The Investment Company Institute's latest weekly "Money Market Fund Assets" report shows a huge jump in money fund assets after a big drop last week. (Money funds saw big outflows last Tuesday, 12/4 ahead of the sudden Bush Memorial Holiday, but had even larger inflows on 12/6.) ICI's latest asset series shows MMFs with their biggest gain in over 10 years, breaking above the $3.0 trillion level for the first time since early 2010, and the 7th week of strong gains in the past 8. Government, Prime and Tax Exempt MMFs all increased. Overall assets are now up $165 billion, or 5.8%, YTD, and they've increased by $162 billion, or 5.7%, over 52 weeks. Retail MMFs have increased by $114 billion, or 11.3%, while Inst MMFs are up $51 billion, or 2.8%, YTD. Over 52 weeks, Retail money funds have gained $127 billion, or 12.7%, while Inst money funds are up $35 billion, or 1.9%.

ICI writes, "Total money market fund assets increased by $93.50 billion to $3.00 trillion for the eight-day period ended Wednesday, December 12, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $81.83 billion and prime funds increased by $10.14 billion. Tax-exempt money market funds increased by $1.53 billion." Total Government MMF assets, which include Treasury funds too, stand at $2.299 trillion (76.6% of all money funds), while Total Prime MMFs stand at $562.4 billion (18.7%). Tax Exempt MMFs total $141.8 billion, or 4.7%.

They explain, "Assets of retail money market funds increased by $11.47 billion to $1.13 trillion. Among retail funds, government money market fund assets increased by $5.78 billion to $664.07 billion, prime money market fund assets increased by $4.22 billion to $330.68 billion, and tax-exempt fund assets increased by $1.47 billion to $133.24 billion." Retail assets account for over a third of total assets, or 37.6%, and Government Retail assets make up 58.9% of all Retail MMFs.

ICI's release adds, "Assets of institutional money market funds increased by $82.03 billion to $1.87 trillion. Among institutional funds, government money market fund assets increased by $76.05 billion to $1.63 trillion, prime money market fund assets increased by $5.92 billion to $231.67 billion, and tax-exempt fund assets increased by $63 million to $8.51 billion." Institutional assets account for 62.4% of all MMF assets, with Government Inst assets making up 87.2% of all Institutional MMFs.

In other news, UBS Asset Management is the latest money fund manager to weigh in on European Money Market Fund Regulation with the paper, "We've got answers." They explain, "In January 2019 new rules governing European Money Market Funds will come into force. These rules will have implications for the structures and features of money market funds (MMFs). We at UBS Asset Management understand that the regulation can cause uncertainty. We have prepared this document to help you understand how the proposed changes impact your investments with us."

UBS asks, "Q. What is this regulation? The official title is Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds, published in the Official Journal of the European Union on 30 June 2017 and entered into force on 20 July 2017. Q. Who does it apply to? The change to regulation applies to all MMFs established or sold in the EU and applies directly in every member state, without needing to be brought into law locally."

They write, "Q. When do MMFs have to comply with the new regulation? Existing funds are required to be compliant by 21 January 2019. Any funds launched after July 2018 were required to be compliant at launch. Q. What does the regulation focus on? The regulation focuses on three main areas: The creation of new sub-categories under Short Term MMFs. Increased liquidity and diversification requirements (applies to all types of MMFs). Implementation of potential redemption fees and gates when the liquidity level of the fund falls below certain minimum thresholds."

UBS's update continues, "Q. What are the different categories of MMFs? As defined by the European Securities and Markets Association (ESMA), MMFs are currently divided into two main categories: Short Term MMFs - These funds are required to adhere to more conservative investment rules than Standard MMFs. The new regulation introduces three sub categories of Short Term MMFs: Public Debt Constant NAV (CNAV), Low Volatility NAV (LVNAV) and Variable NAV (VNAV)."

The other category, they tell us, is: "Standard MMFs - Funds that fall into this category are subject to less restrictive investment rules (such as liquidity requirements) than Short Term MMFs. They must be variably priced and are, therefore, all categorized as Standard VNAV MMFs."

UBS adds, "Q. What do the changes mean to investors? If you are investing in: UBS (Irl) Select Money Market Fund - US Treasury, the fund will continue to be priced using amortized cost accounting for the full portfolio and operate with a constant NAV. It will be categorised as a Public Debt Constant NAV (CNAV) fund. UBS (Irl) Select Money Market Funds (USD, GBP and EUR), these funds will be categorised as Low Volatility NAV (LVNAV) funds."

They explain, "In a normal market environment, units will continue to price at 1 USD/GBP/EUR per unit so long as the shadow market NAV does not deviate by more than 20 basis points (bps). In the unlikely event that the shadow NAV does deviate by more than 20 bps the fund will convert to a Short Term VNAV fund. UBS (Lux) Money Market Funds (USD, GBP, EUR, CHF and AUD), these funds will remain Variable NAV (VNAV) funds."

Finally, they comment, "Q. Will investors have to move to a new fund once the new regulation is fully implemented? No. Your investment will roll in to the new structure automatically with no impact to your unit holdings, value of your units or the way you currently trade the fund. Q. When will UBS Asset Management comply with the regulation? We intend to be compliant with the EMEA Money Market Fund regulation on/or about 14 January 2019 (subject to change)."

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