The Wall Street Journal writes "Cash Is a Star in Rocky Year for Global Markets," which says, "In a year of anemic returns and wild gyrations across most markets, cash is a star. U.S. cash and cash equivalents are on track to be some of the best-performing assets in 2018, enticing money managers struggling with a rare synchronized downturn in stocks, commodities and bond markets. Rising returns on cash make it more appealing for investors to move out of other investments, risking a turning point for markets as the global economy shows signs of slowing and the Federal Reserve slowly normalizes interest rates." We quote from the Journal and take a look at how cash has done below, and we also review our latest Weekly Portfolio Holdings data.
The Journal tells us, "One popular cash proxy -- the S&P U.S. Treasury Bill 3-6 Month Index, which measures the performance of U.S. Treasury bills maturing within three to six months -- has returned 1.7% so far this year. That comes against a background of lower and even negative returns on most assets this year, including global stocks, high-yield and investment-grade corporate bonds, long-term government debt and a range of commodities."
It adds, "There appears to be room to add more to cash positions: Fund managers' cash levels stood at 4.7% in November -- slightly above the average of the past 10 years, but below the 5.1% levels reached in September and October, according to Bank of America Merrill Lynch."
Finally, they write, "For most of the past decade, holding cash or cash-like instruments such as certificates of deposit or short-dated Treasury bills has failed to pay off. A person who invested $100 in the S&P 500 about 10 years ago would have about $396 by now, compared with roughly $104.50 on the same investment in cash."
Crane Data's December Money Fund Intelligence will be out Friday morning with our 11/30/18 data (we'll also have a story on money funds vs. bond funds). But through 10/31/18, money funds have returned 0.46% year-to-date and 1.30% over 1-year, as measured by our Crane 100 Money Fund Index, versus bond fund returns of -0.84% YTD and -0.56% over 12 months, as measured by our Crane 100 Bond Fund Index. (Our broader Crane Money Fund Average shows returns of 1.14% YTD and 1.28% over 1-year vs. the Crane BFI Total Index shows returns -0.73% and -0.45%, respectively.)
In other news, Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics and summary Tuesday, which tracks a shifting subset of our monthly Portfolio Holdings collection. The latest cut, with data as of Nov. 30, includes Holdings information from 59 money funds (down from 73 on Nov. 23), representing $1.127 trillion (down from $1.158 trillion) of the $2.984T (37.8%) in total money fund assets tracked by Crane Data. (For our latest monthly Money Fund Portfolio Holdings numbers, see our Nov. 13 News, "Nov. MF Portfolio Holdings: Treasury, Repo, CDs Up; Fed Repo Near Zero.")
Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Repurchase Agreements (Repo) totaling $429.1 billion (down from $431.4 billion on Nov. 23), or 38.1% of holdings, Treasury debt totaling $356.7 billion (down from $357.7 billion) or 31.7%, and Government Agency securities totaling $222.8 billion (down from $223.4 billion), or 19.8%. Commercial Paper (CP) totaled $46.6 billion (down from $56.1 billion), or 4.1%, and Certificates of Deposit (CDs) totaled $39.0 billion (down from $40.5 billion), or 3.5%. A total of $16.7 billion or 1.5% was listed in the Other category (primarily Time Deposits), and VRDNs accounted for $16.0 billion, or 1.4%.
The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $356.7 billion (31.7% of total holdings), Federal Home Loan Bank with $168.3B (14.9%), RBC with $46.2 billion (4.1%), BNP Paribas with $45.0B (4.0%), Federal Farm Credit Bank with $39.3B (3.5%), Credit Agricole with $31.6B (2.8%), HSBC with $24.5B (2.2%), Wells Fargo with $24.2B (2.1%), Societe Generale with $24.0B (2.1%), and Fixed Income Clearing Co with $22.0B (2.0%).
The Ten Largest Funds tracked in our latest Weekly Holdings update include: Fidelity Inv MM: Govt Port ($118.1B), Goldman Sachs FS Govt ($99.1B), BlackRock Lq FedFund ($83.3B), Wells Fargo Govt MMkt ($70.5B), BlackRock Lq T-Fund ($70.3B), Goldman Sachs FS Trs Instruments ($58.4B), Dreyfus Govt Cash Mgmt ($56.6B), Morgan Stanley Inst Liq Govt ($51.7B), State Street Inst US Govt ($45.4B), and Fidelity Inv MM: MMkt Port ($42.9B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary.)
Finally, the ICI released its "Annual Report to Members" last week. Though it had little on money market funds, it did have one mention of fund data. The publication quotes Chief Economist Sean Collins, "One of the biggest challenges we face is collecting increasing amounts of data. The SEC [Securities and Exchange Commission] is going to be collecting more new data through data reports called N-PORT and N-CEN. It's going to be a massive amount of data on all kinds of things that the SEC never had access to previously -- such as funds' monthly portfolio holdings, various risk metrics, liquidity measures. And the SEC is gearing up to analyze and use all these data in its regulatory work."
He adds, "I believe it would be very important for us to have access to the same information so that we can conduct our own research and analysis, verify what the government may produce in terms of summary statistics, help interpret the data, or help provide information to the fund industry and the public about trends in the industry. Historically, this has been of immense importance to our members, and it stands to grow even more important."
Collins explains, "The SEC collection of Form N-MFP data on money market funds is an excellent example of how our research serves the interests of our members in a similar way. Members voluntarily supplied the data to us on the same basis as they gave them to the SEC, and that was really important for us, because it allowed us to do analysis, push back on inappropriate aspects of rules that the SEC was putting in place for money funds, and challenge the notion that the money market fund industry poses financial stability concerns. We hope members will see the value of a similar arrangement with respect to N-PORT data."
