The May issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Friday morning, features the articles: "ICI's PWG Comment Defends MMFs; Crane Celebrates 15th," which excerpts from ICI's comment letter to the SEC; "Big Fund Companies Respond to SEC, PWG Report Reforms," which highlights comment letters from the largest money fund complexes; and, "ICI 2021 Fact Book Shows Money Fund Trends in '20," which reviews ICI's annual statistical work. We also sent out our MFI XLS spreadsheet Friday a.m., and updated our Money Fund Wisdom database query system with 4/30/21 data. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our May Money Fund Portfolio Holdings are scheduled to ship on Tuesday, May 11, and our May Bond Fund Intelligence is scheduled to go out Friday, May 14.
MFI's lead article says, "The big news last month was the submission of comment letters to the SEC ahead of potential changes to money fund regulations. We quote from mutual fund trade association, the Investment Company Institute, who writes, 'Money market funds did not cause the stresses in the short-term funding markets last March. US public institutional and retail prime money market funds accounted for just 19% of the reduction in financial and nonfinancial commercial paper outstanding during the week-ended March 18.... Other market participants accounted for 81% of the decline.... In addition, even at the height of the liquidity crisis, money market funds, including institutional prime money market funds, still had liquidity to meet new redemptions if they had meaningful opportunity to use part of their 30% weekly liquid asset buffers.'"
The ICI continues, "To the extent policymakers seek to mitigate the possibility of future distress in the short-term funding markets, they should prioritize the examination of the activities and behavior of all market participants. Only by doing so will policymakers make progress toward their goal of making the financial system more resilient in the face of a liquidity shock of the nature experienced in March 2020."
Our second article reads, "Following the April 12 deadline, we've been detailing comment letters to the SEC in response to its 'Request for Comment on Potential Money Market Fund Reform Measures in President's Working Group Report.' Below we highlight excerpts of the letters submitted by the largest money fund complexes. (Note: For more, please join us for our webinar, 'Handicapping Money Fund Reforms,' Thursday, May 20 from 2-3pmET.)"
The piece continues, "Fidelity Investments explains, 'While we view the PWG Report as a productive first step in considering potential reform measures, we encourage the SEC to now narrow the range of options under consideration by eliminating those options that have no nexus to the events of 2020 and therefore would not achieve any of the goals for reform stated in the PWG Report. The details of any measures that the SEC wishes to pursue further remain to be considered and, as such, we anticipate having more viewpoints to offer once more of these details are made public."
The "ICI Fact Book" article tells readers, "ICI's new '2021 Investment Company Fact Book' looks at the crazy events of 2020 and the huge inflows into Government money market funds. Overall, money funds assets were $4.333 trillion at year-end 2020, making up 18.1% of the $23.9 trillion in overall mutual fund assets. Retail investors held $1.529 trillion, while institutional investors held $2.804 trillion."
ICI tells us, "In 2020, money market funds received $691 billion in net new cash flows, up from $553 billion in 2019.... Government money market funds received substantial inflows ($835 billion) while prime money market funds and tax-exempt money market funds had outflows of $111 billion and $33 billion, respectively."
MFI also includes the News piece, "MMF Assets Stay Strong in April." It says, "Crane's MFI shows assets rising $62.2 in April to $4.991 trillion, but ICI's weekly "Money Market Fund Assets" report shows MMFs falling $17.2 billion to $4.512 trillion in the latest week."
An additional News brief, "Powell Hits MMFs on 60 Minutes," tells us, "Federal Reserve Chair Jerome Powell discussed money funds during a recent '60 Minutes.' He comments, "Most parts of the financial system made it through quite a stress test last year, [but] some parts of the financial system had to be bailed out again, places like money market funds ... where we had to step in again and provide liquidity.... There's a structural issue and we know this, and it really is time to address it decisively."
Our May MFI XLS, with April 30 data, shows total assets increased $62.2 billion in April to $4.991 trillion, after jumping $151.0 billion in March, rising $30.8 billion in February and $5.6 billion in January. Assets decreased $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. 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 and the Crane 100 both stand at 0.10%. Charged Expenses averaged 0.08% for the Crane MFA and 0.08% for the Crane 100. (We'll revise expenses on Monday once we upload the SEC's Form N-MFP data for 4/30.) The average WAM (weighted average maturity) for the Crane MFA and Crane 100 was 40 (down two days from the previous month) and 42 days (down two days) respectively. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
