Daily Links Archives: January, 2021

Fitch Ratings published, "U.S. Money Market Funds: January 2021," which tells us, "Assets Decline Slightly: Total taxable money market fund (MMF) assets decreased by $1 billion from Dec.16, 2020 to Jan.15, 2021, according to iMoneyNet data. Prime MMFs lost $5 billion in assets during this period, offset by a $3 billion increase in government MMF assets. As seen in the top left chart on page 2, total MMF assets have been steadily declining since peaking on May28, 2020, partially driven by the low rate environment. Prime MMFs Increase Exposure to Repos: Prime MMFs continued to increase allocations to repurchase agreements (repos) in December, partially driven by stability in the market following the U.S. presidential election. Allocations increased by $50 billion from Oct. 31, 2020 to Dec. 31, 2020, while agency and U.S. Treasury allocations decreased during the period by $3 billion and $40 billion, respectively, according to Crane Data." In other news, a release entitled, "Federated Hermes, Inc. reports fourth quarter and full-year 2020 earnings," says, "Federated Hermes will host an earnings conference call at 9 a.m. Eastern on Jan. 29, 2021. Investors are invited to listen to the earnings teleconference by calling 877-407-0782 ... prior to the 9 a.m. start time. To listen online, go to the Investor Relations section and the Analyst Information tab of FederatedHermes.com at least 15 minutes prior to register and join the call." Watch for coverage in our Crane Data News for Monday.

CNBC.com writes, "Cash flows into European funds surged more than 60% in 2020, new data shows," which tells us, "Across the year, overall net inflows into European funds were estimated at 574.3 billion euros ($696 billion), up from 303.9 billion euros in 2019. The 2020 total also marks the second-highest inflows into mutual funds and ETFs (exchange-traded funds) in the history of the European fund industry." The piece explains, "The 2020 total also marks the second-highest inflows into mutual funds and ETFs (exchange-traded funds) in the history of the European fund industry. Mutual funds, which enjoyed 483.5 billion euros of inflows, are those which pool money from investors to allocate to stocks, bonds, money market instruments or other alternative assets." CNBC.com quotes Detlef Glow, head of Lipper EMEA research at Refinitiv, "Generally speaking, European investors seem to be somewhat cautious since the majority of the inflows were invested in money market funds (+€268.4 bn), while long-term investment products enjoyed inflows of €305.8 bn.... It is remarkable that the flows in money market products were the highest annual flows in the history of the European fund industry." The article adds, "Money market funds are mutual funds designed to offer investors high levels of liquidity with minimal risk. They invest in such instruments as cash, cash equivalent securities, and short term debt-based securities with high credit ratings, like U.S. Treasurys. With net inflows of 24.8 billion euros, BlackRock was by far the largest fund promoter in Europe in December. In its fourth-quarter earnings report, the U.S. giant said its $391 billion net inflows for the full year was driven by “record flows in cash, active equity and alternatives and continued momentum in fixed income." Glow also says, "Despite these fears, investors bought into risky assets as long-term funds enjoyed estimated net inflows of €90.6 bn, while money market products had estimated inflows of €31.7 bn."

Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics Tuesday, which track a shifting subset of our monthly Portfolio Holdings collection. The most recent cut (with data as of Jan. 22, 2021) includes Holdings information from 85 money funds (up 7 funds from a week ago), which represent $2.530 trillion (up from $2.266 trillion) of the $4.623 trillion (54.7%) in total money fund assets tracked by Crane Data. (Our Weekly MFPH are e-mail only and aren't available on the website.) Our latest Weekly MFPH Composition summary again shows Government assets dominating the holdings list with Treasury totaling $1.362 trillion (up from $1.255 trillion a week ago), or 53.8%, Repurchase Agreements (Repo) totaling $578.5 billion (up from $544.7 billion a week ago), or 22.9% and Government Agency securities totaling $306.2 billion (up from $277.2 billion), or 12.1%. Commercial Paper (CP) totaled $99.1 billion (up from $69.1 billion), or 3.9%, and Certificates of Deposit (CDs) totaled $66.9 billion (up from $53.7 billion), or 2.6%. The Other category accounted for $79.5 billion or 3.1%, while VRDNs accounted for $37.5 billion, or 1.5%. The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.362 trillion (53.8% of total holdings), Federal Home Loan Bank with $153.2B (6.1%), BNP Paribas with $74.0B (2.9%), Fixed Income Clearing Corp with $71.1B (2.8%), Federal Farm Credit Bank with $63.5B (2.5%), Federal National Mortgage Association with $54.8B (2.2%), RBC with $51.9B (2.1%), Credit Agricole with $32.9B (1.3%), Federal Home Mortgage Corp with $32.7B (1.3%) and Mitsubishi UFJ Financial Group Inc with $32.6B (1.3%). The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($191.0 billion), Goldman Sachs FS Govt ($161.3B), Wells Fargo Govt MM ($142.5B), Fidelity Inv MM: Govt Port ($139.5B), BlackRock Lq FedFund ($126.1B), Morgan Stanley Inst Liq Govt ($108.2B), Federated Hermes Govt Obl ($104.6B), BlackRock Lq T-Fund ($96.8B), JPMorgan 100% US Treas MMkt ($91.2B) and Dreyfus Govt Cash Mgmt ($86.5B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary, or our Bond Fund Portfolio Holdings data series.)

In the January issue of our Bond Fund Intelligence newsletter, we recognize the top performing bond funds, ranked by total returns, for calendar year 2020. We present the funds below with our annual Bond Fund Intelligence Awards, given to the No. 1‐ranked funds based on 1‐year returns, through Dec. 31, 2020, in each of our major fund categories. The Top-Performing Long-Term bond fund (and fund overall) was Vanguard Long-Term Treasury Adm (VUSUX), which returned 18.41% over the year. PIMCO Real Return Inst (PRRIX) was the top Intermediate-Term bond fund; it earned 12.09%. The highest earning High-Yield bond fund was MetWest High Yield Bond I (MWHIX) which returned 11.77%. Guggenheim Macro Opportunities Inst (GIOIX) and T Rowe Price International Bond Fund (RPIBX) were the highest returning Global bond funds at 11.56% and 11.50%, respectively. Eaton Vance Short Duration Strategic Inc I (ESIIX) ranked number-one among Short-Term bond funds, returning 7.79% over the year, while Goldman Sachs Enhanced Income I (GEIIX) won the Conservative Ultra-Short section, returning 2.50%, while PIMCO Low Duration Inst (PTLDX) ranked first among Ultra-Short Bond Funds with a return of 3.41%. Finally, Federated Hermes Muni and Stock Adv A (FMUAX) returned 8.48% over the year, putting it at the top of Muni bond funds tracked by Crane Data. Contact us if you'd like to see the latest issue of BFI, the full rankings in our BFI XLS, or our Bond Fund Portfolio Holdings data.

The Irish Times wrote recently, in a piece titled, "Jack Ma vs Xi Jinping: the future of private business in China," that, "Four years ago, when Ant Group's premier money market fund was racing to a peak of more than $260 billion (€213.5 billion) worth of assets under management, many of China's state-owned banks and their regulators started to get agitated. In a series of calls and meetings with Jack Ma, Ant's founder, bank executives and regulatory officials demanded that its Yu'E Bao fund be reined in. 'Yu'E Bao was pulling a lot of money from the banks,' says one person familiar with the discussions. 'The banks were worried about the impact on liquidity and wanted Ant to take measures to minimise the impact. The conversations were pretty tense.'" They explain, "In the end, Mr Ma had to back down and Yu'E Bao imposed caps on how much people could deposit. Between March and December of 2018, its funds under management fell by a third to $168 billion and stood at $183 billion last September. The showdown would prove to be a prelude to the much bigger confrontation that now pits the Chinese Communist party and President Xi Jinping against not just Ant but also Alibaba, the ecommerce group founded by Mr Ma." The Irish Times adds, "Yu'E Bao, which translates as 'account balance treasure', was started in 2013 and allowed anyone in China, from restaurant staff to the urban yuppies they serve, to deposit as little as Rmb1 (13 cent) in a money-market fund and earn more interest than they could in a Chinese savings deposit account. Just four years later it became the world's largest money market fund, surpassing JPMorgan's US government money market fund. The fund’s success was a dramatic demonstration of Ant's potential. But it was also a threat to one of China's most powerful vested interest groups -- state banks and the officials who regulate them. The central bank was also concerned. In its annual financial stability report published in late 2019, the PBoC said it would 'strengthen regulation of systematically important money market funds', without mentioning Yu'E Bao by name. 'When a taxi driver can deposit one renminbi in a money-market fund and get interest, that's a big breakthrough,' says a former Alibaba executive. 'Jack feels what Ant is doing is good for society.'" See also the article, "Breakingviews - Chinese monopoly rules threaten super-app model."

