Daily Links Archives: September, 2010

Moody's Investor's Service posted two press releases yesterday and two more today -- "Moody's withdraws Aaa/MR1+ ratings of six Nomura Money Market Funds," "Moody's withdraws the Aaa/MR1 ratings of Pictet Global Selection Fund - Euro Cash," "Moody's withdraws Aaa/MR1+ rating on Nikko Money Market Fund -- US Dollar Portfolio," and "Moody's withdraws Aaa/MR1+ ratings of two Nomura Money Market Funds." The first says, "Moody's Investors Service has withdrawn for business reasons the Aaa/MR1+ ratings of six Nomura money market funds: Nomura Multi Currency MMF -- US Money Market Fund, Australian Dollar Money Market Fund, G.B. Pound Money Market Fund, Canadian Dollar Money Market Fund, Euro Money Market Fund, and New Zealand Dollar Money Market Fund.... Moody's Investors Service has withdrawn the credit rating for its own business reasons.... The last rating action on Nomura Multi Currency MMF - US Money Market Fund was on 3 December 2007 when the fund was rated Aaa/MR1+." The second says, "Moody's Investors Service has withdrawn for business reasons the Aaa/MR1 ratings of Pictet Global Selection Fund-Euro Cash.... The last rating action on Pictet Global Selection Fund-Euro Cash was on 26 April 2002 when the fund was assigned a Aaa/MR1 rating." The Nomura fund is one of the only funds offering Canadian, Australian and New Zealand currencies to "offshore" investors. Note that normally fund ratings are withdrawn for cost considerations or because a fund liquidation is imminent. See also, SmartMoney's "Where Did All the Money Funds Go?".

The London-based Institutional Money Market Funds Association, or IMMFA, announced the publication of "a series of investor 'Insights', designed to provide useful information to investors on key matters which influence investment decisions." IMMFA's website explains, "This series of one page documents currently covers Selecting a Money Market Fund, Comparing CNAV and VNAV Funds, Managing and Mitigating Credit Risk, and Investing in an IMMFA Money Market Fund." (The site and IMMFA member funds are geared towards European institutional investors.) The Selecting a Money Market Fund piece advises, "There are two principal types of money market fund available: (a) Constant Net Asset Value; and (b) Variable Net Asset Value. The two types may have different accounting and taxation treatments, so you should check local rules before investing. You should also consider the types of securities held by the fund. 'Prime' money market funds can invest in all types of money market securities, from deposits to short dated asset-backed securities, whereas 'Government' money market funds only invest in government debt. If you are looking for a lower risk investment, you might want to consider Government funds." The Investing in an IMMFA Money Market Fund brief says, "Since 2003, IMMFA members have adhered to a Code of Practice. The IMMFA Code is designed to deliver best practice standards in the management and operation of money market funds. These requirements aim to provide investors with a product that is resilient and able to effectively manage and mitigate risks."

Late last week, at the "Thirteenth Annual International Banking Conference" in Chicago, hosted by the Federal Reserve Bank of Chicago, Paul Volcker, Chairman of the U.S. President's Economic Recovery Advisory Board and former Chairman of the Federal Reserve System made a couple of comments of interest to money fund providers and investors. Volcker said, "The G30's going to put out a report [soon]" (see our Jan. 19, 2009 Crane Data News "Group of Thirty Recommendation Poses Threat to Money Market Funds"). Volcker also said, "I think ... it's important to make a distinction between those institutions ... you want to protect and those you don't.... The commercial banks ... were diminished in relative importance as an immediate provider of credit. You add up the people holding credit in the United States and they used to be at 60-65% but now they're at 30-35%.... Another institutional change that hasn't gotten much attention, is money market mutual funds, [which] have encroached so much on the banking market. They are nothing so much as a regulatory arbitrage, which serves no other purpose than ... handling payments and short-term paper, which is a commercial banking function. Money market mutual funds didn't have to keep capital, they didn't have to be regulated [by banking regulators], and so on... But I think there is something special about banks, and if you're going to regulate this system you have to recognize that. They are central."

