The March issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Monday morning, features the articles: "MMF Assets Dip Again After January Plunge; Slow Liftoff," which discusses the latest on money market fund assets and yields; "BlackRock's Mejzak, D'Anjou Cautious and Conservative," which quotes from a recent webinar; and, "ESMA Proposes Reforms to European Money Fund Regs," which covers the money fund reform proposals in the EU. We also sent out our MFI XLS spreadsheet Monday morning, and we've updated our database with 2/28/22 data. Our March Money Fund Portfolio Holdings are scheduled to ship on Wednesday, March 9, and our March Bond Fund Intelligence is scheduled to go out on Monday, March 14. (Note: Our MFI, MFI XLS and Crane Index products are all available to subscribers via our Content center. Reminder: Today is the last day for discounted hotel rates to our upcoming Bond Fund Symposium conference in Newport Beach, Calif., March 28-29.)
MFI's "MMF Assets article says, "Money market mutual fund assets were lower again in February after a huge outflow in January. Going forward, assets should stay weak in the first half (and drop briefly following any Fed moves as assets shift to higher yielding direct instruments). But assets should rise in the second half of the year as money fund yields move off the zero floor and regain their historical rate advantage over bank deposit products."
It continues, "The Investment Company Institute's latest 'Money Market Fund Assets' report shows assets rebounding sharply in the latest week, after one flat week and 3 weeks of steep declines. Year-to-date, MMFs are down by $99 billion, or -2.1%, with Institutional MMFs down $113 billion, or 3.5% and Retail MMFs up $14 billion, or 1.0%. Over the past 52 weeks, money fund assets have increased by $243 billion, or 5.6%, with Retail MMFs falling by $25 billion (-1.7%) and Inst MMFs rising by $269 billion (9.4%). (Crane Data's MFI XLS shows assets falling $34.2 billion in February after plummeting $128.1 billion in January.)"
Our "BlackRock" profile reads, "ICD recently hosted a webinar entitled, 'Global Markets Update 2022 with BlackRock,' which asked, 'What are the trends that will impact investors in 2022 as the world transitions from a pandemic-focused economy?' The session was moderated by ICD's Justin Brimfield and featured BlackRock Global CIO Rich Mejzak and BlackRock Director and Govt Fund PM Eion D'Anjou. Its description says, 'BlackRock joins ICD to discuss: Expectations around inflation, rising rates and yields in money market funds; Impact of labor market and supply chain concerns on the global economy; and, BlackRock Liquid Federal Trust Fund (BLFT) and other investment opportunities in the year ahead."
Mejzak comments, "We obviously are very thoughtful about flows, or anticipated flows, into and out of our products. We run liquidity products. So that is going to be a huge determinant of how we manage strategy, especially in front of a rising interest rate environment. Up until this point, markets have been pretty aggressive in repricing the Fed. The reality was that a lot of the products that we invest in were not reflecting [this] to the same degree. That's a function of a couple of things.... The supply-demand dynamic in the front end was out of skew, you had money assets that were largely unchanged over the last several quarters, and you had diminishing supply."
Our "ESMA Proposes" piece states, "A press release entitled, '`ESMA Proposes Reforms to Improve Resilience of Money Market Funds' explains, 'The European Securities and Markets Authority (ESMA), the EU's securities markets regulator, is issuing an Opinion containing proposed reforms to the regulatory framework for EU Money Market Funds (MMFs) under the Money Market Funds Regulation (MMFR). The proposals will improve the resilience of MMFs by addressing in particular liquidity issues and the threshold effects for constant net asset value (CNAV) MMFs.' See ESMA's 'Final Report - ESMA Opinion on the Review of the Money Market Fund Regulation' and their 'Final Report - Guidelines on Stress Test Scenarios Under the MMF Regulation 2021.'"
It continues, "ESMA explains, '`These proposed reforms result from the lessons learnt from the significant liquidity difficulties faced by MMFs during the initial outbreak of the COVID-19 pandemic in March 2020. At the time investor redemption rates rose on the liability side with a corresponding deterioration in the liquidity of money market instruments on the asset side.'"
MFI also includes the News brief, "MF Revenue Rises to $4.7B." which says, "Money fund charged expense ratios (Exp%) rose in January to 0.09% from 0.08% the prior month. (Expenses hit a record low of 0.06% in May 2021.) We estimate that annualized revenue for all money funds is $4.656 billion as of 1/31/22. (Our 2/28/22 numbers will be revised tomorrow with N-MFP data.) Revenues rose from $4.043B in Dec. and from May 2020’s record low of $2.927B.
Another News brief, "Bloomberg Says MMF WAMs Short," says, "Bloomberg posted, 'Battered Money-Market Industry Is Ready for Aggressive Fed,' which tells us, 'While the global financial system waits for the Federal Reserve to begin lifting interest rates, funds across the money-market industry are positioning their cash to take advantage of the higher yields to come. For some funds that means shortening exposure to interest-rate shifts in their portfolios. As of Feb. 14, more than 100 money markets funds had a weighted average maturity, or WAM, of 10 days or less ... according to money-market information provider Crane Data.'"
Our March MFI XLS, with Feb. 28 data, shows total assets decreased $34.2 billion to $5.009 trillion, after decreasing $146.8 billion in January, but increasing $104.6 billion in December, $49.7 billion in November and $20.5 billion October. Assets increased $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 were the same as the previous month at 0.11% and 0.11%, respectively. Charged Expenses averaged 0.09% for the Crane MFA and the Crane 100. (We'll revise expenses Tuesday once we upload the SEC's Form N-MFP data for 2/28/22.) The average WAM (weighted average maturity) for the Crane MFA was 27 days (down 3 days from previous month) while the Crane 100 WAM dropped 4 days to 29 days). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