ICI's latest "Money Market Fund Assets" report shows MMFs falling, after rising the first two weeks of 2021. Money fund assets are up $10 billion, or 0.3%, year-to-date, with Inst MMFs up $5 billion (0.2%) and Retail MMFs up $5 billion (0.4%). Over the past 52 weeks, money fund assets have increased by $673 billion, or 19.2%, with Retail MMFs rising by $152 billion (11.4%) and Inst MMFs rising by $521 billion (24.0%). ICI says, "Total money market fund assets decreased by $8.29 billion to $4.31 trillion for the week ended Wednesday, January 20.... Among taxable money market funds, government funds decreased by $7.39 billion and prime funds decreased by $1.24 billion. Tax-exempt money market funds increased by $337 million." ICI's stats show Institutional MMFs decreasing $4.8 billion and Retail MMFs decreasing $3.5 billion. Total Government MMF assets, including Treasury funds, were $3.658 trillion (84.9% of all money funds), while Total Prime MMFs were $542.1 billion (12.6%). Tax Exempt MMFs totaled $106.6 billion (2.5%). (Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're almost $400 billion lower than our asset series.) They explain, "Assets of retail money market funds decreased by $3.49 billion to $1.53 trillion. Among retail funds, government money market fund assets decreased by $1.52 billion to $1.16 trillion, prime money market fund assets decreased by $1.85 billion to $275.09 billion, and tax-exempt fund assets decreased by $121 million to $93.62 billion." Retail assets account for just over a third of total assets, or 35.5%, and Government Retail assets make up 75.9% of all Retail MMFs. ICI adds, "Assets of institutional money market funds decreased by $4.80 billion to $2.78 trillion. Among institutional funds, government money market fund assets decreased by $5.87 billion to $2.50 trillion, prime money market fund assets increased by $612 million to $266.99 billion, and tax-exempt fund assets increased by $457 million to $12.99 billion." Institutional assets, which broke below the $3.0 trillion level for the first time since April 22 at the end of August, accounted for 64.5% of all MMF assets, with Government Institutional assets making up 89.9% of all Institutional MMF totals.

BlackRock released its Q4 2020 Earnings late last week. During the Q4'20 earnings call CFO Gary Shedlin commented, "[W]hile fourth quarter base fees were up 5% sequentially, the impact of lower securities lending revenue during the quarter driven by a continued tightening of cash spreads was the primary reason we saw a sequential decline of 0.2 basis points in our annualized effective fee rate despite the positive impact of strong organic based fee growth." He continued, "As we look into 2021, based on current marketing conditions and the interest rates we are planning for the possibility of lower securities lending revenue and higher discretionary money market fee waivers as compared to 2020. In isolation, this could have an additional 0.3 basis point negative impact on our fee rate this year as compared to our fourth quarter annualized base fee rate." Shedlin said, "Bear in mind that our higher interest rate environment and continued strong organic based fee growth could mitigate this headwinds especially with continued momentum in our higher fee, active equity and alternative businesses and then nearly roughly and at nearly 40% of gross money market fee waivers are generally shared with distributors reducing the impact on operating income." He also commented, "Full year net inflows of $391 billion were positive across active and index, all asset classes, client types and regions, and reflected broad based strength across iShares and active and cash strategies.... Institutional index net outflows of $29 billion in 2020 reflected equity net outflows partially offset by fixed income net inflows, as several large clients rebalance portfolios after significant equity market gains or tactically shifted assets to fixed income and cash." The CFO explained, "BlackRock's cash management platform generated another $9 billion of net inflows in the fourth quarter, even as the broader industry saw outflows, and a record $113 billion of net inflows in 2020." CEO Laurence Fink added, "In strategic growth areas, we saw record client demand for active equities, sustainability, our cash products and our alternative investment strategies. We also generated 185 billion of net inflows into iShares ETFs and we also delivered a record $1.1 billion in technology services revenues."

