The June issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Friday morning, features the articles: "Consolidation's Slow March Resumes in Cash Space," which reviews recent mergers and changes among money fund families; "Morgan Stanley Ultra Short Income Fund's Kolk & Wachs," a profile of MSIM's conservative ultra-short bond fund offering; and, "Fin-Tech Invasion Targets Low Bank Deposit Rates," which looks at new entrants challenging the savings and "cash" space. We've also updated our Money Fund Wisdom database with May 31 statistics, and sent out our MFI XLS spreadsheet Friday 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 Tuesday, June 11, and our June Bond Fund Intelligence is scheduled to go out Friday, June 14.
MFI's "Consolidation," article says, "Consolidation and changes continue to slowly spread through the money fund space. As we've written, change paused following the adoption of Money Fund Reforms in October 2016 and the end of the zero rate environment. Last year, we saw some fund liquidations, particularly 'sweep' money funds. But we've seen a little pickup of late in the form of a couple of bigger deals. (See our Nov. 2018 MFI, "Money Fund Consolidation & Liquidations, Slight Return.")
It continues, "The latest involves a deal for Federated to buy PNC's fund assets, and the one before this was the Invesco and Oppenheimer funds merger, which was just completed. We review these latest changes, and list the liquidations and mergers over the past decade."
Our Morgan Stanley profile reads, "This month, we interview Morgan Stanley Investment Management CIO & Co-Head of Global Liquidity Jonas Kolk and Global Head of Liquidity Products Scott Wachs. We discuss MSIM's Ultra Short Income Fund, which recently broke above $15 billion in assets and had its 3-year anniversary, and talk about the fund's history, its investment strategies and a number of other topics in the near-cash and 'beyond cash' space. Our Q&A follows. (Note: We'll be publishing more of this interview in our upcoming June Bond Fund Intelligence too.)
MFI says, "Tell us about the Firm's history. Kolk responds, "We were one of the first in the money market business, launching our first fund in 1975. Given our history and some of the dynamics that we've gone through from a regulatory, and rate, standpoint, we viewed the ultra-short bond space as really a natural addition to our business. We thought that the conservative ultra-short space was a perfect opportunity to leverage our core capabilities and extend our product line."
Wachs says of MS Ultra Short Income, "The fund itself is by design a very, very conservative fund on the conservative end of the ultra-short fund spectrum. It's focus and objectives are very familiar to conservative liquidity investors, namely capital preservation, liquidity and yield. But we think the fund is very differentiated in the space for a number of reasons. One is the high credit quality of the portfolio. The investments in our fund are limited to high-quality money market instruments. Ninety-five percent of the portfolio holdings must be rated A1-P1, which is of course the highest rating for short-term obligations."
Our "Fin-Tech" update says, "In May, Investment News featured the article, 'Fintechs find new focus helping clients with cash management.' Subtitled, 'Robo-advisers, lenders and stock trading apps are all launching high-yield savings accounts,' it explains that, 'Cash management is suddenly one of the hottest trends in financial technology. Since Wealthfront launched Federal Deposit Insurance Corp.-insured high-yield savings accounts in February, the digital adviser said clients have deposited more than $1 billion, generating $2.5 million in interest. With that success, Wealthfront is increasing interest rates on the cash accounts to 2.29%."
The latest MFI also includes the News Brief, "MMF Assets Break $3.5 Trillion," which says, "Assets jumped in May, rising $91.1 billion to $3.511 trillion according to Crane Data. ICI's latest stats show that MMF assets rose for the 7th week in a row, increasing by $119.7 billion, or 3.9%, since April 17. Money fund assets have increased by $115 billion, or 3.8%, year-to-date. Over 52 weeks, ICI's money fund asset series has increased by $285 billion, or 9.9%, with Retail MMFs rising by $192 billion (18.6%) and Inst MMFs rising by $93 billion (5.0%)."
Our June MFI XLS, with May 31, 2019, data, shows total assets rose by $91.1 billion in May to $3.511 trillion, after rising $105.7 billion in April (this included the addition of the $108 billion American Funds Central Cash Fund), falling $10.2 billion in March and gaining $56.4 billion in February. Our broad Crane Money Fund Average 7-Day Yield fell to 2.07% during the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) was down 4 basis points to 2.22%.
On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA fell 3 basis points to 2.49% and the Crane 100 fell to 2.48%. Charged Expenses averaged 0.42% (unchanged) and 0.27% (unchanged), respectively for the Crane MFA and Crane 100. The average WAM (weighted average maturity) for the Crane MFA and Crane 100 was 30 and 31 days, respectively (up one bp and unchanged, respectively). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
