The March issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Tuesday morning, features the articles: "Green Shoots: MMFs' Future Brightens on Fed, Prime Flows," which reviews the benefits of rising rates and a return to Prime on MMFs; "New King of Cash: Interview with Fidelity's Tim Huyck," which "profiles" the Chief Investor Officer for Money Markets at Fidelity Investments; and, "In Memoriam: Money Fund Guru Bill Donoghue," which reprints Crane Data's article on Bill Donoghue. We have also updated our Money Fund Wisdom database query system with Feb. 28, 2017, performance statistics, and sent out our MFI XLS spreadsheet Tuesday a.m. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our March Money Fund Portfolio Holdings are scheduled to ship Thursday, March 9, and our March Bond Fund Intelligence is scheduled to go out Tuesday, March 14.
MFI's lead "Green Shoots: MMFs' Future Brightens" article says, "After seven years of zero yields and another two of near zero yields, money fund investors finally may see rates crawl back above 1.0% in 2017. The Federal Reserve appears poised to raise rates next week, in June and again later this year. Investors have already been inching back into Prime funds, and another hike or two may well make spreads too attractive to ignore. We examine the latest on the Fed, flows and fund news below."
It adds, "Regarding the sudden uptick in rate hikes, Federal Reserve Chair Yellen explained last week, "With the job market strengthening and inflation rising toward our target, the median assessment of FOMC participants as of last December was that a cumulative 3/4 percentage point increase in the target range for the federal funds rate would likely be appropriate over the course of this year."
Our Fidelity profile reads, "This month, Money Fund Intelligence interviews Tim Huyck, Chief Investment Officer for Money Markets at Fidelity Investments. Fidelity is by far the largest manager of money funds with over $500 billion, almost double the next largest competitor. The company's history goes back to the earliest days of money funds (recently retired Chairman Edward "Ned" Johnson III played a key role in popularizing money funds), and Fidelity remains the most important player in the space. Our Q&A follows."
MFI says, "Tell us a little about your history," and Huyck answers, "Fidelity Daily Income Trust (FDIT) was the first money fund that we launched at Fidelity [in 1974], and it was the first money fund with check writing privileges.... I joined Fidelity in September 1990, just before the move of the money market desk from Boston to Dallas. We were in Dallas for 7 years, and then in November of '97 we moved from Dallas to Merrimack. We're celebrating our 20-year anniversary here in Merrimack (NH) this year."
He adds, "I'm coming up on 27 years at Fidelity, and all but three of those years have been spent in money markets. I've traded; I've managed the trading desk; I basically had every trading role on the taxable money market desk. I managed most of the taxable money market funds that we had at some point or another. In 2014, I took over as CIO for the money market group, and I report into Nancy Prior."
Our "In Memoriam on Bill Donoghue" explains, "Crane Data was saddened to learn recently that the original money fund 'guru," Bill Donoghue, passed away. Donoghue's Obituary explains, "William E. Donoghue, 75, of Seattle, Washington, died January 16, 2017 in Healdsburg, California. Donoghue was a respected author and investment expert best known for the growth of money market mutual funds, of which he raised awareness through newsletters, investment conferences, books, and television appearances." We excerpt from the obituary and reflect on our Peter Crane's history with Donoghue."
The obituary continues, "While in graduate school, Donoghue met a professor who encouraged him to focus on cash management. He quickly became a leading expert on the subject, chairing financial management seminars and serving as editor of Donoghue's MoneyLetter. The periodical came out during a time of unusually high interest rates. In the 1980s, Donoghue was the leading analyst and monitor of the budding money market mutual fund industry. Along with MoneyLetter, he founded "Donoghue's Money Fund Average," a rating system for these interest-sensitive investment vehicles."
In a sidebar, we discuss, "JPMorgan on "Alt-Cash," saying, "J.P. Morgan Securities' "Short Duration Strategy Weekly" featured a brief last month entitled, "Ultrashort and short-term bond fund update." They explain, "Ultrashort and short-term bond funds are one subsector of the non 2a-7 space that have received a relatively increased amount of attention post-MMF reform. These "alt-cash" vehicles are comprised of ETFs and open-ended mutual funds that invest primarily in high grade fixed income securities maturing anywhere between 6 moths to 3.5 years -- well beyond what most consider to be the traditional money market arena."
Our March MFI XLS, with Feb. 28, 2017, data, shows total assets increased $45.6 billion in February (this includes the addition of $45.0 billion in new funds) to $2.761 trillion after decreasing $43.0 billion in January, and increasing $107.8 billion in December (this includes the addition of $110.3 billion in new funds). Our broad Crane Money Fund Average 7-Day Yield was up one bps to 0.29% for the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) was unchanged at 0.48% (7-day).
On a Gross Yield Basis (before expenses were taken out), the Crane MFA rose 0.01% to 0.69% and the Crane 100 rose 2 bps to 0.75%. Charged Expenses averaged 0.40% and 0.27% for the Crane MFA and Crane 100, respectively. The average WAM (weighted average maturity) for the Crane MFA was 36 days (down 1 day from last month) and for the Crane 100 was also 36 days (down 1 day from last month). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
The $45.0 billion in new funds added this month to Crane Data's Money Fund Intelligence XLS collection include: American Funds US Govt MMF R6 (RAFXX, $588M), DFA Short Term Investment Fund (DFA01, $22.6B), Fidelity Series Govt Money Market F (FFGXX, $3.7B), Fidelity Series Govt Money Market Fund (FGNXX, $3.3B), Great-West Govt MM Initial (MXMXX, $1.4B), JPMorgan Prime MM IM (JIMXX, $1.9B), JPMorgan US Govt MM IM (MGMXX, $598M), JPMorgan US Trs Plus MM IM (MJPXX, $7.3B), SEI Daily Inc Trust Treasury II A (SCPXX, $545M), UBS Select Govt Investor (SGEXX, $57M), Voya Govt Liquid Asset S (ISPXX, $601M), Voya Govt Liquid Asset S2 (ITLXX, $334M), Western Asset Inst Govt MM L (LWPXX, $516M), and Fidelity Muni Cash Central Fund (FID04, $1.7B).
