The October issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Friday morning, features the articles: "MMFs Give Up Prime Ghost; $1.1 Trillion Now 'Gone Govie'," which reviews the massive shift away from Prime and into Govt MMFs; "Federated Reveals Prime Private Liquidity Fund," which profiles Bud Person on Federated's new "3c-7" fund; and "Regulations, Brexit Focus of European MF Symposium," which excerpts highlights from our recent European Money Fund Symposium. We have updated our Money Fund Wisdom database query system with Sept. 30, 2016, performance statistics, and we also sent out our MFI XLS spreadsheet Friday a.m. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our October Money Fund Portfolio Holdings are scheduled to ship Wednesday, Oct. 12, and our Oct. Bond Fund Intelligence is scheduled to go out Monday, Oct. 17.
MFI's lead "MMFs Give Up Prime Ghost" article says, "The total amount that's moved out of Prime and Tax Exempt money funds combined reached $1.1 trillion this week, as the "Big Shift" of assets into Government money funds approached a crescendo ahead of the October 14 money fund reform deadline."
It adds, "ICI's latest weekly "Money Market Fund Assets" report shows that Prime funds fell by over $110 billion in the past week, again the largest drop of the year, and Crane Data's MFI XLS shows Prime totals falling by a shocking $295 billion, or 37%, in September alone. Since Oct. 29, 2015, Prime assets have fallen by a massive $985 billion, or 68%, and Tax Exempt funds have declined by another $116 billion, or 47% (according to ICI's broader weekly series). Combined these two non-Government sectors (which will be subject to emergency gates and fees come October 14) have fallen by $1.101 trillion (down 65%) since this giant migration started."
Our latest fund interview reads, "Federated Investors recently launched a "private" money market fund, Federated Prime Private Liquidity Fund, a "3c-7" fund which intends to maintain a $1.00 NAV and adhere to money funds' liquidity, quality, maturity, diversity, and disclosure guidelines. The fund went live on Sept. 22 and has attracted approximately $220 million in assets to date. We review the launch with Federated's Bud Person and excerpt from Fitch and S&P's ratings statements on the new fund."
The article says, "Federated plans to offer share classes charging 10 bps and 15 bps with $25 and $5 million minimums, but the lower priced "Founders" shares will only accept new accounts until January 2017 or the fund reaches $5 billion in assets, whichever comes first. In a FAQ, Federated says it is disclosing yield, liquidity, shadow NAV and other information on its website. The Private Placement Memorandum is only available upon request. (Crane Data plans on tracking this and other private funds to the extent possible. See our Sept. 26 News.)"
The "European MF Symposium" article explains, "Last month, Crane Data hosted its 4th European Money Fund Symposium, which brought together about 120 money fund and money market professionals in London. We briefly review some of the highlights of the discussions and sessions below. The keynote, entitled, "IMMFA Update: The State of MMFs in Europe," was presented by Reyer Kooy, Chairman of IMMFA. He commented, "With the combination of Brexit, ultra-low Sterling rates and money market fund reforms, we're keeping ourselves pretty busy at the moment.... It's exciting times for everyone in the money fund industry."
In a sidebar, we discuss, "Fed Z1: Household MMFs Fall," saying, "The Federal Reserve released its latest quarterly "Z.1 Financial Accounts of the United States" statistical survey (formerly the "Flow of Funds"). Among the 4 tables it includes on money market mutual funds, the Second Quarter, 2016 edition shows that the Household Sector remains the largest investor segment, though assets here declined again and fell back below the $1.0 trillion level. Funding Corporations, Nonfinancial Corporate Businesses and Private Pension Funds showed gains in the latest quarter, while Funding Corporations, Nonfinancial Corporate Businesses, State & Local Governments, and Private Pension Funds showed increases over the past 12 months."
We also do a sidebar on "Worldwide MF Assets Q2," which comments, "The Investment Company Institute released its latest "Worldwide Mutual Fund Assets and Flows" data collection late last month. The latest report shows that total global money fund assets declined by $67.1 billion, or 1.3%, to $4.996 trillion in Q2 2016. The U.S., China and Luxembourg suffered the biggest declines, while France, Korea and Brazil saw gains. Worldwide MMF assets have increased by $136.0 billion, or 2.8%, over the previous 12 months through 6/30/16."
Our October MFI XLS, with Sept. 30, 2016, data, shows total assets decreased $48.5 billion in September to $2.595 trillion after increasing $19.3 billion in August, $11.6 billion in July, and decreasing $13.8 billion in June. Our broad Crane Money Fund Average 7-Day Yield was up 2 bps to 0.14% for the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) also rose 2 bps to 0.24% (7-day).
On a Gross Yield Basis (before expenses were taken out), the Crane MFA inched up to 0.46% and the Crane 100 rose one bps to 0.49%. Charged Expenses averaged 0.32% and 0.25% for the Crane MFA and Crane 100, respectively (unchanged). The average WAM (weighted average maturity) for the Crane MFA was 31 days (up 1 day from last month) and for the Crane 100 was 30 days (up 1 day). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
