The June issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Thursday morning, features the articles: "MMF Assets Turn Positive in '18, Despite Brokerage Sweeps," which discusses how the assets of money market mutual funds are beginning to see inflows; "Goldman Sachs AM's Granet & Hughes Talk Liquidity," which interviews Jason Granet and Kathleen Hughes of Goldman Sachs Asset Management; and, "ICI 2018 Fact Book Sparse on Money Fund Commentary," which excerpts from the annual compilation of statistics and commentary on the mutual fund industry. We've also updated our Money Fund Wisdom database with May 31, 2018, statistics, and sent out our MFI XLS spreadsheet this a.m. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our June Money Fund Portfolio Holdings are scheduled to ship on Monday, June 11, and our June Bond Fund Intelligence is scheduled to go out Thursday, June 14.
MFI's "Assets Positive" article says, "Assets of money market mutual funds are beginning to see the benefits of higher yields. Year-to-date, money funds are now positive, the earliest that they've overcome their seasonal first-half weakness since 2008. While money funds are beginning to take back assets from bank deposits and other alternatives, brokerage sweep providers continue to shift assets away from MMFs and into banks."
Our lead piece continues, "ICI's latest 'Money Market Fund Assets' report shows money fund assets rising for 5 weeks in a row. Money fund assets turned positive for the year-to-date for the first time in 2018 last week. They've increased by $2 billion, or 0.1%, YTD, and they've increased by $192 billion, or 7.2%, over 52 weeks. Over the prior 3 years, MMFs have averaged declines of $75 billion, or 2.7% through the end of May, and over 5 years MMFs (prior to 2018) have averaged declines of $92 billion, or 3.4%, YTD."
MFI's latest Profile reads, "This month, MFI interviews Jason Granet, Deputy Head of Liquidity Solutions for Goldman Sachs Asset Management, and Kathleen Hughes, Global Head of GSAM's Liquidity Solutions Client Business. Goldman Sachs Asset Management is one of the top 5 fund money managers globally, and we discuss the firm's history in cash, their latest priorities and challenges, and developments in Europe and in the world just beyond money markets. Our interview follows."
MFI says, "MFI: Tell us about your history." Granet tells us, "We entered the business in 1981 with $2 billion in assets. `Over our 37-year history, we have grown the franchise into $280 billion-plus of money market fund assets across a range of fund families globally. In 1996, we launch our Dublin-domiciled Liquid Reserves family and we consolidated our US funds into the Financial Square family in 2010. We recently launched our Liquid Reserves Plus funds in dollars, euros, and sterling, which is an extension of our Liquid Reserves range. We manage taxable, tax exempt and tax advantaged money funds both onshore and offshore, and we have funds domiciled in dollars, euros, sterling, and yen, as well as a suite of separate accounts and short duration products. Money markets have a long legacy here and are an important part of our global franchise."
He adds, "We believe our credit process is a strong contributing factor to our business. We're unique in the sense that we run an independently constructed list of between 600 and 1,000 issuers -- depending on the day or week -- that is maintained by Goldman Sachs' credit risk team. They've been doing that since the day we started in the early 1980s. It is the cornerstone of our franchise and something that we are very proud of."
Our "Fact Book" article says, "The Investment Company Institute recently released its '2018 Investment Company Fact Book,' an annual compilation of statistics and commentary on the mutual fund industry. The latest edition reports that money market funds had their strongest inflows in almost 10 years in 2017. Overall, money funds assets were $2.847 trillion at year-end 2017, making up 15% of the $18.7 trillion in overall mutual fund assets."
It continues, "On `Worldwide Regulated Funds, ICI says, 'Money market funds, which are generally defined throughout the world as regulated funds that are restricted to holding only short-term, high-quality money market instruments, had $5.9 trillion in total net assets, or 12% of worldwide regulated fund total net assets.... Worldwide net sales of money market funds totaled $598 billion in 2017, a sharp increase from the $82 billion ... in 2016.'"
The book tells us, "The pattern of net sales over 2016 and 2017 primarily owed to developments in the Asia Pacific region, where money market funds had net sales of $404 billion in 2017, after experiencing net outflows of $14 billion in the previous year. Investor demand for Chinese money market funds strongly influenced net sales of money market funds in the Asia Pacific region. Nearly 80% of Asia-Pacific's total net assets in money market funds were held in funds domiciled in China at year-end 2017.'"
The piece adds, "Investor demand for money market funds in the Asia-Pacific region appears to be related to changes in the total return on the short-term money market instruments held by these funds.... Investors pulled back from Asia-Pacific money market funds as the total return on Chinese money market instruments declined from 4.3% in 2015 to 2.6% in 2016. As the total return on these money market instruments rose throughout 2017, investor demand for Asia-Pacific money market funds increased."
Our June MFI XLS, with May 31, 2018, data, shows total assets increased $63.5 billion in May to $3.068 trillion, after increasing $19.9 billion in April <b:>`_, and decreasing $42.9 billion in March. Our broad Crane Money Fund Average 7-Day Yield was up 6 basis points to 1.41% during the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) was up 6 bps to 1.61%.
On a Gross Yield Basis (7-Day) (before expenses were taken out), the Crane MFA stayed at 1.80% and the Crane 100 also stayed 1.84%. Charged Expenses averaged 0.45% and 0.28% (unchanged), respectively for the Crane MFA and Crane 100. The average WAM (weighted average maturity) for the Crane MFA and Crane 100 were both 28 days, respectively (down from last month). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
