Daily Links Archives: July, 2017

Crain's Chicago Business writes "`Remember when banks paid for deposits? Those days are returning." It says, "For nearly a decade, consumers and businesses stashing their money in banks have earned next to nothing on their deposits. That's about to change. The first signs of competitive pricing on deposits have finally emerged, blunting earnings growth at some local banks. They include Northern Trust, which caters to institutions and the wealthy, and MB Financial, which serves midsize businesses and consumers. Investors sold off stocks of these Chicago-based companies after their cost of funds rose more than expected and helped lead to lower-than-expected profits. Other local banks such as Rosemont-based Wintrust Financial and Itasca-based First Midwest haven't felt the pressure yet. But they acknowledge that it's coming. The Federal Reserve has boosted interest rates three times since December, but depositors are only now starting to see some benefit. "I think we've held off for a long time, but the demand is there now that we need deposits," Wintrust CEO Edward Wehmer said on a July 19 conference call with analysts. "So we're going to start paying up a little bit."

A New York Times article entitled, "Libor Brought Scandal, Cost Billions -- and May Be Going Away" tells us, "The benchmark is one of the most important in the world. It underpins trillions of dollars in financial products. It was the center of a huge scandal when banks were accused of rigging it. Now Libor is going away. British regulators said on Thursday that they wanted to phase out the scandal-plagued interest rate by 2021, replacing it with new measures that are more closely tied to the lending markets. The London interbank offered rate, or Libor, dates back to the 1980s, when banks in Britain decided to use a uniform benchmark across their increasing range of financial products, rather than referring to various currencies and interest rates. Today, Libor is the underlying rate for a vast array of financial products, from home loans and credit cards to small business loans. To set Libor, banks submit the rates at which they would be prepared to lend money to one another, on an unsecured basis, in various currencies and at varying maturities. But that process has been undermined in recent years." It adds, "Andrew Bailey, the chief executive of the Financial Conduct Authority in Britain, said the market that Libor sought to measure -- unsecured wholesale term lending to banks -- was 'no longer sufficiently active' for it to continue as a benchmark. "We do not think we will complete the journey to transaction-based benchmarks if markets continue to rely on Libor in its current form," Mr. Bailey said in a speech on Thursday at Bloomberg L.P.'s offices in London. "And while we have given our full support to encouraging panel banks to continue to contribute and maintaining Libor over recent years, we do not think markets can rely on Libor continuing to be available indefinitely.""

A press release entitled, "Fitch Affirms Ratings on 110 Money Market Funds with $1.3 Trillion in Assets," tells us, "Fitch Ratings has affirmed the ratings on 110 money market funds (MMFs) following a regularly scheduled global review of the sector. Collectively, the funds comprise about $1.3 trillion of assets under management (AUM). A complete list of the funds and the associated ratings is included at the end of this press release." The "Key Rating Drivers," according to Fitch, include: The MMF portfolios' overall credit quality and diversification; Low exposure to interest rate and spread risks; Holdings of daily and weekly liquid assets consistent with shareholder profiles; Maturity profiles meeting Fitch's rating criteria; and, The capabilities and resources of the respective investment advisors. The release explains, "Consistent with Fitch's criteria for rating MMFs at 'AAAmmf', the reviewed funds maintain high credit quality portfolios by investing exclusively in short-term securities rated at least 'F1' by Fitch or the equivalent. MMFs rated 'AAmmf' and 'Ammf' may elect to invest a small percent of their assets in securities rated 'F2' by Fitch or the equivalent. These MMFs rated at 'AAAmmf' manage their portfolios to limit their exposures to individual issuers at 10% of the fund's assets, with no more than 5% of assets for those exposures above seven days in tenor. Minor and temporary deviations from these parameters may occur from time to time, mainly due to cash outflows.... The reviewed MMFs seek to limit interest rate and spread risk by maintaining their weighted average maturity (WAM) and weighted average life (WAL) below 60 days and 120 days, respectively. These funds also limit the maturity date of any single investment to 397 days with the exception of floating-rate securities issued by highly rated sovereigns, supranationals, or government agencies benefiting from strong market liquidity, which could have maturities as long as 762 days.... The funds seek to maintain sufficient levels of daily and weekly liquidity to meet investors' redemption requests. Specifically, taxable MMFs rated 'AAAmmf' invest at least 10% of total assets in securities offering daily liquidity and at least 30% of total assets in securities providing weekly liquidity in line with Fitch's rating criteria. Tax-exempt MMFs invest at least 30% of their assets in securities offering weekly liquidity, consistent with Fitch's MMF rating criteria."

