The September issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Tuesday morning, features the articles: "Vanguard Retreats from Prime; Going Govie Again," which reviews the most recent exit from the Prime space; "Major Issues Highlight of Crane's Mini Fund Symposium," which quotes from our latest webinar; and, "Federated Joins Social MMF Movement; Update on ESG," which discusses recent developments in the "Impact" MMF space. We've also updated our Money Fund Wisdom database with August 31 statistics, and sent 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 September Money Fund Portfolio Holdings are scheduled to ship on Thursday, September 10, and our September Bond Fund Intelligence is scheduled to go out Tuesday, September 15.

MFI's "Retreat from Prime" article says, "The news that Vanguard is converting its $125.3 billion Vanguard Prime Money Market Fund into a Government MMF continues to send shock waves through the money markets. Following Northern and Fidelity's retreats from the Prime Institutional space, this marks the third major exit from Prime since the coronavirus chaos hit in March and the first Prime Retail conversion since Money Fund Reforms went into effect in 2016."

It continues, "The press release, 'Vanguard Announces Changes to Money Market Fund Lineup,' tells us, 'Vanguard today announced the following changes to its taxable money market fund lineup: Vanguard Prime Money Market Fund will be reorganized into a government money market fund and renamed Vanguard Cash Reserves Federal Money Market Fund Vanguard.... Treasury Money Market Fund has reopened to new investors."

Our latest "Profile" reads, "We recently hosted our fourth webinar and first true virtual event, 'Crane's Money Fund Webinar: Mini Fund Symposium,' a 3-hour series of sessions including segments on 'The State of the Money Fund Industry,' 'Strategists Speak: Treasury, Fed & Repo;' 'Regulatory & ESG Money Funds Update;' and, 'Major Money Fund Issues 2020.' We quote from this last session, which featured BNY Mellon/Dreyfus' Tracy Hopkins, Goldman Sachs Asset Management's Andrew Lontai and J.P. Morgan Asset Management's John Tobin. Thanks again to our Mini Fund Symposium attendees, speakers and sponsors! (The full recording is available here and materials are available via our 'Webinar Download Center.')"

When asked about ESG vs. Social MMFs, Hopkins comments, "What we did, we call it an 'Impact' fund. It's really a subset of the ESG sector as a whole. When we took a look at ESG [in] the money fund space, I think it's a different kind of way of looking at things. Obviously, in the short duration product the vast majority of what we do is really heavily concentrated in the financial sector and the government sector. Instead of converting a Prime fund to an ESG specific mandate, we converted one of our Government funds, Dreyfus Government Securities Cash Management Fund."

She continues, "Where we changed the strategy a little bit is to direct the aggregate value of our buys themselves to minority owned brokerage firms. Being part of Bank of New York Mellon and Dreyfus, our firm does put a lot of emphasis on diversity and inclusion, and it's always been an important part of our organization. So, we felt that this was a good way to go.... Given the fact that so many assets from our large customers ... are really in that Government and Treasury space, we thought there was some value add there."

The "Update on ESG" article tells readers, "The Board of Federated Hermes Government Obligations Tax-Managed Fund recently voted to convert it into a 'Social' or 'Impact' money market fund, we learned from and from a Prospectus Supplement filing.' The ignites article, '$7.5B Federated Hermes Fund Adds Diversity Target for Trading,' explains, 'The $7.5 billion Federated Hermes Government Obligations Tax-Managed Fund will 'generally seek' to direct trades to women-, minority- and veteran-owned broker-dealers starting on Oct. 1.... The change applies to all three of the fund's share classes."

The piece continues, "This fund becomes the third 'social' money fund, joining Goldman Sachs and Dreyfus in offering funds that attempt to drive trading business through minority brokerages; it also joins a number of ESG money market funds focused on environmental investment screens."

The latest MFI also includes the News brief, "The Wall Street Journal Writes, 'Money Funds Waive Charges to Keep Yields From Falling Below Zero." It tells us, "Fidelity Investments, Federated Hermes Inc. and J.P. Morgan Asset Management are ... ceding some fees to stave off negative yields. The moves are the latest sign of how a roughly $5 trillion piece of the financial system is bracing for new pressure."

A second News piece titled, "MMF Yields Near Record Lows," says, "Money market fund yields continue to bottom out just above zero; our flagship Crane 100 was down 4 basis points in August to a near-record low of 0.‚Äč04%. (The record low was set in 2014 at 0.02%.)"

Our September MFI XLS, with August 31 data, shows total assets decreased by $42.3 billion in August to $4.924 trillion, after decreasing $44.2 billion in July and $113.0 billion in June, but increasing $31.6 billion in May, $417.9 billion in April and $688.1 billion in March. Our broad Crane Money Fund Average 7-Day Yield fell 2 bps to 0.03% during the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) was down 4 bps to 0.04%.

On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA was down one bp to 0.24% while the Crane 100 fell 3 bps to 0.23%. Charged Expenses averaged 0.21% (unchanged from last month) and 0.19% (down 2 bps and 1 basis point from the previous month), respectively for the Crane MFA and Crane 100. The average WAM (weighted average maturity) for the Crane MFA and Crane 100 was 39 (down 1 day) and 42 days (down a day) respectively. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)

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