ICI released its latest monthly "Money Market Fund Holdings" summary yesterday, which reviews the aggregate daily and weekly liquid assets, regional exposure, and maturities (WAM and WAL) for Prime and Government money market funds. (For more, see our January 13 News, "January MF Portfolio Holdings: Treasuries Still Rule; TDs, Repo Drop.") The MMF Holdings release says, "The Investment Company Institute (ICI) reports that, as of the final Friday in December, prime money market funds held 34.4 percent of their portfolios in daily liquid assets and 46.8 percent in weekly liquid assets, while government money market funds held 74.6 percent of their portfolios in daily liquid assets and 84.1 percent in weekly liquid assets." Prime DLA was down from 38.8% in November, and Prime WLA decreased from 51.7%. Govt MMFs' DLA decreased from 75.1% in November and Govt WLA decreased from 84.6% from the previous month. ICI explains, "At the end of December, prime funds had a weighted average maturity (WAM) of 44 days and a weighted average life (WAL) of 58 days. Average WAMs and WALs are asset-weighted. Government money market funds had a WAM of 49 days and a WAL of 103 days." Prime WAMs were up one day from the previous month, while WALs were unchanged from the previous month. Govt WAMs and WALs were both up four days from November. Regarding Holdings By Region of Issuer, the release tells us, "Prime money market funds' holdings attributable to the Americas rose from $268.37 billion in November to $290.24 billion in December. Government money market funds' holdings attributable to the Americas rose from $3,249.75 billion in November to $3,283.99 billion in December." The Prime Money Market Funds by Region of Issuer table shows Americas-related holdings at $290.2 billion, or 53.5%; Asia and Pacific at $94.9 billion, or 17.5%; Europe at $152.5 billion, or 28.1%; and, Other (including Supranational) at $4.5 billion, or 0.9%. The Government Money Market Funds by Region of Issuer table shows Americas at $3.284 trillion, or 88.8%; Asia and Pacific at $117.9 billion, or 3.2%; Europe at $285.5 billion, 7.7%, and Other (Including Supranational) at $8.7 billion, or 0.2%."

Please join us for Crane's Bond Fund Symposium 2021 (Online), which will be hosted virtually the afternoons of March 25-26, 2021. Bond Fund Symposium offers a concentrated and affordable educational experience for bond fund and fixed-income professionals with a focus on the ultra-short sector of the market. Registrations are $250 and "comp" and sponsor tickets are also available. (Ask us if you'd like more information.) See the latest agenda and details here. Portfolio managers, analysts, investors, issuers, service providers, and anyone interested in expanding their knowledge of bond funds and fixed-income investing will benefit from our comprehensive program. E-mail us for the brochure and more details. We are also making final preparations for our virtual Money Fund University, which we'll be hosting this Thursday and Friday (Jan. 21-22). This year's MFU will be online only ($250 to attend), and will include two afternoons of live segments, as well as a number of pre-recorded sessions and access to recordings and binder materials. Money Fund University offers an affordable and comprehensive 2-day training on money market mutual funds. MFU covers the history of money funds, interest rates, regulations (Rule 2a-7), ratings, rankings, money market instruments such as commercial paper, CDs and repo, and portfolio construction and credit analysis. We also include segments on offshore money funds and ultra-short bond funds. New portfolio managers, analysts, investors, issuers, service providers, and anyone interested in expanding their knowledge of "cash" investing will benefit from our comprehensive program. Even experienced professionals should enjoy this refresher course and the opportunity to interact with peers in an informal setting. Attendee registration is $250 and sponsorship opportunities are $1K, $2K, $3K and $5K. For last-minute registrations, click here, and visit our "Money Fund University 2021 Download Center" (subscribers and attendees only) here for the Powerpoints, handouts and recordings. Finally, mark your calendars for our "big show," Money Fund Symposium, which is scheduled for June 23-25, 2021 in Philadelphia, and for our European Money Fund Symposium, which is scheduled for October 21-22, 2021 in Paris. We hope to see you in person later this year, and we hope to see you virtually later this week or in March!

