The July issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Monday morning, features the articles: "Prime, Alternates, Business as Usual Hot Topics in Atlanta," which quotes highlights from our recent Money Fund Symposium conference in Atlanta, "Invesco's Flanagan Keynotes Money Fund Symposium," which reviews the Keynote speech from Invesco CEO & President Martin Flanagan, and, "Worldwide MMF Assets Up: US, China Drop; India Rising?" which reviews ICI's latest quarterly global statistics. We have also updated our Money Fund Wisdom database with June 30, 2017, statistics, and 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 July Money Fund Portfolio Holdings are scheduled to ship Wednesday, July 12, and our July Bond Fund Intelligence is scheduled to go out Monday, July 17.
MFI's "Prime, Alternates, Business as Usual" article says, "Our recent Money Fund Symposium in Atlanta, which attracted 550 money fund and money market professionals last month, featured a number of industry heavyweights discussing a host of important topics. The biggest questions this year included: Will Prime survive and recover? Will higher rates and the lack of further change return money funds to business as usual? And, will alternatives such as private funds or ultra-short bond funds take root and begin to attract significant amounts of assets? We quote from a number of sessions and speakers on these issues below."
The piece continues, "First we take some comments from the session, "Major Money Fund Issues 2017," moderated by Peter Crane and featuring Tracy Hopkins from Dreyfus BNY Mellon CIS, Pat O’Callaghan from Goldman Sachs A.M., and Jeff Weaver from Wells Fargo Funds. Hopkins comments, "What we're kind of seeing and hearing is now is that we finally have some yield spread between products [and that] there is some new interest back into prime funds.... I think the movement from government funds back into prime funds is going to be slow. But now that there's about a 30 to 33 basis points spread, you're just gaining interest again.... We are starting to see prime funds starting to take in assets. Overall the prime MMF space is up about 9% YTD, and the institutional prime MMF space is up about 28%."
Flanagan's speech reads, "Crane's Money Fund Symposium 2017 opened with a Q&A with Martin Flanagan, CEO & President of Atlanta-based Invesco, one of the largest pure asset managers in the world. Flanagan's keynote, entitled, "The Elevation of Money Market Funds," discussed a number of important topics in the asset management, money fund, and product development spheres. An edited transcript from the session follows."
Crane says, "Tell us about your history. Flanagan responds, "My family had been in the commodities business for many, many years ... so the markets and international business were always an interest.... I ended up at Templeton way back when, and I've stayed [in investment management] ever since. I think for all of us, it's a great industry. It's a dynamic industry, and it's just a fascinating time. I think the advice I would give is to continue doing what we do. We are fiduciaries to our clients. As long as we keep our clients first, we're all going to do well.... Atlanta is a phenomenal place.... It is a fantastic city, very dynamic, an incredible business community, arts, sports community, and very welcoming.... So, come on down."
Crane also asks, "What's the current state of asset management?" He tells us, "It's an incredibly important industry. There is an absolute need for what we do.... It's a growing industry. But we all know it's going through dramatic changes right now. It has signs of a maturing industry and the competition that comes along with [that].... The winners will probably look different in 5 years than they were 5-10 years ago. But that said, I think it's a great industry."
Flanagan continues, "You've seen this big move into passive, and an extended period of time of [this] low-rate environment. So that's really caused a lot of firms to do self-reflection.... I think if you look at it today and ask the question, 'What do you really need?' Clients are moving much more towards achieving outcomes, and this really [calls for a] combination of active and passive alternatives, and this whole array of solutions. So to be a firm, you have to be broad, you have to be deep.... It is an environment that if you can't invest where the market is going right now or where the clients are going, it's been really difficult.... You need a suite of capabilities, you need to have deep relationships ... clients are wanting to work with fewer people."
Our "Worldwide" update explains, "The Investment Company Institute released its "Worldwide Regulated Open-End Fund Assets and Flows First Quarter 2017" recently. The latest data collection on mutual funds in other countries (as well as the U.S.) shows that money fund assets globally rose by $127.3 billion, or 2.5%, in Q1'17, though U.S. and Chinese money funds fell. MMF assets worldwide have increased by $161.5 billion, or 3.2%, the past 12 months. Japan, France and Korea showed the biggest asset increases in Q1'17, while Japan, Luxembourg, France and Brazil showed the largest increases over 12 months. China, the U.S., Belgium and Sweden posted the largest declines over the past year. We review the latest Worldwide MMF totals below."
It continues, "Money market fund assets increased by 0.4 percent globally to $5.15 trillion.... Money market fund assets represented 12 percent of the worldwide total.... Money market funds worldwide experienced an inflow of $29 billion in the first quarter of 2017 after registering an inflow of $96 billion in the fourth quarter of 2016."
In a sidebar, we discuss, "Dreyfus' Survey on Prime," and write, "A release entitled, "Prime Money Market Inflows Expected to Accelerate, Finds Dreyfus Survey," says, "Widening spreads are luring more capital back to higher yielding prime funds, according to a survey of more than 100 money market professionals and investors conducted by BNY Mellon Cash Investment Strategies (CIS), a division of The Dreyfus Corporation."
Our July MFI XLS, with June 30, 2017, data, shows total assets decreased $15.0 billion in June to $2.801 trillion after increasing $20.3 billion in May and $68.9 billion in April, but decreasing $25.2 billion in March. (Note that we added $67.3 billion in new funds in April.) Our broad Crane Money Fund Average 7-Day Yield was up 13 bps to 0.62% for the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) was up 13 bps to 0.81% (7-day).
On a Gross Yield Basis (7-Day) (before expenses were taken out), the Crane MFA rose 0.13% to 1.06% and the Crane 100 rose 13 bps to 1.09%. Charged Expenses averaged 0.43% and 0.29% for the Crane MFA and Crane 100, respectively. The average WAM (weighted average maturity) for the Crane MFA was 31 days (up 2 days from last month) and for the Crane 100 was 32 days (up 2 days from last month). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
