After the chaos and turmoil of the coronavirus lockdown in 2020, 2021 was a relatively stable and uneventful year. Yields remained pinned to zero, assets held fast at around $5 trillion, and money funds engaged in seemingly endless discussions around further money fund reforms in the U.S. and Europe. Other major themes of the year included: gradual consolidation, ESG and Social MMFs, continued interest in ultra-short bond funds and the expansion of money funds in worldwide markets. Below, we've selected and excerpted from a number of our news stories of 2021 to remind readers and to highlight the major trends of the past year.
Crane Data's Top 10 Stories of 2021 include (in chronological order): "Rolling w/Reform Changes III: Recap of '20 Prime Exits, News & Moves" (1/7/21); "Wells Fargo Sells Asset Management Unit; Morgan Stanley Gets Social" (2/25/21); "ESMA Posts Consultation Report on Potential Reform of European MMFs" (3/30/21); "Schwab, Vanguard SEC Comments Support Floating NAV for Prime Retail" (4/19/21); "Boston Fed Paper Proposes Requirement to Convert All MMFs to Govt" (5/27/21); "Asian Money Fund Symposium Recap: JPMAM's Shevlin on Chinese MMFs" (6/24/21); "Tether Hits Keep Coming: WSJ, PWG, CNBC; Taming Wildcat Stablecoins" (7/21/21); "BNY Mellon's Ultra Short Income ETF Live; Locke on MMFs' Paper Tiger" (8/12/21); "Callahan, Cunningham Money Fund Symposium Keynote Talks ESG, Regs" (9/29/21); and, finally, "SEC MMF Stats: Assets Inch Higher to $5.03 Trillion in Sept; Yields Flat" (10/22/21).
Early in 2021, we reported on reform changes, news and moves of the previous year, which continued into the new one. Our Jan. 7 story, "Rolling w/Reform Changes III: Recap of '20 Prime Exits, News & Moves," told readers, "In January 2016, money market mutual funds were in the midst of a series of dramatic changes ahead of October 2016's Money Fund Reforms, the biggest changes to money fund regulations since their introduction in October 1970. Five years ago, we ran the story, 'Rolling w/Reform Changes II: Recap of '15 Announcements, '16 Plans,' which reviewed a number of major changes among the largest managers that took place during 2015. As in the past year, exits from Prime MMFs and fund repositioning were notable trends. Today, we examine the Covid-19 driven changes and general fund actions over the past year, as we prepare for potential regulatory changes and more fund lineup shifts in the New Year. (See also our Dec. 17 News, 'Top 10 Stories of 2020: Assets Skyrocket; Yields Plunge; Regs Coming?' Note: Readers may also review "Crane Data's News," "Link of the Day" and "Money Fund Intelligence Archives" for more stories from the past year, 5 years and decade-plus.)
Our February 25 story, "Wells Fargo Sells Asset Management Unit; Morgan Stanley Gets Social," highlights two big trends of 2021 -- shifts in the money fund manager lineups and the growth of ESG & Social money funds. It reviews the press release, "Wells Fargo Enters Agreement with GTCR and Reverence Capital Partners to Sell Wells Fargo Asset Management," which tells us, "Wells Fargo & Company (WFC) today announced that it has entered into a definitive agreement to sell Wells Fargo Asset Management to GTCR LLC and Reverence Capital Partners, L.P. This sale includes Wells Fargo Bank N.A.'s business of acting as trustee to its collective investment trusts and all related WFAM legal entities. Under the terms of the agreement, the purchase price is $2.1 billion. The transaction is expected to close in the second half of 2021." (The deal has since closed and Wells Fargo Funds have been renamed the Allspring Funds.)
Our March 30 News, "ESMA Posts Consultation Report on Potential Reform of European MMFs" covers pending and potential reforms in Europe. We wrote, "[T]he European Securities and Market Authority published a press release entitled, 'ESMA Consults on the Framework for EU Money Market Funds,' which requests feedback on potential European money market fund reforms.... Today, we quote from the full, 'Consultation Report: EU Money Market Fund Regulation.' The 'Executive Summary' explains, 'This consultation document is developed in the context of Article 46 of the MMF Regulation, which provides that '[b]y 21 July 2022, the Commission shall review the adequacy of this Regulation from a prudential and economic point of view, following consultations with ESMA'. The COVID-19 crisis has been challenging for MMFs. A number of EU MMFs faced significant liquidity issues during the period of acute stress in March 2020 with large redemptions from investors on the liability side, and a severe deterioration of liquidity of money market instruments on the asset side. In this context, this consultation document discusses the potential reforms of the EU MMF regulatory framework that could be envisaged, in light of the lessons learnt from the difficulties faced by MMFs during the COVID-19 crisis in March 2020.'"
In April, we published, "Schwab, Vanguard SEC Comments Support Floating NAV for Prime Retail," which excerpted from a couple of the more notable posts to the SEC. It explains, "Last Monday was the deadline for the SEC's 'Request for Comment on Potential Money Market Fund Reform Measures in President's Working Group Report' and, as expected, it brought an onslaught of comment letters. We reviewed several last week, but today we review submissions from retail giants Charles Schwab and Vanguard. Schwab's Rick Wurster writes, "Charles Schwab & Co, Inc. and Charles Schwab Investment Management appreciate the opportunity to provide comments to the Securities and Exchange Commission on the potential money market fund reform measures outlined by the President's Working Group on Financial Markets in its December 2020 report, 'Overview of Recent Events and Potential Reform Options for Money Market Funds'."