ICI's latest "Money Market Fund Assets" report shows MMFs rising for the second week in a row, but just their 6th increase in the past 24 weeks. Money fund assets are up $18 billion, or 0.5%, year-to-date in 2021, with Inst MMFs up $10 billion (0.4%) and Retail MMFs up $8 billion (0.6%). Over the past 52 weeks, money fund assets have increased by $685 billion, or 19.5%, with Retail MMFs rising by $155 billion (11.6%) and Inst MMFs rising by $530 billion (24.4%). ICI says, "Total money market fund assets increased by $6.03 billion to $4.32 trillion for the week ended Wednesday, January 13.... Among taxable money market funds, government funds increased by $9.94 billion and prime funds decreased by $2.76 billion. Tax-exempt money market funds decreased by $1.15 billion." ICI's stats show Institutional MMFs increasing $5.5 billion and Retail MMFs increasing $499 million. Total Government MMF assets, including Treasury funds, were $3.666 trillion (84.9% of all money funds), while Total Prime MMFs were $543.3 billion (12.6%). Tax Exempt MMFs totaled $106.3 billion (2.5%). (Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're almost $400 billion lower than our asset series.) They explain, "Assets of retail money market funds increased by $499 million to $1.53 trillion. Among retail funds, government money market fund assets increased by $3.72 billion to $1.16 trillion, prime money market fund assets decreased by $1.93 billion to $276.94 billion, and tax-exempt fund assets decreased by $1.29 billion to $93.74 billion." Retail assets account for just over a third of total assets, or 35.6%, and Government Retail assets make up 75.9% of all Retail MMFs. ICI adds, "Assets of institutional money market funds increased by $5.53 billion to $2.78 trillion. Among institutional funds, government money market fund assets increased by $6.21 billion to $2.50 trillion, prime money market fund assets decreased by $825 million to $266.38 billion, and tax-exempt fund assets increased by $145 million to $12.53 billion." Institutional assets, which broke below the $3.0 trillion level for the first time since April 22 at the end of August, accounted for 64.5% of all MMF assets, with Government Institutional assets making up 90.0% of all Institutional MMF totals.

Fund technology firm Calastone posted the blog piece, "Money Market Funds in Uncertain Times: Five Takeaways to Keep in Mind As We Enter 2021." They write, "Treasurers at companies and financial institutions view money market funds as critical tools to help them manage their cash. But from one end of the investment process to the other, the experience of using them falls well short of their expectations. According to Calastone's survey of global treasury professionals, a rethink could be due: Money market funds are essential -- but cumbersome to access. Corporate treasurers and financial institutions use MMFs to achieve a balance of security, liquidity and yield. They are especially important during periods of financial stress, when managing capital and liquidity becomes the key concern. However, the process of investing in MMFs is inefficient and time consuming, with too many manual processes and IT systems that do not talk to each other. At a time when interest rates are already close to zero, this inefficiency ties up resources, pushes up costs and drags down overall returns on MMF investments." Calastone asks, "What are treasurers looking for from their MMF investments? Treasurers' main reason for using MMFs is to manage their organisation's capital better and ensure access to liquidity -- more than 70 per cent included this among their top three priorities and nearly 40 percent put it first. Calastone's research coincided with a bout of intense market uncertainty, which pushed liquidity management to the top of corporate agendas worldwide. Closely related to this overriding concern are other important objectives in using MMFs, notably treasurers' desire to manage their financial and operational risks better." The piece continues, "Respondents who took part in Calastone's global survey of 150 treasury professionals highlighted two major problems with the MMF investment process. Too many steps are still manual, from creating reports to sourcing the information they need to select funds. Some 93 percent of respondents called for more automation. Alongside that finding, more than 70 percent said a lack of integration between different systems and real-time information made the process of researching, executing and managing their investments harder than it should be.... The problem that causes most headaches for treasurers is the lack of automation in reporting on MMF investments -- 46 percent of respondents in our survey called for solutions to ease friction caused, for example, by MMF managers providing information in different formats, from PDF attachments to digital dashboards. Pulling all this detail together and making sense of it wastes too much time. However, it is not just reporting that treasurers think should be more automated: they also want the process of researching funds and executing transactions to be quicker and easier." Calastone adds, "Corporates and financial institutions say that fixing the complex, disjointed process of investing in MMFs will yield big gains. They see greater automation and integration between different systems allowing them to make better investment decisions and improve the returns they earn on their money market investments."

