The June issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Monday morning, features the articles: "Asset Growth Continues, But No Yields in Sight; Record RRP," which tracks the continued jumps in assets despite yields sitting at rock bottom; "J.P. Morgan A.M.'s Chris Tufts: Focused on Core Deliverables," which profiles the new JPMAM Head of Liquidity; and, "Boston Fed Proposes Only Govt MMFs; Already 80%," which highlights the possibility of banning Prime MMFs. We also sent out our MFI XLS spreadsheet Monday a.m., and updated our Money Fund Wisdom database query system with 5/31/21 data. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our June Money Fund Portfolio Holdings are scheduled to ship on Wednesday, June 9, and our June Bond Fund Intelligence is scheduled to go out Monday, June 14.
MFI's lead article says, "Money fund assets continue to see strong growth, but fund managers aren't celebrating as any yield becomes increasingly difficult to find. Assets broke back above the $5 trillion level ($4.6 trillion if you're looking at ICI's totals), and the inflows show no signs of subsiding. Charged expenses and gross yields are pushing to record lows, though, and the business model of money market funds is coming into question. We look at the latest asset and yield trends, the record usage of the Fed’s RRP program, and whether funds can survive with gross yields of 0.00%, below."
It continues, "Crane Data's latest MFI XLS shows money fund assets increasing by $74.0 billion in May 2021 to $5.066 trillion, up $341.9 billion, or 7.2% year-to-date. Our numbers just broke back above the $5.0 trillion mark for the first time since June 2020, and they're approaching the record level of $5.163 set in April 2020."
Our latest profile reads, "This month, MFI speaks with Christopher Tufts, the new Global Head of Portfolio Management and Trading for the money market fund business at J.P. Morgan Asset Management. Tufts had been Head of Portfolio Management for the U.S. funds before taking on the expanded role late last year. We discuss the current rate environment, supply and pending regulatory issues, among other things. Our Q&A follows."
MFI says, "Give us a little history." Tufts tell us, "J.P. Morgan Asset Management has been managing money market funds since 1987, and as an institution, J.P. Morgan has been solving client liquidity needs for over 200 years. Today, we manage about $885 billion in short-term fixed income assets, of which roughly $735 billion sits in money market funds and liquidity separately managed accounts.... The money market fund offering has evolved and expanded significantly over time, and today is comprised of over 30 funds, managed in 8 different currencies across an array of on- and offshore vehicles, including our pioneering AAA-rated RMB offering in Asia."
Tufts adds, "The portfolio management team is distributed across the U.S., London and Hong Kong with an average of 22 years of experience. Without a doubt, I think that global reach and depth of experience throughout multiple rate cycles and stressed scenarios over the years helped us emerge from last year's volatility in a strong position across the platform.... I've been with J.P. Morgan my entire career, having started with the firm in the summer analyst program in 1995."
The "Boston Fed" article tells readers, "The Federal Reserve Bank of Boston's new paper, 'Money Market Mutual Funds: Runs, Emergency Liquidity Facilities, and Potential Reforms,' is causing quite a stir in the money fund industry. Authored by Kenechukwu Anadu and Siobhan Sanders, it states, 'Twice in the past 12 years, prime and tax-exempt money market mutual funds (MMMFs), collectively non-government MMMFs, have experienced large investor redemptions and runs.... These strains only abated after the Board of Governors of the Federal Reserve System and the United States Department of the Treasury took emergency actions, including the establishment of lending facilities for non-government MMMFs.'"
The piece continues, "Policymakers are now examining potential reform options to enhance non-government funds' resilience and reduce run risk. An option worth examining is a requirement that all non-government MMMFs convert to government MMMFs, which remained resilient -- and even experienced large inflows -- during periods in which non-government funds experienced runs. An option worth examining is a requirement that all non-government MMMFs convert to government MMMFs, which remained resilient -- and even experienced large inflows -- during periods in which non-​govt funds experienced runs."
MFI also includes the News brief, "NY Fed Blogs on WLAs and Retail vs. Inst Prime Runs," It says, "The Federal Reserve Bank of New York published, ‘Sophisticated and Unsophisticated Runs,’ written by Marco Cipriani and Gabriele La Spada. The piece tells us, 'In March 2020, U.S. prime money market funds (MMFs) suffered heavy outflows following the liquidity shock triggered by the COVID-19 crisis.... In this post, based on a recent Staff Report, we contrast the behaviors of retail and institutional investors during the run and explain the different reasons behind the run.'"
Another News brief, "SEC Stats: Assets Retake $5 Trillion; Govt MMFs Break $4T," explains, "The SEC's 'Money Market Fund Statistics' summary shows total money fund assets increased $46.3 billion in April to $5.040 trillion. (According to Crane Data, MMFs assets rose by $74.0 billion in May.) Prime MMFs rose by $1.3 billion in April to $929.2 billion, Govt & Treasury funds increased $48.4 billion to $4.006 trillion and Tax Exempt funds decreased $3.4 billion to $104.8 billion. Yields were down again in April."
Our June MFI XLS, with May 31 data, shows total assets increased $74.0 billion in May to $5.066 trillion, after increasing $62.2 billion in April, 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 0.09%. Charged Expenses averaged 0.07% for the Crane MFA and 0.07% for the Crane 100. (We'll revise expenses on Tuesday once we upload the SEC's Form N-MFP data for 5/31.) The average WAM (weighted average maturity) for the Crane MFA and Crane 100 was 38 (down two days from the previous month) and 39 days (down three days), respectively. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
