The November issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Wednesday, features the articles: "Money Fund Consolidation & Liquidations, Slight Return," which looks at a short list of recent changes in the sector; "Vanguard's Nafis Smith: Money Markets Compelling," our profile of the new head of Taxable Money Markets at the second largest fund company; and, "Money Fund Yields Break 2.0%; Still Going," which reviews the latest increase in MMF returns. We've also updated our Money Fund Wisdom database with Oct. 31 statistics, and sent out our MFI XLS spreadsheet Wednesday 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 on Friday, November 10, and our Nov. Bond Fund Intelligence is scheduled to go out Thursday, November 15.
MFI's "Consolidation" article says, "While there has been surprisingly little consolidation in the money fund space over the past two years since the adoption of Money Fund Reforms in October 2016, there has been some. Most of the changes involve minor fund liquidations, particularly Tax Exempt MMFs last year and "sweep" money funds this year."
It continues, "But there have been some notable moves, including the recent filing that TDAM will liquidate its funds and the recent announcement that Invesco will buy OppenheimerFunds. We review some of these changes, and look back at the changes over the past decade, below."
Our "Vanguard's Smith" profile reads, "This month, Money Fund Intelligence interviews Nafis Smith, Vanguard's new Head of Taxable Money Markets. We discuss the history, strategies, and outlook for the funds, and he addresses a number of major issues in the money markets today. Vanguard is the second largest manager of money market mutual funds with $327.3 billion in assets (as of 9/30/18). Our Q&A follows."
MFI says, "Tell us about your history." Smith tells us, "We've been running money market funds pretty much since Vanguard was founded. Our flagship taxable retail money market fund, now Prime Money Market, was launched over 40 years ago, back in 1975. In the early '80s, we launched our first government offering, Federal Money Market. In the early '90s, we filled out the taxable lineup and added Treasury Money Market Fund. We also run a number of municipal funds including Vanguard Municipal Money Market, which was launched in 1980."
He continues, "I joined Vanguard in 2003 after I graduated from Cornell University. I've been a part of Vanguard's Fixed Income Group since 2005. Throughout the course of my career in fixed-income, most my career was in bond indexing. I spent time in our Australian office from 2014 to 2016. Then in 2016, I moved back to the U.S. to become a money fund Portfolio Manager working for David Glocke, helping to look after Prime Money Market and Treasury Money Market." (Watch for more excerpts from our interview in coming weeks, or see the latest issue of MFI for the full article.)
MFI's "2% Yields" piece says, "Money fund yields moved higher in October following the Fed's 8th quarter-point rate hike at the end of September, bringing our Crane 100 Money Fund Index up to the 2.0% level for the first time in 10 years. (Our Crane 100 MF Index measures the average yield of the 100 largest taxable money market funds.) Yields have moved up from 1.88% at the start of October and up from 1.12% at the start of 2018 and 0.43% at the start of 2017. We briefly discuss recent yields."
Also, MFI includes a sidebar, "European Reforms & RDM," which says "In other money fund news outside the U.S., we learned from ignites Europe that Valdis Dombrovskis, Vice President of the European Commission, wrote a letter to Steven Maijoor, the Chairman of ESMA, entitled, 'Subject: Implementation of the Money Market Funds Regulation.' While the letter appears to uphold a ban on reverse distribution mechanisms, European money fund providers still believe the matter is undecided, and are awaiting confirmation from the EU entities and regulators to continue with RDM."
Our November MFI XLS, with Oct. 31, 2018, data, shows total assets rising $34.5 billion in October to $3.072 trillion, after increasing $1.6 billion in Sept., $29.2 billion in August, and $36.3 billion in July. Our broad Crane Money Fund Average 7-Day Yield rose 11 bps to 1.80% during the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) was up 12 bps to 2.01% (its highest level since Oct. 2008).
On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA rose 12 bps to 2.25% and the Crane 100 rose to 2.28%. Charged Expenses averaged 0.45% (up one bps) and 0.27% (down one bps), respectively for the Crane MFA and Crane 100. The average WAM (weighted average maturity) for the Crane MFA and Crane 100 was 29 and 30 days, respectively (down 1 day). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