J.P. Morgan's latest weekly "`Short-Term Fixed Income" briefly discusses, "The state of prime MMFs." They write, "Prime MMFs are starting off the year with plenty of liquidity, and consequently plenty of cash to be put to work. Concerns around outflows in the run up to the November elections and year-end failed to materialize, and as a result, prime MMFs are starting the year with 50-60% in weekly liquidity, depending on the type of fund.... Based on Crane Data, aggregate AUMs have settled in the range of about $920bn ($640bn institutional, $280bn retail), so there is still plenty of demand for credit products. Not surprisingly, WAMs and WALs have increased this past week after a shortening late last year though it's unclear how much more room there is to go." The piece tells us, "Anecdotally, we've seen more and more investors prefer longer-dated fixed rate paper this past week. However, the extreme flatness of the credit curve in the money markets does bring into question whether extending out the curve makes sense. Indeed, the 1m/1y Libor curve is currently trading at around 20bp, significantly flatter than what we saw during the prior ZIRP period. During that time, the lowest spread between 1m and 1y Libor was 38bp, nearly double what it is currently." JPM adds, "That said, as noted earlier, given the tepid supply backdrop and a continued rise in reserves, we would argue that staying invested is likely going to be more of an issue than trying to find relative value in the current environment."

Reuters wrote last week that, "BoE's Hauser calls for new central bank tools to tackle market upheavals." The piece explains, "Financial markets are likely to be hit more often by the kind of upheaval unleashed by the COVID-19 pandemic and central banks need new tools to deal with powerful investment firms at the heart of such events, a Bank of England official said. Non-bank companies, which include pension managers, money market funds and hedge funds, now account for about half of the world's financial assets." They quote a recent speech from the Bank of England's Andrew Hauser, "Last year's COVID 'dash for cash' was a wake-up call as to the scale and urgency of this work." (See the full speech here: "Why central banks need new tools for dealing with market dysfunction.") Reuters explains, "Non-banks have helped savers and businesses as banks were reined in by reforms after their risk-taking brought about the 2007-09 financial crisis. But they failed to withstand the coronavirus shock in March and reforms are needed to prevent future liquidity problems threatening the economy, Hauser said. Central banks should consider a formal role as 'market makers of last resort' -- trading securities at times of financial panic -- in return for tougher regulation of financial businesses other than banks, he said." They add, "Last March's surge in demand for cash, as economies around the world went into lockdown, was exacerbated by chaos in normally stable debt markets. Non-bank firms -- some over-indebted -- scrambled to get money out of funds which in turn struggled to raise the cash. That helped cause a spike in government and corporate bond yields that threatened to deepen the hit to the global economy and forced central banks into huge emergency action, chiefly by ramping up their bond-buying programmes." Finally, Reuters tells us, "Non-banks also failed to function as intermediaries for government bond markets, which have soared in size since the 2007-09 financial crisis, Hauser said. Since March, the central banks of the Group of 10 (G10) nations have added $8 trillion to their balance sheets, mostly by buying government bonds. That has helped to bring down borrowing costs and allowed huge government spending to slow the economic slide, but adds urgency to the case for reform of non-banks, Hauser said. 'We should certainly be wary of drawing overly direct conclusions from the COVID pandemic, given how truly unique the circumstances have been,' Hauser said."