A Prospectus Supplement filing for Northern Institutional Funds says, "The Board of Trustees (the "Board") of Northern Institutional Funds (the "Trust") has approved a Plan of Reorganization, which contemplates the reorganization of the Government Assets Portfolio, a series of the Trust (the "Acquired Portfolio"), with and into the U.S. Government Portfolio, also a series of the Trust (the "Acquiring Portfolio" and, together with the Acquired Portfolio, the "Portfolios"). The reorganization is expected to take effect on or about November 17, 2017 or such other date the Board or an authorized officer of the Trust may determine. The reorganization does not require a shareholder vote by the Acquired Portfolio's shareholders, but the reorganization is subject to the satisfaction of certain conditions. More information about the Acquiring Portfolio and the definitive terms of the reorganization will be included in an information statement that will be mailed to shareholders at a later date. After the close of business on November 10, 2017, the Acquired Portfolio will discontinue accepting orders from new investors for purchase of the Acquired Portfolio shares or exchanges into the Acquired Portfolio from other portfolios of the Trust; provided, however, that existing shareholders of the Acquired Portfolio may continue to purchase, redeem and exchange shares subject to the account policies described in the Acquired Portfolio's prospectus up until the date of the reorganization. For shareholders who purchase shares of the Acquired Portfolio through a Northern Trust sweep account, the Portfolio will remain available until on or about November 17, 2017. After considering the recommendation of Northern Trust Investments, Inc. ("NTI"), the Portfolios' investment adviser, the Board concluded that the reorganization would be in the best interests of each Portfolio and their shareholders and shareholders' interests will not be diluted as a result of the reorganization. It is expected that the reorganization of the Portfolios will be effected on a tax-free basis for federal income tax purposes. This tax-free treatment, however, does not extend to transactions that occur prior to, or after the reorganization."

The AFP wrote recently, "Money Funds: Navigating the Road Less Traveled." They say, "The current state of money markets reminds me of that old Robert Frost quote: 'Two roads diverged in a wood and I -- I took the one less traveled by, and that has made all the difference.' I just got back from the Crane Money Fund Symposium, and the view from the event is that money market deposit accounts (MMDAs) have largely supplanted money market funds, at least for the time being.... The utilization of MMDAs has outpaced money funds. While investment in prime money funds has fallen dramatically since the global financial crisis, deposits in MMDAs have skyrocketed. Over the past 10 years, MMDAs have increased by $5.2 trillion.... Many in the industry wonder whether we will ever see a move back to prime funds. Should the stable NAV be restored, a shift back to prime would be a no-brainer for many corporates. Under the Consumer Financial Choice and Capital Markets Protection Act (S.1117/H.R. 2319), money funds could elect to be stable value funds if they meet certain criteria. Some managers favor adopting a mix of prime funds and their similar counterparts (ultrashort bond funds) as a viable alternative to achieving pre-money fund reform investment options. But others favor only investing in stable NAV products -- namely government/treasury money market funds. Depending on which investment manager you ask, you will get a variety of opinions on the best way to proceed.... Separately managed accounts (SMAs) and ultrashort bond funds were highly discussed at the symposium. Many investment managers are having conversations with their clients regarding these as viable alternatives to money funds. This is because these options offer full transparency of investments and customizable investment styles. Ultimately, clients determine their best course of action, given their investment directives, the amount of cash they have to invest, and how much they want to segment that cash."

