The U.S. Treasury's Office of Financial Research unveiled a new "Money Market Fund Monitor" tool, "a set of interactive charts for exploring the portfolios of U.S. money market funds." Their statement explains, "Money market funds have been popular for decades among investors who want better returns than bank accounts offer, but still with little risk. Since the 1990s, institutional investors have used money market funds as a professional cash management option." (Note: Crane Data publishes its own Money Fund Portfolio Holdings data series and provides reports based on fund postings and feeds, as well as from the SEC's Form N-MFP information.)
OFR's release explains, "The funds strive to maintain the value of the money invested in them. In 2008, at the height of the financial crisis, investors in an established fund lost money when the price of each share fell slightly below $1 -- called "breaking the buck." In the ensuing weeks, investors pulled hundreds of billions of dollars out of prime money market funds in favor of safer investments, such as government money market funds. The government stepped in to insure funds temporarily. That support ended in 2009. (As of October 2016, regulations will require prime funds for institutional investors to use floating share values rather than a fixed share price.)"
It continues, "A lack of detailed data about fund holdings blocked regulators from seeing risks quickly in 2008. Since then, regulators have begun to require funds to report detailed data about their holdings more frequently. Funds are also required to hold more liquid assets."
OFR explains, "To develop the new Money Market Fund Monitor, the OFR analyzed more than 4 million records of monthly data on the holdings of about 500 funds over five years. Before now, the data were on the Securities and Exchange Commission website as separate individual filings and industry-level monthly reports. The OFR monitor displays the data in a graphical format that is easy to adjust to the needs of any user. Any user can download the data into spreadsheets."
They add, "The monitor has various uses, such as tracking industry trends. For example, the figure below, taken from the monitor, shows that prime money market funds' investments in European bank issuers have dropped at the end of each quarter from 2013 to the present. This pattern suggests that banks reduce their funding from money market funds to improve their balance sheet profiles when they submit quarterly financial data to regulators. A 2015 OFR working paperī discussed this phenomenon using different data."
The release says, "Because of those funding decisions by banks, money market fund managers may have fewer ways to deploy cash at the end of each quarter. The chart below, taken from the monitor, shows a quarter-end surge in money market funds turning to the Federal Reserve's Reverse Repurchase Agreement Facility as an investment option."
Finally, it adds, "An OFR brief published today provides more detail about each chart in the Money Market Fund Monitor. The monitor will be updated monthly as funds file new data. The Money Market Fund Monitor is the latest product of the OFR's monitors program. The OFR already produces the quarterly Financial Markets Monitor and the biannual Financial Stability Monitor."
The Monitor's homepage says, "This monitor is designed to track the investment portfolios of money market funds by funds asset types, investments in different countries, counterparties, and other characteristics. Users can view trends and developments across the MMF industry. Data are downloadable and displayed in six interactive charts. The reference guide contains examples of how to use the monitor and additional information."
In other news, the July issue of Crane Data's Bond Fund Intelligence was sent out to subscribers last week. Our latest edition features the stories, "Party Continues for Bonds; SEC Warns USBFs on 'Holding Out'," which looks at the continued jump in bond fund assets and the ultra-short sector in particular, and a review of the Money Fund Symposium session entitled, "Enhanced Cash and Ultra-Short Bond Funds." Also, we recap the latest Bond Fund News. `BFI also includes our Crane BFI Indexes, which showed higher returns and lower yields in June.
Our lead Bond Fund Intelligence story says, "Seventeen straight weeks of inflows for bond funds came to an end during the week ended June 29. Fixed-income funds posted $2.5 billion in outflows the last week of the month, but had $1.3 billion in inflows in the first week of July, according to ICI's "Estimated Long-Term Mutual Fund Flows" report. Since March 2, bond funds have had $78.0 billion in inflows."
Our monthly Profile says, "Crane Data's recent Money Fund Symposium was of course mostly about money funds. But we did include a session entitled, "Enhanced Cash and Ultra-Short Bond Funds," which featured `JP Morgan Securities' Alex Roever, Fidelity Investments' Michael Morin and Goldman Sachs Asset Management's John Olivo. They discussed why they think ultra-short bond funds are poised for significant growth in the post money fund reform environment."
Finally, we also report on returns, writing, "Returns moved higher in June across our Crane BFI Indexes. Our BFI Total Index averaged a one month return of 1.14% and is up 3.97% YTD through June 30. (Contact us if you'd like to see a copy of our latest Bond Fund Intelligence.)
