The November issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Tuesday morning, features the articles: "Money Funds Coming Back; Starting Hard Sell on Prime," which reviews the growing recovery of money funds; "Northern Trust AM's Peter Yi Talks Prime, Segmentation," which interviews Northern's Director of Short Duration Fixed Income; and, "MMFs Pressure Deposits; Banks, Brokers Raising Rates," which reviews the nascent shift in assets from banks back to money market funds. We've also updated our Money Fund Wisdom database with Oct. 31, 2017, 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 November Money Fund Portfolio Holdings are scheduled to ship Thursday, November 9, and our November Bond Fund Intelligence is scheduled to go out Tuesday, November 14.

MFI's "Money Funds Coming Back" article says, "The gradual recovery in money market assets, rates and revenues continues, and appears to be poised to accelerate in the coming months. Prime money funds continue to build back their base, and asset managers are stepping up their push to get investors to reconsider moving some of their cash out of Government MMFs. Yields breaking over 1.0% along with noticeable spreads also appear to be drawing assets from the banking sector (see article below). While Barron's may be premature in saying that "Money-Market Funds Are Back" recently, the comeback is certainly real and appears to have legs."

MFI continues, "The Barron's piece discusses money fund yields moving over 1% and compares them with the dismal yields on brokerage sweep accounts. (See our Oct. 17 News.) It says, "It's not much, but as the Federal Reserve edges short-​term interest rates higher, money funds are finally starting to offer a yield -- sometimes even more than 1%. With a rate hike probable in December and three more expected in 2018, 'money market funds will become more attractive than they've been in a decade,' says Peter Crane, president of Crane Data."

Our Profile reads, "This month, Money Fund Intelligence again speaks with Northern Trust Asset Management's Director of Short Duration Fixed Income Peter Yi, who has steadily returned to work following a car accident last year. He tells us about Northern's pioneering role in cash "segmentation," the gradual recovery of prime fund assets and their views on differentiation in the ultra-short space."

MFI first asks about Northern's history, and Yi answers, "Sure. As you know, Northern Trust Asset Management has had a long, successful history managing cash and liquidity products. We've been managing liquidity products since the 1970's, when our trust department created our first cash sweep vehicle. Not only do we have the experience, but we're also one of the largest cash managers, whether you simply look at money market mutual fund assets or if you look at it comprehensively with our non-registered STIFs, separately managed accounts and security lending reinvestment collateral pools. This gives us a formidable presence in the liquidity business."

He continues, "Northern Trust thinks of cash management as a core capability and a product that really caters to both our institutional asset servicing business and our retail wealth management clients. Right now, we are managing about $240 billion across all of our money market and short duration strategies. As you know, having experience and leadership are critical in the money market business. This has served us well in successfully navigating not only challenging credit and interest-rate environments, but the changing landscape driven by regulatory reform."

Our "MMFs Pressure Deposits" article says, "While the data is still tentative, anecdotal and other evidence is growing that a shift in assets from banks back to money market funds is starting in earnest. Money fund assets grew faster in the third quarter than they have in years, and deposit totals are beginning to decline. Brokerage sweep rates and bank deposit rates are grudgingly moving higher as reports of high-end investors shifting cash appear in the popular press."

MFI continues, "We wrote earlier this year about the $1.0 trillion brokerage sweep cash sector and discussed how rates were finally inching higher after almost a decade stuck at virtually zero. As money fund yields, on average, approach 1.0%, the much lower-yielding brokerage sweep rates also continue to grind higher. The latest to bump rates up is Wells Fargo Advisors. Wells also announced an expansion of its available FDIC insurance, moving the total coverage limit from $1 million to $1.25 million. (See our Oct. 12 News, "Wells Bumps Up Brokerage Sweep Rates, Raises FDIC Insurance Coverage.")

A sidebar, "ICD Gets Cash;​ AFP Sessions," explains, "At last month's AFP Annual Conference, "portals" and "prime" were the big topics of discussion among cash professionals. Online trading portal ICD published a new white paper, and announced an outside investment. Their release, explains, "Institutional Cash Distributors (ICD) ... released their latest ICD Intelligencer. The whitepaper investigates various surveys on institutional short-term portfolio asset allocation, strengths and weaknesses of treasury investment options, yield comparisons on various products, and best practices for trading and investment risk management." (See our Oct. 16 News, "ICD Releases Treasury Options Paper, Announces Parthenon Investment.")"

Our November MFI XLS, with Oct. 31, 2017, data, shows total assets decreased $2.2 billion in October to $2.941 trillion after increasing $32.0 billion in September and $68 billion in August, but decreasing $32.6 billion in July. Our broad Crane Money Fund Average 7-Day Yield was up 1 basis points to 0.71% during the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) was up 3 bps to 0.90%.

On a Gross Yield Basis (7-Day) (before expenses were taken out), the Crane MFA rose 2 bps to 1.16% and the Crane 100 rose 2 bps to 1.17%. Charged Expenses averaged 0.45% and 0.28% for the Crane MFA and Crane 100, respectively. The average WAM (weighted average maturity) for the Crane MFA was 30 days (down two days from last month) and for the Crane 100 was 31 days (down one from last month). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)

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