Wells Fargo Money Market Funds' latest "Overview, Strategy, and Outlook" tells us, "For money market funds, the gradual pace of Fed tightening has enabled prime money market funds to opportunistically extend weighted average maturities (WAMS) and weighted average lives(WALS) to take advantage of what yield pickup there is from extension out of the curve. The average maturity for institutional prime funds has hovered in the mid-20s for the past several months. Our funds' WAMS have been slightly lower at around 20 days recently (with WALS closer to 60 days) in an effort to maintain increased amounts of liquidity and to be in a position to more quickly capture the effects of future rate hikes. In this environment, we continue to construct high-quality portfolios that are focused on liquidity while opportunistically purchasing floating-rate notes in an effort to incrementally increase yields." The piece adds, "The money market industry is experiencing a small but noticeable change in the composition of asset growth this year. After the implementation of money market reform, we surmised that it might take a pickup in yield of 30 bps to 35 bps to entice investors who moved to government funds during reform to come back into prime funds. In looking at weighted industry assets, the yield differential between the two fund types has averaged 30 bps since the end of 2016; on a year-to-date basis, prime institutional assets have increased by $61 billion (+50%) while government/ agency institutional funds have declined by $50 billion (-3%). As investors become more comfortable with the new fund structures and behavior, we fully expect the trend to continue. To help investors understand the total return proposition of floating net asset value (NAV) money market funds as compared with stable NAV money market funds, Wells Fargo Asset Management, the money market funds' sponsor, recently published a total return calculator designed to model multiple investment scenarios. You can find it and other helpful information at www.wellsfargofunds.com/icm/ market-commentary-insights/money-fund-calculator.html."

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