A press release entitled, "John Tobin Appointed Chief Investment Officer of Dreyfus Cash Investment Strategies," tells us that, "Dreyfus Cash Investment Strategies (Dreyfus CIS), a BNY Mellon Investment Management firm with $248.8bn in assets under management, announced the appointment of John Tobin as Chief Investment Officer (CIO). John brings to this role deep and broad money market industry expertise, including first-hand knowledge of Dreyfus CIS, where he began his career 30 years ago. John joins from J.P. Morgan, where he was most recently Managing Director, Global Head of Liquidity Portfolio Management, a position he held since 2001."
Stephanie Pierce, CEO of ETF, Index, and Cash Investment Strategies at BNY Mellon Investment Management, comments, "This appointment marks a homecoming for John who, in addition to being steeped in CIS' strong heritage and investment philosophy, brings valuable experience managing clients' evolving needs through shifting market and regulatory environments on a global scale.... We believe John will continue to build upon on our nearly 50-year history and BNY Mellon's leadership across the entire cash ecosystem to position our business for long-term growth."
Tobin tells us, "I am thrilled to return to the firm that provided me with my foundation in this industry.... Dreyfus CIS is a storied brand and its money market offerings are a core component of BNY Mellon's suite of liquidity solutions."
The release explains, "As CIO, John is responsible for investment management and distribution of Dreyfus CIS' affiliated money market mutual funds and UCITS, as well as the management of the firm's collective investment trusts. John will work closely with Stephanie, the firm's client base, and cash business partners across the BNY Mellon enterprise to continue to create innovative solutions and build upon the firm's established heritage as one of the leading providers of managed liquidity solutions."
It adds, "Patricia Larkin, current CIO, will work closely with John to ensure a smooth transition and will leave the firm at the end of March 2021. BNY Mellon Investment Management thanks her for her significant contributions to the business and partnership with Dreyfus CIS' clients during her 40-year career with the firm."
In other news, 2020 was a good year for assets and a bad year for yields. Our Crane 100 Money Fund Index, the average of the 100 largest Taxable MMFs, which yielded 1.46% on Dec. 31, 2019 (and 2.23% at the beginning of 2019), fell 1.44% to a record low of 0.02% over the course of the year. The Crane 100 fell below the 1.0% level in mid-March and below the 0.5% level in late March. Just under three-quarters of all money funds and over half of MMF assets have since landed on the zero yield floor, though many continue to show some yield.
Our broader Crane Money Fund Average fell from 1.29% on Dec. 31, 2019 to 0.02%. Prime Inst MFs were down 1.52% (from 1.57%) in the last year and Government Inst MFs were down 1.39% (from 1.41%). Treasury Inst MFs dropped 1.33% (from 1.35%). Treasury Retail MFs decreased 1.08% (from 1.09%), Government Retail MFs yield 1.10% (down 1.11%), and Prime Retail MFs fell 1.36% (down from 1.39%), Tax-exempt MF 7-day yields dropped 1.09% (from 1.10%).
According to our Money Fund Intelligence Daily, as of Thursday, 12/31, 632 funds (out of 856 total, representing 73.8% of funds) yield 0.00% or 0.01% with assets of $2.506 trillion, or 52.6% of the total $4.733 trillion. There are 190 funds yielding between 0.02% and 0.10%, totaling $1.727 trillion, or 36.5% of assets; 33 funds yielded between 0.11% and 0.22% with $499.1 billion, or 10.5% of assets. No funds yield over 0.22%.
According to our latest Money Fund Intelligence Daily, money fund assets jumped by $773.3 billion to $4.620 trillion over the course of 2020 (up from $3.811 trillion on Dec. 31, 2019). Prime Inst MF assets increased $7.7 billion in the last year to $640.4 billion (up from $617.6 billion) while Government Inst MF assets jumped $326.8 billion to $1.575 trillion (up from $1.241 trillion). Treasury Inst MF assets increased $271.5 billion (up from $766.5B). Treasury Retail MF assets rose $15.0 billion (from $92.5 billion), Government Retail MF assets jumped $207.3 billion (up from $761.3 billion), while Prime Retail MF assets fell $55.0 billion (down from $331.8B), Tax-exempt MF assets decreased $25.3 billion (from $138.5 billion). (See also our Dec. 31 News, "ICI Assets & Trends: MMFs Up $665 Billion in 2020, But Down in Nov, Dec.")
Our Brokerage Sweep Intelligence, with data as of December 31, showed no changes in the latest week. All major brokerages, with the exception of RW Baird, offer rates of 0.01% for balances of $100K. No brokerage sweep rates or money fund yields have gone negative to date, but this could become a distinct possibility in coming weeks or months. Crane's Brokerage Sweep Index has been flat for the last 37 weeks at 0.01% (for balances of $100K). Ameriprise, E*Trade, Fidelity, Merrill Lynch, Morgan Stanley, Raymond James, Schwab, TD Ameritrade, UBS and Wells Fargo all currently have rates of 0.01% for balances at the $100K tier level (and almost every other tier too). RW Baird offers a rate of 0.02% for its balances of $100K.
In other brokerage sweeps news, SIFMA published a "US Negative Interest Rates Policy Checklist." The paper, developed by SIFMA's "US Negative Interest Rates Readiness Working Group," tells us, "The potential impact of a negative interest rate (NIR) policy in the US continues to be discussed by market participants. Federal Reserve Chairman Jerome H. Powell has previously stated that the US does not see negative interest rates as an appropriate policy response to economic disruption caused by the pandemic. However, the uncertainty of US economic recovery and the current 0% to 0.25% monetary policy target range for the federal funds rate continues to lead market participants to consider the future possibility of an NIR policy in the US."
A section on "Brokerage Sweep Accounts," explains, "In a negative rate environment, clients could experience a negative yield on sweep balances, while additional management fees or expenses would further reduce incentives for investors to hold excess cash in such sweep products. Customers may chase yield and avoid sweep products with negative interest rates by moving funds to free credit balances, other sweep vehicles or products with a higher risk profile. To lessen the aggregate impacts to customers, some firms providing sweep products may consider strategies such as reducing or waiving fees. Operationally, sweep platform providers may have to develop processes to pass through negative interest rates, such as daily principal reduction, reverse distribution mechanisms (in which canceled shares are split among the remaining ones to keep the value per share constant under negative rates) or deposit service fees, to process the payments associated with negative yields."