At the end of May, we posted an article, "Boston Fed Paper Proposes Requirement to Convert All MMFs to Govt," which discussed another potential outcome of the current regulatory reform discussions. It says, "The Federal Reserve Bank of Boston published, 'Money Market Mutual Funds: Runs, Emergency Liquidity Facilities, and Potential Reforms.' The new paper, authored by Kenechukwu Anadu and Siobhan Sanders, 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. In both cases, the runs contributed to significant strains in short-term funding markets, an important source of funding for businesses and municipalities. 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.'"
A June story, "Asian Money Fund Symposium Recap: JPMAM's Shevlin on Chinese MMFs," highlighted the growing presence of Chinese MMFs. It starts, "Last week, Crane Data hosted its latest webinar, "Asian Money Fund Symposium," which featured J.P. Morgan Asset Management's Aidan Shevlin, Goldman Sachs A.M.'s Pat O'Callaghan, Fitch Ratings' Alastair Sewell, S&P Global's Andrew Paranthoiene and Crane Data's Peter Crane. The 2-hour, 3-part event discussed money funds, money markets and investors in China, Japan and several other Eastern markets. We excerpt from the first segment below, and watch for more highlights in coming days and in the July issue of our Money Fund Intelligence newsletter."
Another big story of the year, stablecoins, got hot during the summer. Our July 21 update, "Tether Hits Keep Coming: WSJ, PWG, CNBC; Taming Wildcat Stablecoins," explains, "Stablecoin purveyor Tether is again in the news as regulators scrutinize the sector and make uncomfortable comparisons to money market funds. The Wall Street Journal wrote on Saturday, 'Risks of Crypto Stablecoins Attract Attention of Yellen, Fed and SEC.' The piece explains, 'Stablecoins, digital currencies pegged to national currencies like the U.S. dollar, are increasingly seen as a potential risk not just to crypto markets, but to the capital markets as well. Treasury Secretary Janet Yellen is scheduled Monday to hold a meeting of the President's Working Group on Financial Markets to discuss stablecoins."
Interest in ultra-short bond funds and ETFs was again a big theme in 2021. In August, we wrote, "BNY Mellon's Ultra Short Income ETF Live; Locke on MMFs' Paper Tiger." This piece says, "A recent press release explains that, 'BNY Mellon Investment Management ... announced the expansion of its Exchange-Traded Funds (ETFs) range with the introduction of the BNY Mellon Ultra Short Income ETF, sub-advised by Dreyfus Cash Investment Strategies (CIS). This active ETF solution, which seeks to address the growing demand for increased yield with less volatility than a short-term bond fund and potentially additional return over money market funds, is expected to commence trading on the New York Stock Exchange (NYSE) on Wednesday, August 11, 2021.'"
In September, our annual Money Fund Symposium returned as a live event, and, as usual, speakers addressed all of the major issues of the day. Our News piece, "Callahan, Cunningham Money Fund Symposium Keynote Talks ESG, Regs," states, "At last week's Money Fund Symposium conference in Philadelphia, our opening session was entitled, 'Keynote: Adapting to Regulations, Tech & ESG,' and featured our Peter Crane moderating a discussion with BlackRock's Tom Callahan and Federated Hermes' Debbie Cunningham. We excerpt from their comments below." (Note: The recording and materials are available here for Attendees and Crane Data subscribers.)
Finally, in October, we wrote about assets and yields, as we do several times a month. Money fund assets held on to the $5.0 trillion level all year, while yields refused to budge from their zero (or 0.02%) level. Our News, "SEC MMF Stats: Assets Inch Higher to $5.03 Trillion in Sept; Yields Flat," explains, 'The Securities and Exchange Commission's latest monthly 'Money Market Fund Statistics' summary shows that total money fund assets rose by $19.9 billion in September to $5.030 trillion. (Month-to-date in October assets are down $12.1 billion through 10/20, according to our MFI Daily.) The SEC shows that Prime MMFs rose by $2.6 billion in September to $869.8 billion, Govt & Treasury funds increased $20.4 billion to $4.063 trillion and Tax Exempt funds decreased $3.1 billion to $97.6 billion. Yields were flat in September again, after their first increase in 24 months three months ago. The SEC's Division of Investment Management summarizes monthly Form N-MFP data and includes asset totals and averages for yields, liquidity levels, WAMs, WALs, holdings, and other money market fund trends. We review their latest numbers below.'"
For more 2021 (and soon 2022) News (and prior years going back to 2006), see Crane Data's News Archives. We'll continue to provide daily updates on the money fund marketplace in the coming year, so keep reading our News and Link of the Day commentaries in 2022. Let us know if you need web access (unlimited access is for subscribers only), or if you'd like to see our latest Money Fund Intelligence, Bond Fund Intelligence or MFI Daily publications. Thanks to all of our readers and subscribers for your support in 2021, and we wish you all the best in the coming year. Merry Christmas, Happy Holidays and Happy New Year!
