three Prime Retail MMFs to Government MMFs, including the largest money fund, the $112 billion Fidelity Cash Reserves. BlackRock, reports The Wall Street Journal, is also considering turning Prime Retail funds into Government funds. (See our table of the largest money fund managers along with their type of fund assets on p. 7.)"
In our middle column, we look at how JP Morgan Asset Management is responding to MMF reforms. It reads, "Since Fidelity Investments announced that it was revamping its money market fund lineup in response to SEC's reforms and investor demand in late January, two more major MMF managers have announced changes of their own, Federated Investors and J.P. Morgan Asset Management. The latter won't be making any changes to its largest MMF, the $64.9 billion J.P. Morgan Prime MMF, a prime institutional fund that will adopt a Floating NAV. But it did announce other changes."
The article continues, "J.P. Morgan, which is the second largest manager of money market funds globally with $384 billion, became the first money fund manager to designate which of its funds will be "Retail," "Institutional," or "Government," under the pending criteria established by the Securities & Exchange Commission in July 2014. The company also stated that it has no current intention of instituting liquidity fees or gates on any of the MMFs designated as Government MMFs."
The article on "Max 60-Day Maturity Funds: Federated says, "In a recent commentary, Garret Sloan, money market strategist with Wells Fargo Securities, said that he didn't expect a stampede of money managers to follow Fidelity's lead to move from prime to government funds. Rather, he said that money managers would choose to "go their own way." That's indeed been the case over these last few weeks. Case in point: Federated Investors, which is responding to SEC reforms by creating 60-day maximum maturity and under funds -- i.e. floating NAV funds that don't really float. However, the company also plans to have at least one longer duration Prime Institutional fund with a floating NAV."
It adds, "On Feb. 19, Federated Investors, the 4th largest money fund manager with $211 billion in assets, announced "phase one" of its post-MMF reform changes. The big change, which CEO Christopher Donahue has discussed in recent earnings calls, is to convert some of its Institutional Prime funds to 60-day maximum maturity funds, which are allowed to continue using amortized cost pricing, decreasing the likelihood that any floating NAV fund would actually float."
Crane Data's February MFI XLS, with Feb. 28, 2015, data shows total assets decreasing in February, the second month in a row, down $1.6 billion to $2.598 trillion, after falling $44.6 billion in January. Prior to January, assets had gone up each of the last 5 months of 2014. Our broad Crane Money Fund Average 7-Day Yield and 30-Day Yield remained at 0.02%, while our Crane 100 Money Fund Index (the 100 largest taxable funds) stayed at 0.03% (7-day and 30-day). On a Gross Yield Basis (before expenses were taken out), funds averaged 0.14% (Crane MFA, same as last month) and 0.17% (Crane 100, unchanged) on an annualized basis for both the 7-day and 30-day yield averages. Charged Expenses averaged 0.13% (up from 0.12%) and 0.14% (same as last month) for the two main taxable averages. The average WAMs for the Crane MFA and the Crane 100 were 41 and 44 days, respectively. The Crane MFA WAM was the same as last month while the Crane 100 WAM is down 1 day from the prior month. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
