The March issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Friday morning, features the articles: "Liquidations, Changes Slowly Reshape Manager Landscape," which discusses the flurry of recent fund moves; "Ameriprise's Chris Melin on Brokerage Sweeps, Cash," which profiles the Director of Cash Products; and, "Deposits, Cash Soar in '20, Pause in '21; Banks vs. MMFs," which explores money fund vs. bank deposit growth. We also 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 9, and our March Bond Fund Intelligence is scheduled to go out Friday, March 12.
MFI's lead article says, "While the money market fund industry remains surprisingly robust given the myriad challenges it faces, small-scale liquidations and changes continue to gradually remake the space and increase concentration. Over the past month, a number of funds announced or completed liquidations, Wells Fargo announced the sale of its asset management unit, and Dreyfus took additional steps to streamline its fund lineup. In February, Crane Data removed 22 funds from MFI, including over a dozen State Municipal funds. Below, we review the latest batch of changes.
It continues, "SunAmerica is the latest asset manager to exit the money market fund space, which will bring the total of U.S. MMF managers down to 64. A Prospectus Supplement for its AIG Government Money Market Fund explains, 'SunAmerica Asset Management, the Fund's investment adviser, and Touchstone Advisors, announced that they have entered into a definitive agreement for Touchstone to acquire certain assets related to SunAmerica's retail mutual fund management business.... Certain AIG Funds not covered by the agreement, including the Fund, will be liquidated.'"
Our latest "Profile" reads, "This month, MFI interviews Ameriprise Director of Cash Products, Chris Melin. He details the history of the company in cash, comments on the brokerage sweep marketplace and discusses major challenges, including record low rates. Melin also comments on Ameriprise’s outlook. Our Q&A follows."
MFI says, "Give us a little background," and Melin tells us, "The company was founded back in 1894 with a cash product, a 'face-amount certificate'. Through the Ameriprise Certificate Company, we're still issuing Certificates, which are unique investment products that our advisors can offer to help clients manage their cash. Certificates are guaranteed by the Ameriprise Certificate Company."
He continues, "In a more traditional sense, we've been offering money market funds and cash management accounts for decades. In 2003 we started offering sweep options with brokerage accounts -- offering money market funds, a free credit balance option and a single bank deposit program. It stayed that way until 2007, when we decided to add a multi-bank program. As part of Money Fund Reform in 2016, we elected to change our sweep options to government funds-- not wanting to put clients at risk with institutional and retail funds where there was potential for withdrawal gates and fees. We currently offer a multi-bank sweep deposit program, a single bank sweep deposit program, two US government money funds as sweep options and a free credit balance option."
The "Deposits" article tells readers, "U.S. money fund assets grew by 19.1% in 2020, following a 20.8% gain in 2019. Meanwhile, bank deposits surged by 28.3% last year, following seven years of anemic growth. This is according to the Federal Reserve's H.6 data series. Money funds added $627.5 billion (to $3.933 trillion) and Deposits gained $2.779 trillion (to $12.640 trillion) in 2020, according to the Fed, while Small Time Deposits, or bank CDs, plunged by $324.2 billion to a mere $217.9 billion."
It explains, "Assets of Deposits jumped in 2020 after slowing to a crawl in 2018 and 2019. Meanwhile, money fund assets also jumped in 2020 after a scorching 2019 (when they rose $565.5 billion). Money funds and deposits together rose $1.1 trillion in 2019, and an incredible $3.1 trillion in 2020."
MFI also includes the News piece, "Comments to SEC on PWG Report." It says, "The first letters have appeared following the SEC's request for comment on the PWG Report. See the first real posting here."
An additional News brief, "Morgan Stanley Govt Goes Social," tells us, "A filing for the $9.9 billion Morgan Stanley Institutional Liquidity Funds Government Securities Portfolio (MUIXX) tells us, 'The Adviser will generally seek to place purchase orders for the Fund with broker-dealers that are owned by minorities, women, disabled persons, veterans and members of other recognized diversity and inclusion groups and will place the majority of the aggregate dollar volume of the Fund’s purchase orders for government agency securities obtained via auction or window through such broker-dealers, subject in each case to the Adviser’s duty to seek best execution for the Fund’s orders.'"
Our March MFI XLS, with February 28 data, shows total assets rose by $30.8 billion in February to $4.781 trillion, after rising $5.6 billion in January, decreasing $6.7 billion in December, $11.7 billion in November, $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 and $417.9 billion in April. Our broad Crane Money Fund Average 7-Day Yield was unchanged at 0.02%, our Crane 100 Money Fund Index (the 100 largest taxable funds) also remained flat at 0.02%.
On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA sat at 0.13% while the Crane 100 sat at 0.14%. Charged Expenses averaged 0.12% for the Crane MFA and 0.11% for the Crane 100. (We'll revise expenses on Monday once we upload the SEC's Form N-MFP data for 2/28.) The average WAM (weighted average maturity) for the Crane MFA and Crane 100 was 42 (unch.) and 45 days (down a day) respectively. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
