BlackRock: Again, Time For Prime
BlackRock released another update entitled, "Time for Prime." It says, "There is no longer a one-size-fits-all solution in the money market space. In the new world of cash investing, should prime money market funds (MMFs) have a place in your strategy? In addition to the transparency information available elsewhere on this site, the information below may help you better understand how an allocation to prime MMFs could be additive to your portfolio." Their "Prime Perspectives" include: Following the momentous shift in money market fund (MMF) assets into government MMFs last year, 2017 has seen assets consistently return to prime MMFs as investors gain comfort with the new paradigm. According to iMoneyNet, institutional prime MMF AUM has increased 22% year-to-date. Historically, the second half of the calendar year sees money fund inflows, so we believe this trend is expected to continue and gain momentum. BlackRock's flagship institutional prime MMF, BlackRock Liquidity Funds TempFund, remains one of the only prime MMFs with over $10 billion in assets under management (AUM). A recent survey by Bank of New York Mellon Corporation indicates that investors are evaluating the spread differential between prime and government MMFs with an eye towards certain entry points. This suggests that more investors may segment a portion of their cash into prime MMFs. According to iMoneyNet, average spreads are currently 32 basis points between the categories. Mark-to-market net asset value (NAV) per share volatility in prime MMFs since the beginning of the implementation of the floating NAV has been relatively low, despite the Federal Reserve's three recent quarterly rate hikes and active engagement in interest rate normalization. From a total return perspective, we believe that the continuation of this trend of relative NAV stability within these portfolios combined with the yield spread relative to government MMFs could provide an advantage to prime MMF investors. Check out a comparison of our flagship prime and government money market funds below."
