This past year saw historic changes to money market mutual funds, including a massive shift of assets from Prime funds into Government MMFs, rates inching their way higher after almost a decade of zero yields, and the dawn of floating NAVs for Prime Inst money funds. Money fund managers continued to revamp their money fund lineups, convert funds to Government MMFs, and exit the business in 2016. It was also the second straight year that the Federal Reserve inched rates higher in the last month of the year. We've selected the most important news stories of the past year below, as well as those that represent some of the major trends. Crane Data's Top 10 Stories of 2016 include (in chronological order): "Rolling w/Reform Changes II: Recap of '15 Announcements, '16 Plans" (1/6/16); "Govt MMF Assets Surpass Prime for First Time Ever; Highest in 5 Yrs" (2/26/16); "More Exits: PNC Liquidates, PIMCO Goes Govt; First American Update" (3/1/16); "Money Fund Disclosure Reforms Go Live; Websites Add MNAVs, DLA, WLA" (4/14/16); "Prime Outflows, Spreads, and Liquidity Major Issues at MF Symposium" (6/30/16); "Morgan Stanley Pulls Plug on Prime, Muni Sweeps; ignites on Strikes" (8/15/16); "Big Shift Out of Prime and Muni MMFs Hits $1 Trillion" (9/30/16); "SEC's Money Fund Reforms Go Live; NAVs Float, Emergency Gates, Fees" (10/14/16); "Europe Agrees to Money Fund Reforms: VNAVs, CNAVs and New LVNAVs" (11/17/16); and "Fed Hikes! Second Time in 10 Years; Dec. BFI: End of Bull, USAA Profile (12/15/16)."

Our Jan. 6 News story, "Rolling w/Reform Changes II: Recap of '15, '16 Plans," says, "On July 22 [2015], we ran a story entitled, "Managers Rolling with Reform Changes; Recap of Announcements So Far," which summarized all of the money market fund reform related changes that had taken place in the first half of 2015. Since then, we have seen many more announcements and shifts, so we've hit the reset button to update all of the fund lineup changes that occurred in 2015, starting with the largest MMF managers and working our way down. Note: Readers may also review www.cranedata.com's "News Archives" (we recommend choosing "List Archives by Title Only" if you're browsing the history and selecting month by month to browse), "Link of the Day Archives" and "Money Fund Intelligence Archives" for more details."

On February 26, we wrote, "Govt MMF Assets Surpass Prime for First Time Ever. This piece said, "Money fund assets increased for the third straight week, climbing $15.1 billion and pushing asset totals to $2.778 trillion, their highest total since January 2011. The Investment Company Institute's weekly statistics show that for the first time ever, Government money funds now have more assets than Prime funds. Government MMF assets stand at $1.270 trillion, while Prime assets are at $1.265 trillion." Also of note in February, on the 24th we wrote, "Clean Sweep: Tax Free MMFs Liquidating En Masse; BofA, RBC, Deutsche," which told us, "There has been a steady stream of fund liquidations since SEC Money Fund Reforms were announced, with a surprisingly large number of them coming from the Tax-Exempt side."

Our third Top 10 entry is the March 1 article, "More Exits: PNC Liquidates, PIMCO Goes Govt," which comments, "Yet another round of money fund liquidations, prime-to-government conversions and fund lineup change announcements surfaced over the last several days. Among the latest batch: PNC Funds filed with the SEC to liquidate its Prime and Tax-Exempt money funds; PIMCO filed to convert its Prime MMF to Government; and, First American Funds announced a series of changes to its fund lineup, including the launch of a new Prime Retail MMF. With the PIMCO and PNC changes, we now count $272 billion in Prime money funds that have liquidated or converted to Government MMFs, or plan to convert prior to October 2016.... Though the vast majority of these have been conversions from Prime into Govt funds, PNC joins RBC in liquidating its Prime funds instead of converting them. We also report on a new filing from the Schwab Variable Share Price Money Fund."

An April 14 News article, "Disclosure Reforms Go Live; Websites Add MNAVs, DLA, WLA," comments, "Phase II of the SEC's Money Market Fund Reforms goes "live" today, April 14, which means that money fund managers must now officially begin disclosing certain information on their websites. Specifically, they must disclose the percentages of daily and weekly liquid assets (DLA and WLA); daily net inflows and outflows; and, the current market NAV (or MNAV) rounded to four decimal places.... We review statements from several of the largest money fund complexes on what they have done to meet the new requirements, recap the SEC rules, and provide links to websites of the top 20 MMF managers ... below. (Note: Crane Data provides MNAVs, DLA and WLA figures in our MFI Daily product.)" Also of note in April, we wrote on 4/19, "BlackRock Completes BofA Funds Merger; Now 2nd Largest MMF Manager and on 4/18, "NAIC Eliminates Class 1 Status for Prime Money Funds; American Update."