"Federated looking to snap up more money funds, says Donahue" writes Investment News. It says, "Just two months after it announced that it was acquiring SunTrust Banks Inc.'s $17 billion money market business, Federated Investors Inc. is on the prowl to buy more money funds. The fund company also is looking to purchase an international asset manager with a global distribution network, Chris Donahue, chief executive of Federated Investors, said in an interview.... Mr. Donahue said, the firm is casting a wide net." He told IN, "Everything that goes by, we are looking at." The article adds, "He declined to comment on whether the firm is bidding to buy Pioneer Investments from UniCredit SPA, which is reportedly up for sale. Despite the fact that money fund yields have been close to zero, Mr. Donahue thinks now is a good time to acquire money fund assets." Donahue also said, "We realize that because of the [fund] waivers, the economics are not as attractive as they should be, but when you are doing things over the course of decades for customers, you wait and see.... From our perspective, anyone who isn't in the top 25 on the money fund list is someone who can seriously consider turning their money fund business to us. Years ago, there used be 300 money fund managers; now there are less than 150." See also, Bond Buyer's "Basel May Be Threat to Money Funds", which says, "The Basel III bank capital requirements proposed earlier this month threaten to eviscerate the supply of eligible investments for tax-free money market funds -- an industry already struggling with a severe supply shortage. Bankers and analysts have argued that the proposed capital requirements would make it more expensive for banks to guarantee municipal debt."

"AFP Debuts Daily Institutional Money Market Funds Monitor" says a release and e-mail from the Association of Financial Professionals, a trade group for corporate treasurers. AFP writes, "The Association for Financial Professionals (AFP) introduced the Money Market Funds Monitor, a daily resource to help institutional investors make more informed decisions." Brian Kalish, AFP's Finance Practice Lead, comments, "Given all the attention money market funds have received over the past 2-plus years, AFP feels it is important to provide membership with an additional tool." The release adds, "The Money Market Funds Monitor, in partnership with iMoneyNet, is located at www.afponline.org/fundsmonitor. The money fund data provides corporate cash investors with critical information to make daily investment decisions. This data also will help users reduce risk and improve compliance and due-diligence reporting.... Money fund data for AFP members includes: Top 10-yielding Institutional money funds, Offshore and U.S. fund information, 1-, 7- and 30-day yields, WAMs, Prospectuses, Fund fact sheets, and Portfolio assets." Note that information is only available to AFP Members and that Crane Data has a competing product (at a much lower price than AFP membership), Crane Corporate. (Contact us for a sample of ours!) In other news, ICI released its latest "Money Market Mutual Fund Assets report, which shows "Total money market mutual fund assets decreased by $10.63 billion to $2.803 trillion for the week ended Wednesday, September 22."

Crane Data recently sent a notice to attendees, speakers and sponsors of its July Money Fund Symposium conference seeking speaking proposals for next year's 2011 Money Fund Symposium and for our new Money Fund University. The notice said, "We've set the date for our next Money Fund Symposium, which will be held in Philadelphia June 22-24, 2011. We're also launching a spin-off 'basic training' event, Crane's Money Fund University, January 13-14, 2011, in Jersey City, NJ. We're currently preparing the agendas for these programs, and we're looking for speakers for both events. Please let us know if you'd like to be considered, or if you have a topic suggestion. (Send your request to speak, along with a brief topic description and bio, to: pete@cranedata.us. We'll be posting the preliminary agendas, hotel information and signup info on the websites www.moneyfundsymposium.com and www.moneyfunduniversity.com in coming weeks, so watch for more details soon.

The Federal Reserve's FOMC Statement from its meeting yesterday says, "Information received since the Federal Open Market Committee met in August indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit.... Measures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability.... [I]nflation is likely to remain subdued for some time before rising to levels the Committee considers consistent with its mandate. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period. The Committee also will maintain its existing policy of reinvesting principal payments from its securities holdings. The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate." It adds, "Voting against the policy was Thomas M. Hoenig, who judged that the economy continues to recover at a moderate pace. Accordingly, he believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted and will lead to future imbalances that undermine stable long-run growth."

