The March issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Friday morning, features the articles: "Consolidations & Liquidations Again Loom in MMF Sector," which features the merger trend that is likely to continue; "HSBC Global AM's Curry on US, European & EM MMFs," which profiles Jonathan Curry of HSBC Global Asset Management; and, "Deposit Growth Rebounds After Stall; Sweeps Fueling," which compares the growth of bank deposits vs. money fund assets. We've also updated our Money Fund Wisdom database with Feb. 29 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 March Money Fund Portfolio Holdings are scheduled to ship on Tuesday, March 10, and our March Bond Fund Intelligence is scheduled to go out Friday, March 13. (Note: Our apologies, but we've cancelled our upcoming Bond Fund Symposium in Boston!)
MFI's "Consolidations" article says, "Pressure on asset management and financial stocks is heating up the merger market, as evidence by the recent announcements between Franklin and Legg Mason and Morgan Stanley and E*TRADE. Given the potential of looming negative yields and fee waivers, this trend should only accelerate as we move through 2020. We review the latest news here."
It explains, "Last year, we saw Federated take over PNC's fund business and Invesco absorb OppenheimerFunds, and now it appears we'll see more fund consolidation in 2020. A press release entitled, 'Franklin Templeton to Acquire Legg Mason, Creating $1.5 Trillion AUM Global Investment Manager,' tells us, 'Franklin Resources ... operating as Franklin Templeton ... announced that it has entered into a definitive agreement to acquire Legg Mason, Inc.'"
Our "HSBC Global AM" profile reads, "This month, MFI speaks with Jonathan Curry, Global CIO for Liquidity and CIO, Americas for HSBC Global Asset Management. The firm recently filed to launch an ESG money fund in the U.S., and it continues to be a major player globally and in a number of emerging markets. We discuss their funds, the latest money market developments and a number of other issues below.
MFI says, "Give us a little bit of history." Curry answers, "We've been running money funds for over 25 years in a very broad range of currencies. We treat liquidity as an asset class in its own right, so we've got dedicated investment professionals, client service teams, distribution teams, product teams, all focused on this asset class. Liquidity represents around 20 percent of the AUM ... of HSBC Global Asset Management. It's a very important part of the of the asset management franchise here at HSBC. I joined HSBC in 2010, as the Global Chief Investment Officer for Liquidity. I moved to the U.S. in Q'3 2016, to take on the additional responsibilities that I have today. Prior to joining HSBC, I was at Barclays Global Investors."
MFI says, "Tell us about the fund lineup." Curry continues, "For liquidity, we finished 2019 with just under $100 billion, $98.1 billion to be precise. We manage liquidity solutions in 11 currencies globally, which is one the widest breadth of currencies of any manager. It covers both developed and emerging market currencies. We have offerings in U.S. dollar, in sterling, in euros, which are where the bulk of the assets that we have are managed. In Asia, we have Hong Kong dollar funds, RMB, Australian dollar, Taiwan dollar and Indian rupee. In addition to sterling and euros in Europe, we have Turkish lira. In the Americas, in addition to US dollars, we have a Canadian dollar offering and an Argentinian peso offering."
The article on "Deposits" tells readers, "U.S. money fund assets grew by 20.8% in 2019, the biggest increase since 2007. Meanwhile, bank deposits picked up the pace to grow by 5.4% last year, after growing a mere 1.7% in 2018 (the slowest rate since 1995), according to the Federal Reserve's H.6 data series. Money funds added $565.5 billion (to $3.311 trillion) and MMDAs gained $503.6 billion (to $9.868 trillion) for 2019, while Small Time Deposits, or bank CDs, grew by $60.3 billion."
It adds, "Assets of MMDAs began growing again in June 2019, following a stall starting in late 2018. Meanwhile, money fund assets have paused year-to-date in 2020, after a scorching 2019."
The latest MFI also includes the News brief, "Money Fund Assets Up in February," which writes, "Crane Data shows MMFs grew by $23.4 billion to $3.977 trillion in February, following January's $3.7 billion decline. ICI shows assets jumping $49.3 billion in the first week of March."
A second News piece titled, "Fed Cuts by 50; Yields Head to 1.0%," says, "Worried over volatility and the coronavirus, the Federal Reserve cut rates in a surprise 50 basis point move, lowering the Fed funds target rate range to 1.00-1.25%. Money fund yields are expected to plummet in coming days and should break below the 1.0% level in April."
Our March MFI XLS, with Feb. 29 data, shows total assets rose by $23.4 billion in February to $3.977 trillion, after falling $7.8 billion in January and rising $72.7 billion in December and $40.9 billion in November. Our broad Crane Money Fund Average 7-Day Yield fell to 1.27% during the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) was down a basis points to 1.41%.
On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA was unchanged at 1.68% and the Crane 100 fell to 1.68%. Charged Expenses averaged 0.41% (unchanged from last month) and 0.27% (unchanged from last month), respectively for the Crane MFA and Crane 100. The average WAM (weighted average maturity) for the Crane MFA and Crane 100 was 32 (up two days) and 33 days (unchanged) respectively. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
