Wells Fargo Money Market Funds' new monthly "Overview, strategy and outlook publication features a piece on "The year in review." Authors Jeff Weaver and team comment, "While most of the year we focused on the Federal Reserve (Fed), we took three opportunities to engage in a more in-depth discussion on specific topics affecting the money markets. In February, we examined the state of the credit environment, examining both relevant asset classes as well as regional differences. In May, we discussed what was on the horizon for the United Kingdom after it missed its Brexit deadline and Prime Minister Theresa May resigned. And finally, as talk of an impending recession ramped up, in August we focused on the typical expected behavior of money market funds in a recessionary environment. But the Fed and its actions dominated our monthly commentaries this year, and for buy-siders it was not for reasons we particularly liked. After nine tightening moves, beginning with lifting the target federal funds rate off its zero bound in December 2015, the Fed signaled at its December 2018 meeting that it might be pausing.... Then, in June it became clear that the Fed had lost all patience and completed a dovish pivot." Wells' update explains what's, "On the horizon," "'Auld Lang Syne' is traditionally associated with the end of one year and the beginning of the next and can be interpreted to mean 'for the sake of old times.' ... But along with the year in review, it's also a good time to review the past decade, as befits a year ending in "9." In that context, for the money market fund industry as a whole, the story of the year was 'growth.' [M]oney market funds achieved their fastest growth in the past 10 years -- growing by 18.6% this year. This is remarkable in that for much of the past decade, funds have experienced growth that can be charitably characterized as anemic, at around 1% or less -- when it wasn't negative -- and only in the previous two years had growth exceeded 4%.... So where do we go from here? Optimistically, up! The trend seems to favor continued growth, as do economic conditions and market volatility. Additionally, we are entering a cyclical time of year in which funds traditionally gather assets in advance of tax payments coming due in April. Beyond that, the crystal ball is a little cloudy, but if the next year is anything like the past three, we could see continued asset growth in our industry."

Email This Article




Use a comma or a semicolon to separate

captcha image