Bankrate.com writes "Money market funds safer with new rules". The article says, "Though they aren't FDIC-insured, money market mutual funds are supposed to be the safest investment this side of a CD account, and they usually are. But like most investments, money market funds, or MMFs, got dragged into the financial crisis of 2008, and the regulatory chickens are still coming home to roost. New rules by the Securities and Exchange Commission, or SEC, went into effect in May restricting how money market funds can invest in an attempt to prevent future runs on MMFs.... The new SEC rules are designed primarily to make MMFs safer for investors, especially during times of economic stress, by shortening maturities and improving the credit quality of money-market fund investments, says Sean Collins, senior director of industry and financial analysis with the Investment Company Institute in Washington, D.C." Bankrate writes, "[O]ver time, when you add all these rules together, there will be a measurable cost in yield for the increased safety provided by the new rules, says Peter Crane, president of Crane Data in Westborough, Mass.... Estimates range from 3 (basis points) to 20 basis points, Crane says. However, Crane agrees that most investors probably won't notice because, 'even in a spread-out environment, the cost in yield would be dwarfed by a single move by the Fed,' he says.... 'Would (these changes) have stopped a spontaneous run? Maybe,' Crane says. But regulators are still discussing stronger steps such as an emergency liquidity bank or some formalization of the type of government backing for MMFs that came into play in 2008, he says."

MarketWatch columnist Chuck Jaffe named Money Market Funds his "Stupid investment of the week" once again. The article, entitled, "Money funds offer no returns and no insurance," says, "As the anniversary of this money-market scare passed this week, investors could rest easy about what was being held in their money funds, because the entire genre of funds is currently returning so little that it’s practically irrelevant, and the Stupid Investment of the Week.... According to Crane Data, which tracks money-fund returns, nearly one in four taxable money funds has a current yield of 0.00%. More than 55% of that universe of taxable money funds -- 461 out of 818 issues -- has a yield under 0.01%. Of course, even if you do your homework and go for the highest-yielding money funds instead of one of those no-return stinkers, your 'extra' return on a $10,000 investment would be $33 a year. In short, from top to bottom, money funds are a bad idea." Jaffe also writes "Six investing lessons from Lehman's fall," which says, "The Wall Street community is not anxious to celebrate the second anniversary of the collapse of Lehman Brothers, other than to signify that a significant amount of time has passed since one of its darkest hours. It wishes the news media, and the public, would forget the excesses that led to the near-collapse of the financial world. But investors can't afford to forget, because there are too many lessons that came to light in the crisis, and which are more easily seen and remembered today." In other news, see "SEC Proposes Measures to Enhance Short-Term Borrowing Disclosure to Investors."

The Securities & Exchange Commission is hosting a webcast and voting Friday on "Short-Term Borrowings Disclosure." The agenda says, "The Commission will consider whether to propose rules that would require a public company to provide certain disclosures about its short-term borrowings in its filings with the Commission. The Commission will also consider whether to publish an interpretive release to provide guidance regarding the Commission's current disclosure requirements in "Management's Discussion and Analysis of Financial Condition and Results of Operations" relating to liquidity and capital resources." A "Fact Sheet" released this morning says, "In order to fund operations, many financial institutions and other companies engage in short-term borrowing -- that is, a financing arrangement that generally matures in a year or less. Such borrowing arrangements have become increasingly common and can take many forms, including commercial paper, repurchase agreements, letters of credit, promissory notes and factoring. Due to their short-term nature, a company's use of these kinds of financing arrangements can fluctuate significantly during a reporting period. Currently, Commission rules require companies to disclose short-term borrowings at the end of the period. But there is no specific requirement to disclose information about the amount of short-term borrowings outstanding throughout the reporting period."

Investment News writes "Huntington won't waver on fee waivers for money funds". It says, "Despite low yields on money market funds, Huntington Asset Advisors Inc. plans to continue waiving the management and shareholder fees on its four money market funds indefinitely. Huntington began waiving the 40-basis-point management fee and 25-basis-point shareholder administration fee on its four money market funds in late 2008 and will continue to do so until yields rise, according to Randy Bateman, the firm's president and chief investment officer." Bateman says, "Huntington has chosen to forgo profitability on its money fund complex.... While there is a temptation to take more risk to increase yields, we aren't going to do that." The piece adds, "Money fund yields have been close to zero for several months, but most firms, like Huntington, are bearing down and waiting for better times, said Pete Crane, president and chief executive of Crane Data LLC." It quotes Crane, "Banks make more on bond funds than they do on money funds." IN adds, "And there isn't much opportunity for money funds to take on additional risk, Mr. Crane said. The Securities and Exchange Commission passed rules this year that restrict money funds' holdings of lower-quality securities and require them to keep at least 30% of assets in securities that mature within seven days." "Money funds are basically glorified index funds," Mr. Crane said. "You take what the Fed gives you."

