The January issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Monday morning, features the articles: "Money Fund Highlights of '16; Higher Yields The Story in '17," which reviews the top stories of 2016; "AB's Ed Dombrowski on Growing Govt MMFs," which profiles the Portfolio Manager of the AB Government Money Market Portfolio; and "Top Money Funds of 2016; 8th Annual MFI Awards," which looks at the top-performing money funds of 2016. We have updated our Money Fund Wisdom database query system with Dec. 31, 2016, performance statistics, and also sent out our MFI XLS spreadsheet Monday a.m. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our January Money Fund Portfolio Holdings are scheduled to ship Wednesday, Dec. 11, and our Dec. Bond Fund Intelligence is scheduled to go out Tuesday, Jan. 17.
MFI's lead "Money Fund Highlights of '16" article says, "In 2016, we witnessed historic changes to money market mutual funds. Money Fund Reforms went live in October, and prior to this date we witnessed a $1 trillion-plus shift from Prime to Government funds. This "big sort" drove lineup changes, liquidations, and consolidation last year, but amazingly overall asset levels remained flat for their fifth straight year. Below, we take a look back at the highlights of 2016, and we also give a brief outlook for 2017."
It adds, "The unprecedented changes were driven by provider and investor fears of gates and fees, and flows in 2016 were driven by sweep providers converting funds and institutional investors fleeing Prime to "go Government." We show monthly asset levels and yields in the chart on page 1. In the coming year, however, higher rates, the acceptance of prime money fund alternatives and investors' potential return to Prime look to be the big stories." (See also, Crane Data's Dec. 28 News, "Top 10 Stories of 2016: Prime to Govie Shift, Reforms Go Live, Changes.")
Our latest fund "profile" interview reads, "This month, Money Fund Intelligence interviews AB Government Money Market Portfolio Vice President & Portfolio Manager Ed Dombrowski. AB, the former AllianceBernstein, whose motto is "Ahead of Tomorrow," has been rebranding and focusing on expanding their money market fund presence by courting the "portal" and institutional marketplace, among other things. Our Q&A follows."
MFI asks, "Tell us a little bit about your history." Dombrowski answers, "We have a long history, nearly 40 years, in the money fund business. The first fund started in July 1978. Alliance Capital was a top 15 sponsor in the 90's and early 2000's. In 2005, the firm sold its money fund business to Federated. From 2005-2013, we refocused our efforts to efficiently manage internal cash, and one of the results of that was creating our Government Money Market Portfolio (formerly Government STIF Portfolio). I came to AB in 2001, and joined its cash management team in 2004. I spent some time in different areas on the cash management desk before becoming a portfolio manager, running three 2a-7 registered government funds, as well as separate accounts."
Our "Top Money Funds of 2016" article explains, "In this issue, we recognize the top‐performing money funds, ranked by total returns, for calendar year 2016, as well as the top ranked funds for the past 5-year and 10-year periods. We present the funds below with our annual Money Fund Intelligence Awards. These include the No. 1-ranked funds based on 1-year, 5-year and 10-year returns, through Dec. 31, 2016, in each of our major fund categories -- Prime Institutional, Government Institutional, Treasury Institutional, Prime Retail, Government Retail, Treasury Retail and Tax‐Exempt."
The article continues, "The Top-Performing Taxable fund overall in 2016 and top among Prime Institutional funds was Deutsche Variable NAV MM Cap (VNVXX), which returned 0.68%. The Top Prime Inst fund over $100 million (and unrestricted) was Western Asset Inst Liquid Res Inst (CILXX), which returned 0.55%. Among Prime Retail funds, Vanguard Prime MMF Adm (VMRXX) had the best returns in 2016 (0.55%)."
In a sidebar, we discuss, "Worldwide MF Assets: Lux, China, France, India Gain," saying, "The Investment Company Institute released its "Worldwide Regulated Open-End Fund Assets and Flows Third Quarter 2016" earlier this week. The latest data collection on mutual funds in other countries (as well as the U.S.) shows that money fund assets globally rose by $56.3 billion, or 1.1% in Q3'16, led by increases in Luxembourg, China, France and India. MMF assets worldwide have risen by $220.4 billion, or 4.6%, the past 12 months. China, Brazil, Luxembourg, France, Ireland and India showed the biggest asset increases in the past 12 months through Sept. 30, 2016. The U.S., Ireland, Brazil and Japan showed the largest declines in Q3, while Japan, Mexico and Sweden posted the largest declines over the past year."
We also do a sidebar, entitled, "MFI Adding Internal MFs." It comments, "Since the SEC began disclosure of its Form N-MFP filings without a 2-month lag in April 2016, we've been parsing and integrating this new trove of data into our existing collections and products. This month, we've added a big batch (10) of private and internal money market funds to our listings. We've been offering the full N-MFP fund listings in our "fundsnmfp" file (available via our "Content" center) for months now, but now we've begun integrating many of the previously non-public money funds. We list the 15 largest of these internal and private money funds below. They total $219.7 billion, with 10 Prime funds totaling $178.3B. Note that we've added $110.3B of these assets (the funds in bold) this month."
Our January MFI XLS, with Dec. 31, 2016, data, shows total assets increased $115.1 billion in December to $2.761 trillion (this includes the addition of $110.3 billion in new funds) after increasing $32.1 billion in November, and decreasing $3.1 billion in October and $48.5 billion in September. Our broad Crane Money Fund Average 7-Day Yield was up 9 bps to 0.26% for the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) rose 13 bps to 0.43% (7-day).
On a Gross Yield Basis (before expenses were taken out), the Crane MFA rose 0.11% to 0.61% and the Crane 100 rose 14 bps to 0.68%. Charged Expenses averaged 0.35% and 0.25% for the Crane MFA and Crane 100, respectively (unchanged). The average WAM (weighted average maturity) for the Crane MFA was 36 days (up 1 day 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.)