A filing for Delaware Government Cash Management Fund alerts us of the fund's liquidation. It explains, "On May 20, 2020, the Board of Trustees of Delaware Group Equity Funds IV unanimously voted and approved a proposal to liquidate and dissolve the Fund. The liquidation and dissolution are now expected to take effect on or about Dec. 4, 2020. As noted in the supplement dated June 25, 2020 to the Fund's summary and statutory prospectuses, the Fund closed to new investors and all sales efforts ceased as of the close of business on Thursday, July 2, 2020. However, the Fund will continue to accept purchases from existing shareholders (including reinvested dividends or capital gains) until close of business Dec. 2, 2020." The filing continues, "Shareholders will be permitted to exchange their shares for the same share class of any of Delaware Funds by Macquarie's other funds prior to the Funds' liquidation date. Any exchange would be made at the current net asset value of the Funds and the selected Delaware Fund.... Existing shareholders of the Fund may continue to purchase shares until close of business Dec. 2, 2020.... Check writing is available for certain shareholders of Delaware Government Cash Management Fund at no cost, through checks dated Sept. 30, 2020, at which point this service will cease." This marks the latest liquidation in the money market fund sector. For more on recent liquidations, see these recent Crane Data News articles: "Rolling w/Reform Changes III: Recap of '20 Prime Exits, News & Moves" (1/7/21), "Wells Joins Dreyfus in Merging Prime Money Funds; PFM Debunks ECRs" (1/4/21), "Northern Drops Other Prime Shoe, Exits Muni Too; MFI Intl Holdings (12/15/20), "BMO Liquidating Inst Prime MMF (11/17/20), and "Morgan Stanley NY Muni MM Gone (10/5/20).

ICI's latest "Money Market Fund Assets" report shows money fund assets rising over the past week, their 4th increase in the past 8 weeks (this followed 14 straight weeks of decline). Assets have fallen $480 billion since May 20, when they were at a record $4.789 trillion (after rising $1.1 trillion in March and April 2020). ICI shows money fund assets up $12 billion, or 0.3%, year-to-date in 2021, with Inst MMFs up $4 billion (0.2%) and Retail MMFs up $8 billion (0.6%). Over the past 52 weeks, ICI's money fund asset series has increased by $672 billion, or 19.1%, with Retail MMFs rising by $154 billion (11.5%) and Inst MMFs rising by $518 billion (23.8%). ICI says, "Total money market fund assets increased by $12.12 billion to $4.31 trillion for the eight-day period ended Wednesday, January 6.... Among taxable money market funds, government funds increased by $4.37 billion and prime funds increased by $6.25 billion. Tax-exempt money market funds increased by $1.50 billion." ICI's stats show Institutional MMFs increasing $4.2 billion and Retail MMFs increasing $8.0 billion. Total Government MMF assets, including Treasury funds, were $3.656 trillion (84.8% of all money funds), while Total Prime MMFs were $546.1 billion (12.7%). Tax Exempt MMFs totaled $107.4 billion (2.5%). (Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're almost $400 billion lower than our asset series.) They explain, "Assets of retail money market funds increased by $7.95 billion to $1.53 trillion. Among retail funds, government money market fund assets increased by $7.88 billion to $1.16 trillion, prime money market fund assets decreased by $14 million to $278.87 billion, and tax-exempt fund assets increased by $93 million to $95.03 billion. Retail assets account for just over a third of total assets, or 35.6%, and Government Retail assets make up 75.6% of all Retail MMFs. ICI adds, "Assets of institutional money market funds increased by $4.16 billion to $2.78 trillion. Among institutional funds, government money market fund assets decreased by $3.51 billion to $2.50 trillion, prime money market fund assets increased by $6.26 billion to $267.20 billion, and tax-exempt fund assets increased by $1.41 billion to $12.39 billion. Institutional assets, which broke below the $3.0 trillion level for the first time since April 22 at the end of August, accounted for 64.4% of all MMF assets, with Government Institutional assets making up 89.9% of all Institutional MMF totals.

Axios writes, "A new low in the war on savers." They tell us, "It's the latest entreaty in the war on savers. Central bank policy is rewarding risk-taking and punishing saving at a record level even as inflation expectations continue to rise. What it means: The negative real yield on government debt encourages investors to move their money into risky assets like stocks in order to earn a return." The article explains, "Real yields have consistently declined despite inflation expectations rising, an unusual phenomenon. On Monday, the expected breakeven inflation rate on 5-year, 10-year and 30-year Treasuries all rose above 2%, the Fed's longtime inflation target, and their highest levels in more than two years. Yes, but: Despite the unprecedented environment, uncertainty and fear have kept most Americans piling into bonds and savings accounts. U.S. companies and municipalities issued a record amount of debt last year at record low rates, and investors bought $183 billion worth of bond funds between January and November. They also held $4.3 trillion in money market funds, according to data from the Investment Company Institute."

