Adviser Investments published a brief entitled, "Deja Vu Again - Tax-Exempt Money Yields Soar." Written by Christopher Keith, it tells us, "Here we go again! Tax-exempt money market yields are on a moonshot. Investors and savers may be getting the wrong impression about just how sumptuous their yields will be in the new year. It's something we haven't seen for years as money market yields, and particularly those in the municipal market, have been hovering around 0%. Now they've going over 1% and shooting higher." We excerpt from this article, and we extend a new "Free Friday" offer for our upcoming Money Fund University, below. We'd also like to wish all of our readers the best of luck in 2018. Happy New Year!

The Adviser Investments piece says, "You can thank the Federal Reserve for money yields having picked themselves up off the floor. But the Fed's not responsible for what's happening right now. Seasonal tax-loss swaps, a greater need for cash, tax planning and even money market reforms of a year ago are all conspiring to send yields higher as New Years approaches. Unfortunately, the spike will be short-lived because tax-exempt money market funds typically revert to normal within weeks of the turn of the calendar."

It continues, "This year's rise is also due to a heavy new issue calendar of borrowers (municipalities) rushing to get new bonds sold before sweeping tax law changes take effect in 2018 and limit some issuers' ability to tap the market. How dramatic has the yield explosion been? Take Fidelity Municipal Money Market (FTEXX). The fund began December yielding 0.63% and has climbed to 0.98% (up 35 bps) over the past few weeks. Meanwhile, the taxable Fidelity Money Market Fund (SPRXX) has only seen its yield go from 1.00% to 1.20% (up 20 bps.)"

Keith writes, "Vanguard Municipal Money Market (VMSXX) has seen its yield go from 0.86% to 1.20% (up 34 bps) while the taxable Vanguard Prime Money Market (VMMXX) has seen a 16 bps increase from 1.20% to 1.36%. The Vanguard Pennsylvania Municipal Money Market (VPTXX) has seen its yield jump 42 bps from 0.80% to 1.22%."

Finally, he adds, "These tax-exempt yields will not last. How do I know? They never do.... Yet investors watching their year-end statements or calculating whether tax-exempt money funds are better options than taxable funds are going to be misled by the increases. Today's 0.98% tax-exempt yield on Fidelity Municipal Money Market translates into as much as a 1.73% yield for someone in this year's 43.4% tax bracket or even 1.36% for someone in the 28% bracket. That's way ahead of taxable money fund yields. But, as I said, it won't last. Forewarned is forearmed."

Crane Data's Money Fund Intelligence Daily shows Tax Exempt Money Funds averaging 0.97% (as of Dec. 28, 2017), up 27 bps from a week earlier. Taxable money funds, as measured by our Crane Money Fund Average, have increased from 0.91% to 0.94% during the past week and our Crane 100 Money Fund Index, an average of the largest funds, rose from 1.07% to 1.10%. (The taxable averages jumped the prior week.) As of Nov. 30, 2017, Tax Exempt MMFs were yielding an average of 0.52%, vs. 0.77% for taxable funds (and 0.92% for the Crane 100). (See our MFI Daily, MFI XLS or Crane Indexes files for more information on the latest and historical yields.)

In other news, money market professionals new to the space should take note of next month's "basic training" event, Crane's Money Fund University. Our 8th annual MFU returns to the Boston Hyatt Regency in Boston, Mass., January 18-19, 2018. Those interested in the Boston area should note that we're now offering "free Fridays" whereby any unregistered guests are welcome to "crash" the conference on Friday morning to attend the regulatory, European, ultra-short bond fund, and/or money fund information and data product sessions. (Let us know if you're interested or just show up at the Boston Hyatt on 1/19.)

MFU is designed for those new to the money market fund industry or those in need of a concentrated refresher on the basics. The event also focuses on hot topics like money market regulations, money fund alternatives, offshore markets, and other recent industry trends. The affordable educational conference (see the agenda here or e-mail us to request our brochure) features a faculty of the money fund industry's top lawyers, strategists, and portfolio managers.

Money Fund University offers attendees a 2-day course on money market mutual funds, educating attendees on the history of money funds, the Fed, Rule 2a-7, ratings, rankings, money market instruments such as commercial paper, CDs, CP, ABC, repo, plus portfolio construction. At our upcoming Boston event, we will also take a look at ultra-short bond funds and Europeans MMF regulations. Attendee registration for Crane's Money Fund University is just $500, exhibit space is $2,000, and sponsorship opportunities are $3K, $4K, and $5K. A block of rooms has been reserved at the Hyatt Regency Boston.

We'd like to thank our MFU sponsors –- Dreyfus/BNY Mellon CIS, Federated Investors, Fidelity Investments, Fitch Ratings, J.P. Morgan Asset Management, S&P Global, First American Funds/US Bank, J.M. Lummis & Co., and Dechert -- for their support, and we look forward to seeing you in Boston in just over 2 weeks. E-mail Pete Crane ( for the latest brochure or visit to register or for more details.

We've also released the preliminary agendas for the next Crane's Bond Fund Symposium (March 22-23, 2018, at the Los Angeles Intercontinental), and our "big show," Crane's Money Fund Symposium, which will be held June 25-27, 2018, at the Pittsburgh Westin. Finally, we're also starting to make plans for Crane's European Money Fund Symposium, which will be Sept. 21-22, 2018 at the London Tower Bridge Hilton. Thanks to those who supported our events in 2017, and we hope to see you in Boston, LA, Pittsburgh or London in 2018!

Email This Article

Use a comma or a semicolon to separate

captcha image