BlackRock released another update entitled, "Time for Prime." It says, "There is no longer a one-size-fits-all solution in the money market space. In the new world of cash investing, should prime money market funds (MMFs) have a place in your strategy? In addition to the transparency information available elsewhere on this site, the information below may help you better understand how an allocation to prime MMFs could be additive to your portfolio." Their "Prime Perspectives" include: Following the momentous shift in money market fund (MMF) assets into government MMFs last year, 2017 has seen assets consistently return to prime MMFs as investors gain comfort with the new paradigm. According to iMoneyNet, institutional prime MMF AUM has increased 22% year-to-date. Historically, the second half of the calendar year sees money fund inflows, so we believe this trend is expected to continue and gain momentum. BlackRock's flagship institutional prime MMF, BlackRock Liquidity Funds TempFund, remains one of the only prime MMFs with over $10 billion in assets under management (AUM). A recent survey by Bank of New York Mellon Corporation indicates that investors are evaluating the spread differential between prime and government MMFs with an eye towards certain entry points. This suggests that more investors may segment a portion of their cash into prime MMFs. According to iMoneyNet, average spreads are currently 32 basis points between the categories. Mark-to-market net asset value (NAV) per share volatility in prime MMFs since the beginning of the implementation of the floating NAV has been relatively low, despite the Federal Reserve's three recent quarterly rate hikes and active engagement in interest rate normalization. From a total return perspective, we believe that the continuation of this trend of relative NAV stability within these portfolios combined with the yield spread relative to government MMFs could provide an advantage to prime MMF investors. Check out a comparison of our flagship prime and government money market funds below."

ICI's latest weekly Money Market Fund Assets report shows yet another decline in MMFs overall but the 5th straight increase in Prime funds. Prime MMFs rose by $2.4 billion to $420.9 billion, their 11th increase in the past 13 weeks. Prime assets have risen by $22.8 billion over the past 12 weeks, or 5.7%, and year-to-date Prime assets have increased by $42.7 billion, or 10.8%. ICI writes, "Total money market fund assets decreased by $9.88 billion to $2.62 trillion for the week ended Wednesday, July 19, the Investment Company Institute reported today. Among taxable money market funds, government funds decreased by $11.88 billion and prime funds increased by $2.35 billion. Tax-exempt money market funds decreased by $348 million." Total Government MMF assets, which include Treasury funds too, stand at $2.066 trillion (79.0% of all money funds), while Total Prime MMFs stand at $420.9 billion (16.1%). Tax Exempt MMFs total $129.9 billion, or 5.0%. They explain, "Assets of retail money market funds decreased by $388 million to $957.08 billion. Among retail funds, government money market fund assets decreased by $387 million to $580.32 billion, prime money market fund assets increased by $76 million to $252.68 billion, and tax-exempt fund assets decreased by $76 million to $124.08 billion." Retail assets account for over a third of total assets, or 36.6%, and Government Retail assets make up 60.6% of all Retail MMFs. ICI's release adds, "Assets of institutional money market funds decreased by $9.49 billion to $1.66 trillion. Among institutional funds, government money market fund assets decreased by $11.50 billion to $1.49 trillion, prime money market fund assets increased by $2.28 billion to $168.22 billion, and tax-exempt fund assets decreased by $272 million to $5.82 billion." Institutional assets account for 63.4% of all MMF assets, with Government Inst assets making up 89.5% of all Institutional MMFs.

A press release entitled, "Schwab Reports Record Quarterly Net Income of $575 Million, up 27%," tells us, "The Charles Schwab Corporation announced today that its net income for the second quarter of 2017 was a record $575 million, up 2% from $564 million for the prior quarter, and up 27% from $452 million for the second quarter of 2016. Net income for the six months ended June 30, 2017 was $1.1 billion, up 32% from the year-earlier period." CFO Peter Crawford comments, "Our financial model, with multiple revenue streams, operating leverage, and an all-weather balance sheet, produced outstanding second quarter results, with records for revenue and pre-tax profit margin. Net interest revenue rose to a record $1.1 billion, up 32% from last year's second quarter, driven by higher short-term rates reflecting the Federal Reserve's March and June 2017 hikes. We achieved these results even as the longer end of the yield curve softened and growth in interest-earning assets slowed due to clients engaging further with the markets and investing more of their cash. Asset management and administration fees grew 12% year-over-year to a record $845 million, reflecting further improvement in net money fund revenue from rising rates and growing balances in advised solutions, equity and bond funds, and ETFs. By quarter-end, the yields on all proprietary money market fund portfolios were at or above their respective operating expense ratios, fully eliminating money fund fee waivers for the first time since the financial crisis.... Overall, our growing success with clients, the Fed's rate actions, and improving equity market valuations helped us end the second quarter a bit ahead of our 2017 baseline scenario, with total revenue up 17% year-over-year to $2.1 billion."