The Wall Street Journal writes "Money Funds Try Risk Again", which says, "Two years after a big money-market mutual fund 'broke the buck,' some funds are making new bets on risky securities—raising the chances for problems despite a raft of new rules designed to make the market safer.... To make the funds safer and reduce systemic risk, the Securities and Exchange Commission in January adopted several rules limiting the types of investments money funds can hold. Yet investors, analysts and even some money managers say funds are taking new risks now in part because of unintended consequences stemming from the new rules." It continues, "Tom Milner is one money-market investor who is cutting back. A year ago, the director of treasury services at Wakefern Food Corp. held 80% of the company's cash in money funds; today, he said, that figure is 40% to 50%." It adds, "Money market funds 'are stronger and more resilient today than they were in 2008 as a result of the rules the Commission adopted,' said Robert Plaze, associate director for regulation in the SEC's investment-management division. But investors say new problems are emerging."

WSJ.com writes "Moody's Gets Mixed Grades on Money-Fund Plan". It says, "Investment ratings agency Moody's Corp. plans to replace its AAA ratings for money-market mutual funds with a more-detailed grading system, but some in the fund industry give the idea low marks. Officials at several leading funds sponsors expressed some discomfort with proposals to create a new ratings scale ranging from MF1 to MF4, in part because it goes against industry practice and changes what investors are used to -- they say that many investment mandates, for example, require that an investment has to be rated AAA. But Moody's said the change is intended to highlight the risks of money-market funds more clearly. Under the new system, Moody's would give greater importance to factors such as the capacity of the fund to meet unexpected redemptions and the ability and willingness of the parent company to bail out a fund should that become necessary." The article quotes Peter Crane, "These proposals are going down [among fund companies] like a lead zeppelin. Tweaking the ratings criteria is one thing, but moving away from AAA-ratings is sacrilege.... It will take years or decades to condition people to this new system."

S&P posted the release, "Northern Institutional Funds Treasury Portfolio Rated 'AAAm'", which says, "Standard & Poor's Ratings Services said today that it assigned its 'AAAm' principal stability fund rating to the Northern Institutional Funds Treasury Portfolio. The rating -- the highest assigned to a money-market mutual fund -- is based on our comprehensive analysis of the fund's strategy, investment holdings, market price exposure, and management. Northern Institutional Funds Treasury Portfolio, which was launched on Nov. 5, 2008, seeks to provide a maximum current income consistent with preservation of capital and maintenance of liquidity. The portfolio attempts to achieve its objective by investing mainly in high-quality securities, primarily U.S. Treasuries securities, securities guaranteed as to principal and interest by the U.S. government, and related repurchase agreements. The portfolio is one of seven diversified money-market portfolios in the Northern Trust Institutional Funds. Currently, we rate four portfolios 'AAAm': Government Select Portfolio, Government Portfolio, the Prime Obligations Portfolio, and the Municipal Portfolio." Also, note Crane Data's Peter Crane will be participating in a webinar hosted by SunGard entitled "Trends in Short-Term Cash Investment" at 10:30am EDT this morning.

Moody's Investors Service will host a Teleconference & Webinar on its recently-released "Request for Comment on Money Market Fund Methodology" Tuesday morning (Sept. 14) at 10am EDT. The call will be hosted by Yaron Ernst, Managing Director of Moody's Global Managed Investments Group, and will last approximately 30 minutes. (A replay will be available later too.) See Moody's recent "Request for Comment: New Money Market Fund Rating Methodology and Symbols," which says, "The refined rating methodology, if implemented after a 60-day request-for-comment period, would recalibrate our primary analytical inputs, such as a fund portfolio's underlying asset quality, its liquidity position and susceptibility to market risk, and the likelihood of support from the fund's sponsor. Under the proposed rating system, we would introduce a new five-point rating scale for money market funds ranging from MF1+ (strongest) to MF4 (weakest)."

SunGard will host a webinar entitled "Trends in Short-Term Cash Investment" this Wednesday, September 15 at 10:30am (Eastern) featuring Peter Crane, founder of Crane Data LLC and Vince Tolve, vice president of SunGard Wealth Management. The description says, "Increased regulatory presence, concerns around counterparty, interest and credit risk, as well as the constant challenge to stay within your investment policy are just a few of the challenges facing cash managers today. Corporations can compare and contrast various money market yields to better manage their cash holdings across the organization.... You will also learn how corporate treasurers can more effectively manage short-term cash investments by connecting to SunGard's SGN Short-Term Cash Management portal to research, analyze, trade and report on more than 300 money market funds."