Our June 30 article, "Prime Outflows, Spreads, and Liquidity Major Issues at Symposium," says, "Two of the most popular sessions at our 2016 Money Fund Symposium in Philadelphia last week were "Major Money Fund Issues 2016" and "Senior Portfolio Manager Perspectives," which featured some of the leading authorities from some of the largest players in the money fund industry. During the first session, panelists were asked about the questions they're getting most frequently of late. Fitch Ratings' Ian Rasmussen replied, "The questions usually fall within 3 main categories: They want to know about liquidity, they want to know about asset flows, and they want to know about yield." Indeed, these three topics dominated not just the conversations in these sessions, but the entire conference."

Sweep accounts shifted away from Prime and Tax Exempt funds en masse in 2016, as we reported in our Aug. 15 News, "Morgan Stanley Pulls Plug on Prime, Muni Sweeps." It comments, "Prime and Tax Exempt MMF assets continued their steep slide last week. Though at this point it appears everybody is selling or switching, brokerage sweep accounts continue to be the major contributor of the now over $500 billion shift from Prime and Muni into Government MMFs." Also of note, in August, we wrote on the 4th, "Muni MMFs 'Decimated' by Rules Says Bloomberg; More Liquidations," and on the 12th, we wrote, "TDAM Does About Face, Liquidates Inst MMF and Inst Muni; More Filings."

Of course, the biggest story of 2016 was the trillion shift from Prime into Govt MMFs. We reported in our Sept. 30 News, "Big Shift Out of Prime and Muni MMFs Hits $1 Trillion." It says, "The total amount of money that's moved out of Prime and Tax Exempt MMFs combined approached $1.0 trillion (-$988B) this week, as the "Big Shift" of assets into Government money funds accelerated ahead of the mid-October money fund reform deadline. ICI's latest "Money Market Fund Assets" report shows MMFs overall increasing $10.5 billion in the latest week, but Prime funds fell by over $85 billion (after falling by $60 billion a week the prior 2 weeks). Prime has declined in 17 out of the past 18 weeks (-$579B), and has averaged outflows of $33 billion a week since June 1 and $59 billion since Sept. 1." Also of note, on September 12 we wrote, "HSBC Latest to Exit Prime; Turn Off the Lights? BlackRock on NRSROs."

On October 14, we featured, "SEC's Money Fund Reforms Go Live; NAVs Float." It reads, "October 14 marks the implementation date for the final phase of the SEC's 2014 Money Fund Reforms, which most notably include a floating (4-digit) NAV for Prime Institutional funds and emergency gates and fees provisions for all Prime and Municipal money market funds. (See our July 24, 2014 News, "SEC Adopts MMF Reforms; Chair White on Rule's Fundamental Changes.") ICI released a "Statement on SEC Money Market Fund Rules," which is subtitled, "Reforms from 2010 and 2014 Have Fundamentally Changed Product to Address Any Pre-Crisis Risks." We excerpt their statement, as well as comments from Fitch Ratings and S&P Global Ratings, below."

Then, on Nov. 17, we featured in our News, "Europe Agrees to Money Fund Reforms," The article says, The European Union agreed on a new set of money market fund regulations, we learned from Bloomberg and Reuters. The European Parliament issued a release entitled, "Money Market Funds: breakthrough agreement between MEPs and Slovak Presidency," which says, "An agreement on the EU money market funds regulation has been struck by the European Parliament, Council and Commission, after lengthy negotiations, more than three years after the Commission published the original proposal."

Lastly, the year again ended with a little good news. We reported in our Dec. 15 News, "Fed Hikes! Second Time in 10 Years." It says, "Money market fund investors and managers cheered as the Federal Reserve raised short-term interest rates for the first time this year and for just the second time in 10 years. Money funds, which have an average weighted average maturity (WAM) of 36 days and an average yield of 0.32% currently (as measured by our Crane 100 MF Index), should begin reflecting the 25 basis point higher yields immediately and should reflect them fully in just over a month. So yields should break over 0.5% (levels not seen since early 2009) as we move into January, and the highest-yielding money funds, currently 0.7-0.8%, should break above 1.0% within weeks. Given rejuvenated expectations for more Fed hikes in 2017, money fund yields, and revenues (as fee waivers melt away), are looking up for 2017."

For more 2016 News (and prior years going back to 2006), see Crane Data's News Archives. We'll continue to provide daily updates on the money fund marketplace in the coming year, so keep reading our News and Link of the Day commentaries in 2016. (Watch for our Bond Fund Intelligence News website to launch at some point in the coming months too.) Thanks to our readers, subscribers and supporters; we wish you all the best in the coming year. Happy New Year!

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