Crane Data is now busy preparing for its 5th Annual European Money Fund Symposium, the largest money market fund event in Europe, which will be held Sept. 25-26 in Paris, France. With just over 2 months to go, we're urging European money fund professionals to make hotel reservations ASAP and to register soon. See the latest agenda here, see hotel information here, and click here to register. Last year's event in London attracted 120 attendees, sponsors and speakers -- our largest European event ever. Given pending new money fund regulations in Europe and possible plans for "repatriation" of assets, we expect our first show on the Continent in Paris to attract even more interest this year. "European Money Fund Symposium offers European, Asian and "offshore" money market portfolio managers, investors, issuers, dealers and service providers a concentrated and affordable educational experience, as well as an excellent and informal networking venue," says Crane Data President Peter Crane. "Our mission is to deliver the best possible conference content at an affordable price to money market fund professionals," he added. EMFS will be held at the Renaissance Paris La Defense hotel. Book your hotel room before Monday, August 1, and receive the discounted room rate of E224. Registration for our 2017 Crane's European Money Fund Symposium is $1,000 (USD or Euro). Visit www.euromfs.com to register or contact us to request the PDF brochure, or for Sponsorship pricing and info, and for more details. We hope to see you in Paris this September! Finally, thanks to those who attended our big show, last month's Money Fund Symposium in Atlanta. Next year's event will be June 25-27, 2018, in Pittsburgh, Pa. Watch our site or visit www.cranesmfsymposium.com for details in coming months. Also, our next Money Fund University "basic training" event will take place Jan. 18-19, 2018, in Boston, and our next Bond Fund Symposium will be held March 22-23, 2018, in Los Angeles, Calif.

Wells Fargo Advisors is seeking a "Product Manager 3 for its Cash Sweep and Business and Account Strategy Team who "will be responsible for various product related activities such as: Overall product management and strategic focus for the Cash Sweep Program including Bank Deposit Sweep and Money Market Funds; Integrating product management with key business partners across the organization including Legal, Compliance, Risk, Operations, Technology, Marketing, and internal sale channel representatives; Interpreting various product metrics and create business case presentations; Building strong relationships and strategic partnerships in a complex and multilayered organization; Should be organized and able to work on serval projects at once; Lead a series of internal projects and complex programs; Understand what's technically possible, and how business rules work with customer experience; Maintain departmental documentation, customer disclosures, internal and external websites; Participate in early discovery work that helps to determine future strategy; Advocate for change that improves process and increases departmental efficiency; and, Must be able to see big picture, but also find satisfaction in making every detail right." Required Qualifications include: 5+ years of product management experience, product development experience, or a combination of both, and 3+ years of financial industry experience. Desired Qualifications include: "Strong analytical skills with high attention to detail and accuracy; Excellent verbal, written, and interpersonal communication skills; Good analytical skills including strategically analyzing data and diagnosing opportunities/interventions; Knowledge and understanding of project management or implementation; Ability to develop partnerships and collaborate with other business and functional areas; Advanced Microsoft Office (Word, Excel, Outlook and PowerPoint) skills; Ability to prepare presentations, management reporting, and statistical analysis; Outstanding problem solving and decision making skills; Ability to be flexible and adjust plans quickly to meet changing business needs; Ability to proactively manage and mitigate issues; Ability to successfully exceed goals with a results focus; Ability to take on a high level of responsibility, initiative, and accountability; and, FINRA registration including Series 7 (or FINRA recognized equivalents)."

Western Asset California Tax Free Money Market Fund is the latest in a long line of municipal and tax-free money market funds to liquidate. It Prospectus Supplement filing says, "The following language is added to the Fund's Summary Prospectus, Prospectus and Statement of Additional Information: The fund's Board of Trustees has determined that it is in the best interests of the Fund and its shareholders to terminate and wind up the Fund. The Fund is expected to cease operations on or about July 28, 2017. In preparation for the termination of the Fund, the assets of the Fund will be liquidated and the Fund will cease to pursue its investment objective. Shareholders of the Fund who elect to redeem their shares prior to the completion of the liquidation will be redeemed in the ordinary course at the Fund's net asset value per share. Each shareholder who remains in the Fund will receive a liquidating distribution equal to the aggregate net asset value of the shares of the Fund that such shareholder then holds. In the interim, effective immediately, the Fund will be closed to new purchases and incoming exchanges, except that dividend reinvestment will continue until the Fund is terminated. Current shareholders (including those investing through a systematic investment plan or payroll deduction) will be permitted to purchase additional Fund shares until July 14, 2017. Shareholders are encouraged to consider options that may be suitable for the reinvestment of their liquidation proceeds, including exchanging into another fund within the Legg Mason mutual fund complex, if available to your class of shares. Shareholders should be aware that if they redeem shares, exchange them into another fund, or receive liquidation proceeds upon the termination of the Fund, it is generally considered a taxable event." See also our June 13 News, "Business MMFs Drop in Q1 Says Z.1; Schwab Liquidating MA, NJ, PA MFs."