Fitch Ratings recently published its "U.S. Money Market Funds: December 2020 Dashboard." They explain, "Total taxable money market fund (MMF) assets decreased by $22 billion from Nov. 20, 2020 to Dec. 22, 2020, according to iMoneyNet data. Prime MMFs lost $28 billion in assets during this period, slightly offset by $6 billion increase in government MMF assets. Since prime assets peaked on March 5, 2020, prime MMFs have lost $264 billion, partially driven by flight-to-quality positioning and managers exiting the space." The dashboard tells us, "Prime and government MMFs increased allocations to repurchase agreements in November by $13 billion and $84 billion, respectively, partially driven by stability in the market following the U.S. election. This is a reversal of $64 billion of repo outflows from Aug. 31, 2020 to Oct. 31, 2020. Over this period, total taxable MMFs increased their allocation to Fixed Income Clearing Corporation, the top repo counterparty during the month, by $53 billion."

U.K.-based International Investment writes "£47bn money market fund sector 'at risk' from negative rates, warns AXA IM." The article tells us, "The [money market fund] sector saw outflows of £1.7bn across the summer amid talk from the Bank of England that they were 'actively considering' introducing negative rates to help support the UK's flagging economy. Amid this backdrop, [Nicolas] Trindade, manager of the AXA Sterling Credit Short Duration Bond fund, believes it may be time for investors to consider other options." He comments, "We have seen interest rates and government yields plummeting this year, and that has led to ever lower money market rates.... There is a real risk the UK goes further and does opt to introduce negative rates, and for money market funds that would be a clear negative. All yields have fallen, but short duration bonds are still attractive, particularly for cash investors who are looking for products exhibiting lower volatility and drawdowns, and can commit to holding money in these bonds for a slightly longer time period." The piece explains, "`Trindade's AXA Sterling Credit Short Duration Bond fund yields around 1.1% currently, while his global Short Duration fund has a yield around 2.0%. Trindade added that by using different types of credit within the funds, the strategies can exploit opportunities across the credit spectrum to maximise yield." Trindade adds, "We've more than doubled our exposure since February, taking it to 40% now in the global fund, as we think we do get a return to a more normalised environment globally next year. Emerging market debt in particular will benefit from that, and from continued dollar weakness and low US treasury yields which we also expect."

Website ThinkAdvisor asks "Should You Fear Money Market Fee Waivers?" They write, "Advisors and their investor client don't need to worry about the fact that the country's largest asset managers and other firms are waiving fees on money market funds so they can maintain positive yields in a near-zero rate environment." The article quotes our Peter Crane, "president of Crane Data, which follows money markets and mutual funds," who tells them, "All of them are waiving fees ... [but] just some of their fees." The article continues, "'Clients should not be concerned,' Crane explained, adding that the fee cuts don't threaten the safety of their funds but do mean less income for asset managers.... Vanguard says it has 'temporarily limited certain expenses' on some of its money market funds 'to maintain a zero or positive yield,' said a spokesman. The limits are unrelated to the liquidation of two muni money market funds in November, he notes. Those funds -- the Vanguard Pennsylvania Municipal Money Market Fund and the Vanguard New Jersey Municipal Money Market Fund -- were closed due to 'the short supply of certain types of municipal securities,' which reduced the 'the market-depth needed to prudently provide these state-specific products in all market conditions,' according to a statement from Vanguard in September." ThinkAdvisor adds, "Fee waivers on money market funds are nothing new for asset managers during periods of near zero short-term interest rates. Many waived fees between 2009 and 2015 when rates were also 'pinned to zero' and 'made it through,' said Crane. 'Return is risk,' said Crane. 'If you're not making any money in money market funds you're safe.... Anything else is too dangerous for any 'cash' allocation.' Crane doesn't expect to see more fee waivers even as short-term rates remain near zero. 'The threat of negative yields has receded and rates have inched higher in recent weeks,' he explained."

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