Wells Fargo Daily on Flows, MNAVs
On Friday, Wells Fargo Securities' wrote in its "Daily Short Stuff," "The first week of the year saw $35 billion in assets leave institutional government money market funds, while prime funds gained $4.1 billion. This is not a sea change per-se but could suggest some reallocation from government to prime within fund families at BlackRock and JP Morgan. Looking at the largest gains amongst prime institutional funds, we note that BlackRock's Liquid TempFund gained $1.6 billion and JPMorgan's Prime Money Market Fund gained $1.4 billion. Each of these funds remains at the high-end of the yield spectrum, with each paying north of 80 basis points on the share classes that earned the majority of the assets. On the government side, the largest outflows came from JP Morgan's funds, Dreyfus's Government Cash Management Fund and Goldman Sachs's FS Government Fund, which saw outflows between $5 billion and $6 billion. Morgan Stanley and Fidelity saw outflows between $3 and $5 billion and Federated, BlackRock and Wells Fargo each had outflows between $1 billion and $3 billion." The piece, written by Garret Sloan and Vanessa Hubbard, adds, "Given that the shift out of government funds is likely to be the result of year-end cash needs, it is difficult to make conclusions that any of the cash leaving the BlackRock and JP Morgan funds is related to reallocation, but we would not entirely discount the idea that investors could be taking a fresh look at the MMF landscape and shift assets back to prime in the New Year. The low MNAV volatility may be one thing that is attracting fund investors back to prime along with the higher yield. Currently, based on Crane Data, there are 6 MMF share classes that are trading with a NAV below 1.000 and 122 prime institutional share classes trading with a NAV at or above 1.000. This compares to 127 share classes that traded at or above 1.000 on October 14, and 1 fund trading below 1.000 on October 14. The high and low range of MNAV prices today is $0.9996-$1.0009, while on October 14, the range was $0.9999-$1.0009."