ICI's latest weekly Money Market Fund Assets report shows a slight decline in MMFs overall but Prime funds rose for their 4th week in a row. Prime MMFs rose by $3.1 billion to $418.5 billion, their 10th increase in the past 12 weeks. Prime assets have risen by $22.1 billion over the past 12 weeks, or 5.6%, and year-to-date Prime assets have increased by $40.3 billion, or 10.7%. ICI writes, "Total money market fund assets decreased by $164 million to $2.63 trillion for the week ended Wednesday, July 12, the Investment Company Institute reported today. Among taxable money market funds, government funds decreased by $2.95 billion and prime funds increased by $3.09 billion. Tax-exempt money market funds decreased by $303 million." Total Government MMF assets, which include Treasury funds too, stand at $2.078 trillion (79.1% of all money funds), while Total Prime MMFs stand at $418.5 billion (15.9%). Tax Exempt MMFs total $130.2 billion, or 5.0%. They explain, "Assets of retail money market funds decreased by $607 million to $957.47 billion. Among retail funds, government money market fund assets decreased by $734 million to $580.71 billion, prime money market fund assets decreased by $48 million to $252.61 billion, and tax-exempt fund assets increased by $176 million to $124.15 billion." `Retail assets account for over a third of total assets, or 36.5%, and Government Retail assets make up 60.7% of all Retail MMFs. ICI's release adds, "Assets of institutional money market funds increased by $443 million to $1.67 trillion. Among institutional funds, government money market fund assets decreased by $2.22 billion to $1.50 trillion, prime money market fund assets increased by $3.14 billion to $165.94 billion, and tax-exempt fund assets decreased by $479 million to $6.09 billion." Institutional assets account for 63.5% of all MMF assets, with Government Inst assets making up 89.7% of all Institutional MMFs.

Wells Fargo Funds writes about our recent Money Fund Symposium in their latest "Portfolio Manager Commentary." THey tell us, "June was a fairly active month in money market land, with two events seemingly capturing the attention of most inhabitants. First, the Federal Open Market Committee (FOMC) met on June 14 and 15 and, in a move that surprised no one, raised the federal funds target range by 25 basis points (bps; 100 bps equal 1.00%). Federal Reserve (Fed) Chair Janet Yellen held a press conference at which she reiterated the Fed's commitment to normalizing interest rates as economic conditions warranted.... Fortunately for industry participants, Crane Data scheduled its annual Money Fund Symposium for the third week of the month. This is the largest gathering of money market professionals in the industry and affords participants the opportunity to discuss industry trends, including the impact of the Fed on markets. With money market reform firmly in the rearview mirror, focus turned to the current situation and the future landscape of the industry. One emergent theme from the conference was that given the sector rotation prompted by money market reform, the Fed and the looming congressional fight over the debt ceiling are likely to be front and center in market discussions as well as market influence this year." They add, "Over the past few months, we've discussed the potential for the Fed to let some of its balance sheet roll off by reducing the ongoing reinvestment of its System Open Market Account portfolio maturities. We noted that clarity about methods and timing might be hard to find until at least July 5, when the minutes of the Fed's June 14 meeting are due to be released. It appears this is at least one curve the Fed is staying in front of, as it surprised by addressing how to end reinvestments in a supplement to its June meeting statement. The when has been narrowed down to this year."

