The March issue of our flagship Money Fund Intelligence newsletter was sent to subscribers Monday morning. It features the articles: "Exodus: Prime & Tax-Exempt MMFs Liquidate En Masse," which reports on the most recent rash of fund conversions and liquidations; "UBS Asset Management's Abed & Sabatino on MMFs," where we profile Joe Abed and Rob Sabatino from UBS; and "Tweaks Keep Coming: JPM, Wells, BlackRock, Dreyfus," which looks at more lineup shuffles and announcements from fund groups. We have also updated our Money Fund Wisdom database query system with Feb. 29, 2016, performance statistics, and sent out our MFI XLS spreadsheet Monday morning. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our February Money Fund Portfolio Holdings are scheduled to ship Wednesday, March 9, and our March Bond Fund Intelligence is scheduled to go out Monday, March 14.
MFI's lead article on the "Exodus," says, "We've documented the massive shift from Prime to Government funds, but the latest fallout from the SEC's MMF reforms is widespread fund liquidations. February was another busy month for both liquidations, especially Tax-Exempt MMFs, and fund conversions. This month's wave of Prime to Government declarations brings our total to $272.0 billion in MMFs "going Government" ($172.4 billion of this has converted to date). The new moves come from BBH, Invesco, MassMutual, PIMCO, PNC, and UBS."
The piece explains, "Among the most recent Prime to Govt conversion announcements, the $1.8 billion BBH Money Market Fund filed to convert to BBH US Govt MMF on April 1. (See our Feb. 16 News.) The $441 million MassMutual Premier MMF will change into MassMutual US Govt Premier MMF on May 1. (See our Feb. 11 Link of the Day.)"
It adds, "Crane Data's Pete Crane tells Fund Action, "For most of these small providers that have under $1bn and use their money fund just as a convenience for their clients, it's a no brainer.... The costs of converting to prime are substantial with the systems issues of dealing with a floating NAV, if they're institutional, or the gates and fees if they're retail or institutional. It's a pain for the systems. Their boards of directors don't want the responsibility of the gates and fees even though it's unlikely to happen."
Our UBS Profile reads, "This month, Money Fund Intelligence profiles the leaders of the money market fund team at UBS Asset Management, Joe Abed, Global Head of Distribution for Liquidity Management, and Rob Sabatino, Global Head of Liquidity Portfolio Management. They discuss how UBS is tackling the changing money fund environment, expanding its fund offerings and increasing its resources. Says Abed, "We're not just committed to the liquidity business, we're growing both our fund family and our distribution and investment team globally."
Responding to the question: What is your top priority right now? Abed says, "[It is] assuring that our menu of offerings continues to meet the needs of our clients -- both in the U.S., with the changes in money market fund regulations, and globally, to serve the liquidity needs of our clients around the world.... And we're adjusting other funds to ensure we continue to serve all of our clients. Outside the U.S. we have an equally long history in the money fund business.... Last year we expanded our fund range, launching additional CNAV, short term money market funds in Euro and Sterling to sit alongside our existing short term US Dollar money market fund. We see a significant opportunity to grow our business outside the U.S., and under the leadership of James Finch, we will continue to expand our liquidity distribution team in Europe."
The "Tweaks Keep Coming" article says, "In addition to the myriad Prime to Govt conversions and fund liquidations (see our lead story), there were a number of other money fund lineup tweaks and changes announced over the past month. Among the most notable, both JP Morgan Asset Management and Wells Fargo Funds revealed multiple strike times for their Prime Inst floating NAV funds, the first managers to declare intraday pricing details. Also, we report new details on the BofA Funds/BlackRock merger, and the latest lineup tweaks by Dreyfus."
We also discuss in a sidebar, "Negative Rates in the News." It says, "Michael Cloherty, Head of US Rates Strategy at RBC Capital Markets, asks, "Why is everyone talking about negative rates? We think this all stems from the Fed's 2016 bank stress tests and the Street echo chamber." We provide an overview of IMMFA's stance on European MMF reforms in the sidebar, "IMMFA on European Regs." Finally, as we do every month, we also review all the important "Money fund News."
Our March MFI XLS, with Feb. 29, 2016, data, shows total assets increasing $37.4 billion in February to $2.698 trillion, after decreasing $22.4 billion in January, increasing $44.2 billion in December, rising $3.5 billion in November, and jumping $56.5 billion in October. Our broad Crane Money Fund Average 7-Day Yield climbed by 2 bps to 0.11% for the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) increased 3 basis points to 0.21% (7-day).
On a Gross Yield Basis (before expenses were taken out), funds averaged 0.38% (Crane MFA, up 8 basis points) and 0.44% (Crane 100, up 7 bps). Charged Expenses averaged 0.27% (up 6 bps) and 0.24% (up 5 bps) for the Crane MFA and Crane 100, respectively. The average WAM (weighted average maturity) for the Crane MFA was 37 days (up 2 days from last month) and for the Crane 100 was 37 days (up 1 day). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
