The December issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Monday morning, features the articles: "FSB, IOSCO, OFR Comment on March Money Market Turmoil," which follows recent discussions on future money fund regulations; "IMMFA's Iommi Says MMFs Resilient at European MFS," which highlights a talk from IMMFA's Secretary General; and, "Dreyfus Consolidates MMFs, Sticks With Prime; Impact," which covers Dreyfus's recent changes to its product lineup. We've also updated our Money Fund Wisdom database with November 30 statistics, and sent out our MFI XLS spreadsheet Monday a.m. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our December Money Fund Portfolio Holdings are scheduled to ship on Wednesday, December 9, and our December Bond Fund Intelligence is scheduled to go out Monday, December 14.
MFI's lead article says, "Over the past month, the discussion over possible future money market fund regulations continued in the U.S. but also spread overseas, with the Financial Stability Board (FSB), the International Organization of Securities Commissions (IOSCO), and the U.S. Treasury's Office of Financial Research (OFR) all weighing in. We also heard comments from the Boston Fed and others on possible changes. We review the latest thoughts below."
It continues, "The Financial Stability Board, 'an international body that monitors and makes recommendations about the global financial system,' published a ‘Holistic Review of the March Market Turmoil.' The report tells us, 'The breadth and dynamics of the economic shock and related liquidity stress in March were unprecedented. As in previous cases, the shock caused a fundamental repricing of risk and a heightened demand for safe assets. However, the stress also led to large and persistent imbalances in the demand for, and supply of, liquidity needed to support intermediation. On the demand side, non-financial corporates attempted to tap capital markets; demand for US dollar liquidity increased from foreign borrowers; non-government money market funds (MMFs) experienced significant outflows; and some open-ended funds also experienced redemptions. On the supply side, reductions in risk appetite, regulatory constraints and operational challenges may have reduced dealers’ capacity to intermediate ... in some core funding markets.'"
Our latest "Profile" piece reads, "Crane Data’s recent European Money Fund Symposium Online, which featured a series of discussions on European and 'offshore' money market mutual funds, included a 'Major Issues in European MMFs' segment with Veronica Iommi of the Institutional Money Market Funds Association. She gave a 'brief 2020 update on money market funds in Europe’ from IMMFA's perspective, with a 'focus on the impact of the covid-19 pandemic [and] our role as a voice to the industry.' We quote from her remarks below."
Iommi says, "IMMFA funds specifically are triple-A rated and primarily low volatility funds known as LVNAV.... As we've heard from the previous speakers, the money market funds universe in Europe consists of the variable, VNAV, part and the constant net asset value, or essentially the LVNAV part. The VNAV industry is ... predominantly French funds, but also includes funds in places such as Switzerland.... The other large share consists of IMMFA money market funds ... 95% of these ... are low volatility LVNAV funds with some public debt CNAV funds. Both types ... have constant net asset value as opposed to the variable net asset value. With regard to IMMFA money market funds, US Dollar funds are the largest, followed by Sterling and Euro. But what you will see is that both VNAV and LVNAV sectors have grown steadily over recent years."
Her slides show "Total assets under management reaching over E828 billion, having peaked in July at E890 billion," and the investor base for money market funds. She states, "Perhaps unsurprisingly, the UK accounts for a very high percentage of IMMFA funds’ distribution, 44%.... Sterling market money market funds ... account for around one third of IMMFA funds. A third of a third is sold into the rest of Europe. And here we break out just the larger areas of distribution, which include 12% sold into Benelux and 4% into Ireland.... Approximately 25% of funds are sold outside the EU."
The "Dreyfus Consolidates" article tells readers, "BNY Mellon's Dreyfus money fund complex announced a series of changes to its product lineup, but most notably indicated that it's sticking with Prime funds in its offerings. A press release entitled, Dreyfus Cash Investment Strategies to Optimize Money Market Fund Range' tells us, 'Dreyfus Cash Investment Strategies (Dreyfus CIS), a BNY Mellon Investment Management firm with $254bn in assets under management, ... announced that it will be optimizing its suite of money market funds to meet the evolving needs of cash investors. The enhancements to Dreyfus CIS' money market fund range over the next several months will result in: A streamlined product offering of 19 funds across three fund families to provide investment choice across all major money market asset classes; A uniform pricing structure within each fund family to improve client navigation, as well as reduced management fees in four retail funds and one institutional fund; and, Broader investor eligibility through lower investment minimums in many fund share classes.'"
It quotes, "Stephanie Pierce, CEO of ETF, Index, and Cash Investment Strategies at BNY Mellon Investment Management, comments, 'For nearly 50 years, as markets and client needs have changed, Dreyfus CIS has met the cash management needs and preferences of investors.... As part of BNY Mellon, Dreyfus CIS offers clients deep investment expertise, resilient infrastructure, and a record of strong financial stewardship across the entire cash spectrum. Streamlining our money market fund range is part of our ongoing commitment to providing clients with the professional money management and competitive market returns they expect from us.'"
The latest MFI also includes the News piece, "MF Yields Tie Record Lows of 2013," which says, "Money fund yields hit record lows last month. Our flagship Crane 100 declined by 0.01% to 0.02% in Nov., tying the all-time lows of 2013."
A second news brief entitled, "SEC Statistics: Assets, Yields Lower," writes, "The Securities & Exchange Commission's latest 'Money Market Fund Statistics' summary shows that total money fund assets dropped by $73.6 billion in October to $4.789 trillion, the fifth decrease in a row. The SEC shows that Prime MMFs fell by $30.7 billion in October to $962.0 billion, Govt & Treasury funds dropped by $41.4 billion to $3.706 trillion and Tax Exempt funds decreased $1.5 billion to $119.6 billion. Yields inched lower again in October."
A third news brief, "SEC Publishes MMF & CP Primer" explains, "The SEC also published, 'Primer: Money Market Funds and the Commercial Paper Market,' last month, which reviews commercial paper, money market funds and the events of March 2020. Authored by Viktoria Baklanova, Isaac Kuznits and Trevor Tatum, the paper explains, 'Commercial paper (CP) is unsecured, short-term debt issued for a specified amount to be paid at a specified date. CPs are issued at a discount, with minimum denominations of $100,000 and terms normally ranging from 1 to 270 days. Total U.S. CP outstanding was at $1,007 billion at the end of June 2020, down by $37 billion since the end of 2019 .... This is around one half of $2.2 trillion, the all-time high in CP outstanding reached in July 2007.'"
Our December MFI XLS, with November 30 data, shows total assets fell by $11.7 billion in November to $4.723 trillion, after decreasing $46.8 billion in October, $121.2 billion in September, $42.3 billion in August, $44.2 billion in July and $113.0 billion in June. Assets increased $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 is at 0.02%, our Crane 100 Money Fund Index (the 100 largest taxable funds) also sits at 0.02%.
On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA was unchanged at 0.17% while the Crane 100 was 0.18%. Charged Expenses averaged 0.15% for both the Crane MFA and Crane 100. (We'll revise expenses on Monday once we upload the SEC's Form N-MFP data for 11/30.) The average WAM (weighted average maturity) for the Crane MFA and Crane 100 was 41 (unch.) and 44 days (down a day) respectively. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