The Association for Financial Professionals put out a press release entitled, "Survey: Treasurers Avoid Prime Money Funds, Post-Reform, which described the results of their latest AFP Liquidity Survey. It says, "Nearly a year after new money-market fund regulations by the United States Securities and Exchange Commission (SEC) took effect in October 2016, 41 percent of organizations have no plans to consider investing in prime funds. The 2017 AFP Liquidity Survey, underwritten by State Street Global Advisors, found that organizations maintain 53 percent of their short-term investment portfolio in bank deposits, underscoring the importance of safety of principal as an investment policy objective. Sixty seven percent of organizations indicate that safety is the most important short-term investment objective for their organizations, and, as a result, hold 76 percent of their short-term cash in bank deposits, money market funds and Treasury securities. Allocations in money market funds continued to shift from prime funds to government funds, further demonstrating the emphasis on safety and the adverse impact of money fund reform on prime funds as investment vehicles." AFP quotes Yeng Felipe Butler, Head of SSGA's Global Cash Business, "While we've witnessed significant shifts in the landscape of cash management over the past year, clients clearly continue to adhere strongly to the investment objectives of safety of principal and liquidity. In the four decades that State Street Global Advisors has had the privilege of providing solutions to cash investors, we have seen these objectives sustain and have honed our portfolio management discipline and built a client service model to address these objectives." The release adds, "On a net basis, 14 percent of organizations increased their cash holding in the past 12 months. Of those organizations that increased cash holdings, 69 percent reported that this was the result of higher operating cash flow. Nearly a third of organizations (32 percent) that decreased their cash holdings cited increased capital expenditures as the primary reason." AFP President and Chief Executive Officer Jim Kaitz explains, "Money fund reform continues to have adverse impacts on institutional investors, depriving them of a proven, effective cash management tool. The flight from prime funds is also starving the economy of a critical source of short-term capital for large businesses.... Despite these changes, many businesses are expanding globally, increasing their cash flow, and beginning to make strategic investments to fuel future growth. These are positive developments for the economy."

The Wall Street Journal writes, "A Key Borrowing Spigot Opens for Ford." The piece says, "A handful of investors recently began extending short-term loans to an affiliate of Ford Motor Co. after more than a decade-long hiatus, opening a key borrowing spigot for the blue-chip auto maker, which was locked out of money markets in the last recession. In recent months, a money-market fund of Federated Investors has been buying a kind of short-term IOU called "commercial paper” from Ford Motor Credit Co. LLC. The Federated Capital Reserves Fund now holds about $148 million of debt, according to fund tracker Crane Data. Ford Motor Credit has made a comeback since being struck off Federated's eligible investments list in 2003, when the vehicle-financing company showed signs of struggling and was later downgraded to below-investment grade. It has since been upgraded to investment grade." The piece adds, "The Federated holding, while small, is notable because it signals a potential thaw in relations between money funds and auto companies that could later benefit others, including General Motors Co. and Fiat Chrysler Automobiles NV. GM and Chrysler Group LLC filed for bankruptcy in 2009."

ICI's latest weekly Money Market Fund Assets report shows yet another increase in overall and Prime money market mutual fund assets. Prime MMFs rose by $2.2 billion to $415.5 billion, their 9th increase in the past 11 weeks. Prime assets have risen by $17.3 billion over the past 10 weeks, or 4.4%, and year-to-date Prime assets have increased by $37.2 billion, or 9.4%. ICI writes, "Total money market fund assets increased by $4.74 billion to $2.63 trillion for the week ended Wednesday, July 5, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $569 million and prime funds increased by $2.21 billion. Tax-exempt money market funds increased by $1.96 billion." Total Government MMF assets, which include Treasury funds too, stand at $2.081 trillion (79.2% of all money funds), while Total Prime MMFs stand at $415.5 billion (15.8%). Tax Exempt MMFs total $130.6 billion, or 5.0%. They explain, "Assets of retail money market funds increased by $4.47 billion to $958.08 billion. Among retail funds, government money market fund assets increased by $2.64 billion to $581.45 billion, prime money market fund assets increased by $727 million to $252.65 billion, and tax-exempt fund assets increased by $1.10 billion to $123.98 billion." Retail assets account for over a third of total assets, or 36.5%, and Government Retail assets make up 60.7% of all Retail MMFs. ICI's release adds, "Assets of institutional money market funds increased by $268 million to $1.67 trillion. Among institutional funds, government money market fund assets decreased by $2.07 billion to $1.50 trillion, prime money market fund assets increased by $1.48 billion to $162.80 billion, and tax-exempt fund assets increased by $865 million to $6.57 billion." Institutional assets account for 63.5% of all MMF assets, with Government Inst assets making up 89.8% of all Institutional MMFs.

