The January issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Monday morning, features the articles: "Money Fund Highlights of '17; Yield Jump, Assets Big Stories," which reviews the top stories of 2017 and outlook for 2018; "Public Trust Advisors' Palomba & Waud on LGIPs," which interviews PTA's Randy Palomba and Neil Waud; and, "Top Money Funds of 2017; 8th Annual MFI Awards," which reviews top-performing money market funds for the past 1-, 5- and 10-year periods. We've also updated our Money Fund Wisdom database with Dec. 31, 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 January Money Fund Portfolio Holdings are scheduled to ship Wednesday, January 10, and our January Bond Fund Intelligence is scheduled to go out Monday, January 15.
MFI's "Money Fund Highlights" article says, "This past year was a welcome respite following the dramatic regulatory and portfolio changes of 2016, as slowly rising rates and assets made it money funds' best year in almost a decade. Money fund managers benefited from the end of fee waivers, the slow but steady recovery of Prime funds and the return of that endangered species -- yield. Yields (as measured by our Crane 100) rose from 0.43% to 1.12%, their highest level since the end of 2008. Below, we take a look back at the highlights of 2017, and we also give a brief outlook for 2018."
It continues, "According to Crane Data's numbers, assets rose by $287.0 billion, or 10.4%, to $3.041 trillion in 2017. (Note that our numbers were inflated slightly by the addition of previously unreported funds in 2016.) The ICI's narrower collection recently broke above the $2.8 trillion, its highest level since the end of 2010. YTD, ICI shows MMF assets increased by $113 billion, or 4.1%."
MFI's latest Profile reads, "This month Money Fund Intelligence interviews Public Trust Advisors' CIO Randy Palomba and Head of Portfolio Management Neil Waud. Public Trust manages approximately $25 billion, including more than $18 billion of the estimated $200-300 billion local government investment pool (LGIP) marketplace. LGIPs are run similarly to money market funds and are used by local governments to manage cash. Our Q&A follows."
We asked Palomba to "Give us a little history." He responds, "Public Trust opened its doors in November of 2011 and assumed management of COLOTRUST, a local government investment pool for Colorado, shortly thereafter. With COLOTRUST, my history dates back to 1989.... I assumed the duties of portfolio manager in 1995 and continued through a change in administrator and investment advisor in 1998 (when COLOTRUST selected MBIA as its service provider)."
He continues, "I eventually left Cutwater Asset Management (previously MBIA) in July of 2011 ... to co-found Public Trust.... COLOTRUST wanted to explore other service providers in the market place. We were fortunate enough to be awarded the contract and have been managing those assets ever since. Fast forward to today, and we have grown to manage several more clients, so it has been a very positive story as we moved forward."
Palomba says of their biggest priority, "Our mantra, and we live by it through any kind of market cycle, is 'safety, liquidity, and then yield.' At Public Trust, we have developed a true investment team environment.... We work on these portfolios with a collaborative effort, where there is constant communication and a flow of ideas being generated.... This gives us the opportunity to bounce ideas off one another, thoroughly analyzing all aspects of our investment process. We meet frequently to set overall strategy, then Neil and I determine the assets to purchase for the various portfolios." (Watch for more excerpts from this "profile" later this month, or ask us to see the latest MFI.)
Our "Top Money Funds of 2017" article says, "In this issue, we recognize the top-performing money funds, ranked by total returns, for calendar year 2017, as well as the top funds for the past 5-year and 10-year periods. We present the funds below with our annual Money Fund Intelligence Awards. These are given to the No. 1-ranked funds based on 1-year, 5-year and 10-year returns, through Dec. 31, 2017, in each of our major fund categories -- Prime Institutional, Government Institutional, Treasury Institutional, Prime Retail, Government Retail, Treasury Retail and Tax‐Exempt."
It continues, "The Top-Performing Prime Institutional funds were Morgan Stanley Inst Liq MMP Inst (MPUXX) and UBS Select Prime Money Mkt Pref (SPPXX), which both returned 1.14%. (BlackRock Cash Inst MMF SL, BRC01, would have been No. 1, but this fund is private, only available to internal securities lending clients.) Among Prime Retail funds (and funds overall), Fidelity Inv MM: MM Port Inst (FNSXX) had the best return in 2017 (1.17%)."
The article adds, "The Top‐Performing Government Institutional funds in 2017 were Fidelity Series Govt Money Market Fund (FGNXX) and UBS Liquid Assets Govt Fund (UBS02), which returned 0.86%. TIAA CREF MMkt Fund Advisor (TMHXX) and Vanguard Federal Money Mkt Fund (VMFXX) tied for the Top Government Retail fund spot over a 1‐year period with returns of 0.81%."
Our January MFI XLS, with Dec. 31, 2017, data, shows total assets increased $57.9 billion in December to $3.041 trillion after increasing $46.4 billion in November, decreasing $2.2 billion in October, and increasing $32.0 billion in September and $68 billion in August. Our broad Crane Money Fund Average 7-Day Yield was up 16 basis points to 0.92% during the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) was up 19 bps to 1.12%.
On a Gross Yield Basis (7-Day) (before expenses were taken out), the Crane MFA rose 15 bps to 1.35% and the Crane 100 rose 18 bps to 1.38%. Charged Expenses averaged 0.44% and 0.28% (unchanged) for the Crane MFA and Crane 100, respectively. The average WAM (weighted average maturity) for the Crane MFA was 30 days (up one day from last month) and for the Crane 100 was 30 days (up one from last month). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
