Wells Fargo Money Market Funds' latest Portfolio Manager "Overview, strategy, and outlook," comments, "With money market reform-related conversions some seven to eight weeks in our rear-view mirror, the short-term markets seem to be settling in and adjusting to their "new normal." Following the great rotation out of prime funds and into government funds, prime funds continued to leak assets through most of November, though the pace ... significantly decreased, and even reversed, in the waning days of the month." It adds, "As asset levels have stabilized, managers have been able to extend average maturities of the funds from their historic lows and, by extension, to increase yields on their funds. As anticipated, the overall levels on prime instruments have not decreased in the wake of reform; while there does not appear to be an overabundance of supply, neither is there an overabundance of demand. But at the same time, the boost in funds' yields has been hastened by an overall increase in LIBOR (London Interbank Offered Rate) in the face of a prospective rate hike by the U.S. Federal Reserve (Fed). With industry net asset values (NAVs) demonstrating relative stability, investor behavior in the funds seems to be business as usual: while the funds are not currently attracting new assets in any meaningful size, daily transaction data suggest that those who stayed in the funds continue to use them as a cash management vehicle, and perhaps enjoy a higher yield than that of alternative funds."

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