A press release entitled, "Guggenheim Investments Changes Name of Actively Managed $1 Billion Enhanced Short Duration ETF" says, "Guggenheim Investments, the global asset management and investment advisory business of Guggenheim Partners, has changed the name of the Guggenheim Enhanced Short Duration ETF to the Guggenheim Ultra Short Duration ETF. The name change is effective today. The fund's ticker symbol (GSY) remains the same. The name change more accurately describes and provides greater clarity of the fund's investment strategy. The fund holds a diversified portfolio of varying maturities, with an average duration of less than one year. The fund is appropriately categorized in Morningstar's Ultrashort Bond Category due to its investment guidelines and portfolio holdings. The Adviser believes the new name will enable investors and financial professionals to precisely identify the fund's investment strategy. There will be no change in the actively managed fund's investment objective or investment strategy. There also will be no changes to the fund's portfolio management team of B. Scott Minerd, Anne B. Walsh, James W. Michal, Steven H. Brown, and Kris Dorr." William Belden, Managing Director and Head of ETF Business Development for Guggenheim Investments, comments, "Guggenheim's actively managed approach allows the portfolio investment team the latitude to express its market views, while still adhering to the fund's stated objectives -- offering investors enhanced yield opportunities within a risk-managed approach. GSY can be used for tactical cash positions to deliver potentially greater return than cash as well as liquidity for non-immediate needs. It also may provide the flexibility to invest in floating-rate securities, which reset based on current interest rates, strategically positioning the fund for a changing interest-rate environment."

PlanSponsor writes, "Money Market Returns Challenged In Latest ERISA Suit." It says, "Employees of Pioneer Natural Resources have filed an Employee Retirement Income Security Act (ERISA) lawsuit against their employer, alleging a variety of fiduciary breaches in the management of its 401(k) plan. A close look at the complaint offers plan officials some important -- if unwelcome -- insight about just how widespread ERISA-based litigation has become and how difficult it can be to avoid a challenge once the plan has gained the attention of the plaintiffs' bar. Perhaps most notably, in this suit the plan sponsor is called out for failing to remove a money market fund option that had low returns when a stable value fund was also already available in the plan, and yet other suits have been filed arguing essentially the exact opposite, that a given plan should have offered a money market fund option in place of a stable value fund. The suit, Barrett vs. Pioneer Natural Resources, was filed in the U.S. District Court for the District of Colorado.... The list of fiduciary breaches alleged goes as follows: "Failing to offer institutional class shares for mutual funds, which resulted in the participants paying excessive costs to invest in the funds; failing to make sure that plan fees were reasonable; and failing to remove the poorly performing money market fund when the better-performing stable value fund was already available, causing losses to plan participants who maintained excessively high cash balances in money market funds rather than the stable value fund, which offered higher returns and the same risk level.""

Bank of America Merrill Lynch Rates Strategist Mark Cabana writes, "GC repo index chosen as new benchmark." The update explains, "As we suggested in our publication two weeks ago, the Alternative Reference Rate Committee (ARRC) selected a broad Treasuries repo financing rate (BTFR) as an alternative to USD LIBOR. The selection of the BTFR will not obviate the need for USD LIBOR, but instead provide an alternative benchmark in case there were to ever be an issue with LIBOR production. We expect these two benchmarks to run in parallel for quite some time and expect that USD LIBOR will remain an important benchmark for the foreseeable future. BTFR trading activity is expected to grow very gradually and slowly, largely driven by changes to price alignment interest and derivative discounting measures, before any broader transition to the new rate might be adopted." The piece adds, "The ARRC decided last week to choose the BTFR instead of the overnight bank funding rate (OBFR) as an alternative to LIBOR due to the depth of the underlying market and its expected robustness over time. BTFR volumes are 3x those of OBFR and the divergence in volumes between them is likely to extend in the future. A drawback to the BTFR is its daily volatility. BTFR rates have varied widely on a daily basis in relation to the Fed's main target rates of IOER and the ON RRP. While this volatility appears less pronounced when smoothed over time, it may still cause confusion amongst market participants who are less familiar with repo market vagaries."