The Bank for International Settlements and the Basel Committee on Banking Supervision released a statement entitled, "Group of Governors and Heads of Supervision announces higher global minimum capital standards," which says, "At its 12 September 2010 meeting, the Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision, announced a substantial strengthening of existing capital requirements and fully endorsed the agreements it reached on 26 July 2010. These capital reforms, together with the introduction of a global liquidity standard, deliver on the core of the global financial reform agenda and will be presented to the Seoul G20 Leaders summit in November. The Committee's package of reforms will increase the minimum common equity requirement from 2% to 4.5%. In addition, banks will be required to hold a capital conservation buffer of 2.5% to withstand future periods of stress bringing the total common equity requirements to 7%. This reinforces the stronger definition of capital agreed by Governors and Heads of Supervision in July and the higher capital requirements for trading, derivative and securitisation activities to be introduced at the end of 2011." (Look for more on the problems these new standards will cause liquidity investors in coming days.)

ICI's weekly "Money Market Mutual Fund Assets" report says, "Total money market mutual fund assets increased by $10.55 billion to $2.839 trillion for the week ended Wednesday, September 8, the Investment Company Institute reported today. Taxable government funds did not change by a significant amount, taxable non-government funds increased by $9.91 billion, and tax-exempt funds increased by $640 million." This represents the 6th week in the past 7 that money fund assets have increased. ICI's release continues, "Assets of retail money market funds increased by $3.07 billion to $969.07 billion. Taxable government money market fund assets in the retail category increased by $370 million to $170.18 billion, taxable non-government money market fund assets increased by $1.16 billion to $591.91 billion, and tax-exempt fund assets increased by $1.53 billion to $206.98 billion.... Assets of institutional money market funds increased by $7.48 billion to $1.869 trillion. Among institutional funds, taxable government money market fund assets decreased by $370 million to $666.20 billion, taxable non-government money market fund assets increased by $8.75 billion to $1.074 trillion, and tax-exempt fund assets decreased by $890 million to $129.34 billion."

Federal Reserve "Board authorizes ongoing small-value offerings of term deposits under the Term Deposit Facility". The statement says, "The Federal Reserve Board on Wednesday announced that it has authorized ongoing small-value offerings of term deposits under the Term Deposit Facility (TDF). These small-value offerings are designed to ensure the operational readiness of the TDF and to provide eligible institutions with an opportunity to gain familiarity with term deposit procedures. The development of the TDF and the ongoing small-value TDF offerings are a matter of prudent planning and have no implications for the near-term conduct of monetary policy. The terms and frequency for these auctions may evolve over time, but the Board currently anticipates that TDF auctions will be held about every other month. Following this approach, two auctions will be conducted over the remainder of this year on October 4 and November 29; the corresponding settlements will occur on October 7 and December 2, respectively. Each of these auctions will offer $5 billion of 28-day deposits; the modest increase in the offering amount from the $2 billion offering amount at auctions held in June and July is intended to encourage broad participation by depository institutions at the upcoming auctions. The schedule, amounts, and other terms for small-value auctions to be conducted in 2011 will be announced at later dates."

Cinncinnatti's Business Courier writes "Cash yields keep investors scrambling". It says, "Any investor who has socked away money in a bank account, certificate of deposit or money market fund knows how minuscule those returns are. Money markets are yielding 0.1 percent or so, banks are typically paying that or less, and investors are essentially getting nothing for the cash savings. Thank the incredibly low Federal Reserve rates designed to boost the economy. So what can an investor do? Alternatives do exist, but they often come with slightly added risk or at a higher cost." The article adds, "Then, there's always the option of just sticking with a money market and hoping for the best. Touchstone has one of the nation's best-yielding funds for institutional investors. The Touchstone Institutional Money Market Fund yields 0.28 percent, ranking fourth nationally, according to Westborough, Mass.-based Crane Data." The piece quotes fund manager John Goetz, "It's kind of tough to get excited when you have yields like this."

