The January issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Friday morning, features the articles: "Highlights of '21: Assets Still Going, Waivers, Reg Debate," which discusses the surprisingly positive year for money market mutual funds; "SEC Proposes MMF Reforms, Trades Gates for Swing Pricing," which reviews the latest potential rule changes for MMFs; and, "Top Money Funds of 2021; 13th Annual MFI Awards," which examines the best performing money funds of the past year. We also sent out our MFI XLS spreadsheet Friday morning, and we've updated our database with 12/31/21 data. (Note: Money Fund Wisdom is down temporarily but should be back up next month. MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our January Money Fund Portfolio Holdings are scheduled to ship on Tuesday, Jan. 11, and our January Bond Fund Intelligence is scheduled to go out on Friday, Jan. 14.
MFI's lead article says, "While challenging, the past year was a surprisingly positive one for money market mutual funds, and 2022 looks to be even better. Money fund assets grew 9% in 2021 after jumping by 20% in 2020. While yields remained pinned to zero, the Fed RRP floor and hopes of higher rates in 2022 made the year bearable. Though another set of money fund reforms in 2022 could cause issues and further pressure Prime MMFs, a reduction in fee waivers this year and more asset inflows should make it a good one. Below, we take a look at the highlights of 2021, and also provide a brief outlook for 2022.
MFI's lead article continues, "Crane Data's numbers show assets rose by $425.3 billion, or 9.0%, to a record $5.150 trillion in 2021. ICI's narrower asset collection settled at $4.703 trillion, up by $408 billion, or 9.5%. (See the charts on page 1 and on page 5.) After plunging to zero in 2020, yields remained pinned to the floor in 2021. Our Crane 100 MF Index remained at 0.02% all year, as did our broader Crane Money Fund Average. Yields are expected to rise in the New Year, as expectations for rising rates remain high."
Our "SEC Proposes" article reads, "On December 15, the Securities & Exchange Commission proposed its latest round of Money Market Fund Reforms, which include higher liquidity levels, the removal of the emergency gates and fees regime, a new swing pricing mandate for Prime Inst MMFs and additional disclosure requirements."
The press release, "SEC Proposes Amendments to Money Market Fund Rules," tells us, "The Securities and Exchange Commission ... voted to propose amendments to certain rules that govern money market funds under the Investment Company Act of 1940.... The Commission's proposed amendments are designed, in part, to address concerns about prime and tax-exempt money market funds highlighted by these [March 2020] events." (See also the SEC's "Fact Sheet" and the full Proposal here.)
SEC Chair Gary Gensler comments, "Together, these amendments are designed to reduce the likelihood of runs on money market funds during periods of stress. They also would equip funds to better meet large redemptions, addressing concerns about redemption costs and liquidity. Given the broad reach of short-term funding markets, these proposals speak to our remit to maintain fair, orderly, and efficient markets."
Our "Top Money Funds" piece explains, "This issue recognizes the top performing money funds, ranked by total returns, for calendar year 2021, as well as the top funds for the past 5‐year and 10‐year periods. We present the funds below with our annual Money Fund Intelligence Awards. These are given to the No. 1‐ranked funds based on 1‐year, 5‐year and 10‐year returns, through Dec. 31, 2021, in each of our major fund categories -- Prime Institutional, Government Institutional, Treasury Institutional, Prime Retail, Government Retail, Treasury Retail and Tax‐Exempt."
It continues, "The Top-Performing Prime Institutional funds (and funds overall) were BlackRock Cash Inst MMF SL (BRC01) and JPMorgan Sec Lending MM Agency SL (VSLXX), which returned 0.09%. Excluding private and internal funds, the best performer in 2021 was DWS ESG Liquidity Inst (ESGXX) with a return of 0.08%. Among Prime Retail funds, JPMorgan Liquid Assets Capit (CJLXX) had the best return in 2021 (0.04%)."
MFI also includes the News brief, "ICI's Money Market Fund Assets." ICI's latest weekly 'Money Market Fund Assets' report shows assets falling the first week of the new year after rising for 8 weeks in a row. ICI shows money fund assets rising by $408 billion, or 9.5%, in 2021. (This follows a gain of $665.0 billion, or 18.3%, in 2020.) Crane Data's MFI XLS shows MMFs up $425.3 billion, or 9.0%, to $5.150 trillion in 2021."
Another News brief, "More Disclosures in SEC’s Proposed MMF Reforms," says, "Under 'Amendments to Form N-MFP,' the SEC explains, 'We are proposing amendments to improve our ability to monitor money market funds. The proposed amendments would provide certain new information about a fund's shareholders and disposition of non-maturing portfolio investments. We are also proposing changes to enhance the accuracy and consistency of information funds currently report [and to] to increase the frequency of certain data points."
Our January MFI XLS, with Dec. 31 data, shows total assets increased $104.6 billion to $5.150 trillion, after increasing $49.7 billion in November and $20.5 billion October. Assets decreased $878 million in September and increased $27.9 billion in August. Assets decreased $12.4 billion in July and $73.0 billion in June. Our broad Crane Money Fund Average 7-Day Yield was flat at 0.02%, and 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 unchanged from previous month at 0.09%. Charged Expenses averaged 0.07% for the Crane MFA and the Crane 100. (We'll revise expenses Wednesday once we upload the SEC's Form N-MFP data for 12/31.) The average WAM (weighted average maturity) for the Crane MFA was 35 days (down two days from previous month) while the Crane 100 WAM dropped two days to 37 days). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
