Schwab, BlackRock Say Little on MFs
During the latest round of asset management and brokerage earnings news, there's been little mention of money market funds and sweeps to date. The press release, "Schwab Reports 4Q Earnings Per Share of $.62 and a Record $2.67 for 2019" shows assets in Schwab's money market funds averaged $196.1 billion, up 7% from Q3'19 and up 31% from Q4'18. Bank deposits also grew in the final quarter of 2019, totaling $220.1 billion, up 5% from both the previous quarter and Q4'18. CFO Peter Crawford comments, "Net interest revenue increased 12% from the prior year to $6.5 billion, driven by higher average investment yields - even after the Fed's rate cuts – and an increase in client cash balances held at our bank and brokerage subsidiaries. While trading revenue declined 19% to $617 million due to our pricing actions, asset management and administration fees of $3.2 billion remained essentially flat year-over-year. Rising balances in third-party mutual funds, along with growing enrollment in our advisory solutions, helped to largely offset declines in Mutual Fund OneSource and lower money market fund revenue due to sweep transfers to our balance sheet." BlackRock's Q4 earnings also came out last week. CFO Gary Shedlin says, "Full year flows of $429 billion were positive across active and indexed, all asset classes, client types and regions and reflected significant strength in fixed income and cash which accounted for approximately 85% of organic growth.... BlackRock cash management platforms continue to increase share by leveraging scale for clients and delivering innovative digital distribution and risk management solutions. In 2019, we saw $93 billion of cash management net inflows across the platform including prime, sustainable, government and muni funds. Our innovative Liquid Environmentally Aware Fund or LEAF continues to see strong momentum with $1 billion of net inflows since launch earlier this year." CEO Larry Fink adds, "We generated $93 billion in cash strategies.... Other concerns about a slowdown in global growth all impacted investor sentiment, driving industry flows into safer fixed income and cash strategies, cash assets throughout the year." See also, J.P. Morgan, State Street and Morgan Stanley's earnings releases (though they don't mention MMFs).