WSJ.com writes "Reserve Fund's Manager Says It Wasn't Only One to 'Break the Buck'", which says, "Reserve Management Co. has told a federal judge that its Reserve Primary Fund wasn't the only money-market fund for which the net asset value dipped below $1 per share, known as 'breaking the buck,' in the wake of Lehman Brothers' 2008 bankruptcy. Reserve's attorneys make the statement in court papers dated and filed Friday with the U.S. District Court for the Southern District of New York. The document was filed in support of Reserve's motion to dismiss a shareholders' class-action suit over the 2008 collapse of the once-$62 billion Reserve Primary Fund. Under the judge's bundling rule, the document was released Friday along with some other older documents, including Reserve Management's motion to dismiss the suit." It adds, "Peter Crane, president of Crane Data, said he finds the claim by Reserve's attorneys 'baffling'. Although a number of U.S. money-market mutual funds were on the cusp of breaking the buck in the wake of the Lehman bankruptcy, none—other than the Reserve Primary Fund—actually did, Mr. Crane said." WSJ quotes Crane, "No U.S. money-market fund other than the Reserve Primary Fund transacted under $1. The advisers to other troubled funds stepped in long before the NAV rounded down.... Historically, you're either a dollar or you're dead."

ICI's "Money Market Mutual Fund Assets" shows assets declined for the first time in six weeks. The release says, "`Total money market mutual fund assets decreased by $6.22 billion to $2.827 trillion for the week ended Wednesday, September 1, the Investment Company Institute reported today. Taxable government funds decreased by $10.71 billion, taxable non-government funds increased by $7.26 billion, and tax-exempt funds decreased by $2.77 billion." ICI continues, "Assets of retail money market funds decreased by $470 million to $966.00 billion. Taxable government money market fund assets in the retail category increased by $90 million to $169.81 billion, taxable non-government money market fund assets increased by $810 million to $590.75 billion, and tax-exempt fund assets decreased by $1.38 billion to $205.45 billion.... Assets of institutional money market funds decreased by $5.75 billion to $1.861 trillion. Among institutional funds, taxable government money market fund assets decreased by $10.81 billion to $666.56 billion, taxable non-government money market fund assets increased by $6.45 billion to $1.065 trillion, and tax-exempt fund assets decreased by $1.39 billion to $130.23 billion."

Capital Advisors' just published a paper, "Four Steps to Prudently Pursue Yield". It says, "With the Fed on hold for an extended period, institutional cash investors need a new perspective on dealing with the prolonged low yield reality. Our four-step guide reminds investors to expect lower yields in the new environment, increase exposure only to securities supported by strong fundamentals, improve yield potential with moderate maturity extension, and be mindful of the downside risk of over-extending oneself. The Federal Reserve's August 10th decision to reinvest proceeds from its mortgage-backed securities holdings sent an important signal that the near zero (0.00% to 0.25%) interest rate policy will likely linger longer than previously expected. With the futures market predicting the Fed funds rate stuck on zero through much of 2011, institutional cash investors need a new perspective on how to deal with this prolonged low yield reality." The summary adds, "Given these assumptions, it is possible that the moderate yield increases in money market funds and other cash portfolios in recent months will reverse course in coming weeks. Should one be content with the meager yield, if any, from these commingled vehicles? What are some of the feasible yield opportunities? Should one consider increasing portfolio risk when a double-dip recession may cause new credit concerns? We hope our four-step guide provides a helpful perspective to the institutional cash and short-duration community."

The U.S. Treasury released a report entitled, "Preliminary Annual Report on U.S. Portfolio Holdings of Foreign Securities at End-December 2009. It shows U.S. holdings of "Total Europe" Short-Term Debt Securities at just $287 billion, far below a number of recent estimates. The release says, "Preliminary data from the latest annual survey of U.S. portfolio holdings of foreign securities are now available. The survey measured U.S. holdings at year-end 2009 of approximately $6.0 trillion, with $4.0 trillion held in foreign equities, $1.6 trillion in foreign long-term debt securities (original term-to-maturity in excess of one year), and $0.4 trillion held in foreign short-term debt securities. The previous such survey, conducted as of year-end 2008, measured U.S. holdings of $4.3 trillion, with $2.7 trillion held in foreign equities, $1.3 trillion in foreign long-term debt securities and $0.3 trillion held in foreign short-term debt securities. Final survey results, which will include additional data detail as well as possible revisions to the preliminary data, will be released on October 29, 2010. The survey was a joint effort of the Department of the Treasury, the Federal Reserve Bank of New York, and the Board of Governors of the Federal Reserve System."