The April issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Tuesday morning, features the articles: "Govt MMFs Skyrocket; Prime Reels Over Coronavirus Crisis," which reviews the dramatic moves in money fund assets in March; "Federated's Cunningham on Front Lines of Cash Crisis," which profiles the Federated Hermes MM CIO; and, "Worldwide MF Assets Jump to $6.9 Tril; US Surges, China," which looks at ICI's latest global money fund statistics. We've also updated our Money Fund Wisdom database with March 31 statistics, and sent out our MFI XLS spreadsheet Tuesday a.m. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our April Money Fund Portfolio Holdings are scheduled to ship on Thursday, April 9, and our April Bond Fund Intelligence is scheduled to go out Wednesday, April 15.
MFI's "Govt MMFs Skyrocket" article says, "Money market mutual fund assets showed their biggest asset gain in history in March, skyrocketing by $652.7 billion, or 16.4%, to a record $4.624 trillion. Government MMFs (including Treasury funds) rose a stunning $813.3 billion (29.6%) to $3.563 trillion, while Prime MMFs fell by $152.0 billion to $929.6 billion last month. In comparison, during September 2008, when Reserve Primary Fund "broke the buck" and MMFs saw $160.1 billion in outflows (to $3.203 trillion), Prime MMFs fell by almost 3 times as much then, $447.6 billion, as they did in March 2020. Govt MMFs jumped by just $324.6 billion back during that tumultuous September of 2008, according to our MFI XLS."
We explain, "ICI's weekly assets series also showed these stunning gains. (See ICI's series in the chart on p.1 and see the flows from our MFI Daily in the chart at right). They show money market mutual fund assets surging to record levels in the latest week (through April 1), though the inflows didn't match the previous week's massive $285.7 billion inflow. (It was the second largest inflow ever though.)"
Our latest "profile" reads, "This month, MFI interviews Deborah Cunningham, Federated Hermes' Executive VP & CIO of Liquidity Products. We ask her about the crazy month of March, and about the current state of the money fund sector, flows and the Fed's support programs. Our Q&A follows."
MFI says, "Give us a little history. Cunningham tells us, "I've seen 17% interest rates and 17 basis point interest rates, and neither one of them are healthy. I've been in the industry for the better part of four decades, and worked my way from accounting into the investment group through the credit area. I've been on the portfolio management side now for 25 years."
We ask, "How are you holding up?" She responds, "Well, things have definitely gotten better. I think the worst days were in the beginning of the week of [March] 16th ... then things started to get better a little bit better on [March 19-20]. I would say the markets definitely turned a corner to some degree on Monday [March 23]."
Cunningham adds, "For Treasury securities, the worst days were last week after the massive decrease in yields, but without any real additional volume in Treasury securities yet. Ultimately, you were able to keep positive yields by participating in the primary issuance of bills. But to try to buy anything in the secondary without going into negative territory was almost an impossibility. With the stimulus package ... and the additional bill issuance ... that sector is now much healthier."
The "Worldwide" article tells readers, "The Investment Company Institute's latest 'Worldwide Regulated Open-Fund Assets and Flows, Fourth Quarter 2019' release shows that money fund assets globally rose by $311.2 billion, or 4.7%, in Q4'19 to a record $6.937 trillion. The increase was driven by big gains in U.S.-based money funds, and increases in Ireland-, China- and Luxembourg-based money funds. MMF assets worldwide have increased by $860.7 billion, or 14.2%, the past 12 months, and money funds in the U.S. now represent 52.4% of worldwide assets. (Note: Let us know if you'd like to see our latest Money Fund Intelligence International product, which tracks 'offshore' money market funds domiciled in Europe and outside the U.S.)"
The latest MFI also includes the News brief, "Money Fund Yields Headed to Zero," which writes, "After a panic 100 bps rate cut on March 16, money fund yields dropped below the 1.0% the following day and fell below 0.5% by month-end. And they're still falling. Yields on Government money funds plunged (and a Treasury fund closed to new investors), while Prime MMF barely fell (driving spreads to their widest ever). Our flagship Crane 100 Money Fund Index is now 0.41% (as of 4/6) according to Money Fund Intelligence Daily."
A second News piece titled, "Bill Gives Treasury Temporarily MMF Guarantee, But Need Has Passed," says, "In the depths of the latest money market crisis, the U.S. Treasury sought approval from Congress to launch a program to guarantee money market mutual funds for the second time in history. But as the Federal Reserve stepped in with myriad support programs and after a delay in the CAREs bill, it appears the guarantee won't be needed. (Knock on wood.) See Crane Data's March 19 and April 6 News and WSJ's 'Treasury Department Asks Congress to Let It Backstop Money Markets.'"
Our April MFI XLS, with Mar. 31 data, shows total assets jumped by $652.7 billion in March to $4.624 trillion, after rising $23.4 billion in February, falling $7.8 billion in January and rising $72.7 billion in December. Our broad Crane Money Fund Average 7-Day Yield fell 80 bps to 0.47% during the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) was down 94 bps to 0.47%.
On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA was down 80 bps at 0.88% and the Crane 100 fell to 0.74%. 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 33 (up two days) and 35 days (up two days) respectively. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
