Daily Links Archives: November, 2021

"Fitch Rates Dreyfus Institutional Preferred Government Plus Money Market Fund 'AAAmmf'" says a new press release. It tells us, "Fitch Ratings has assigned an 'AAAmmf' rating to the Dreyfus Institutional Preferred Government Plus Money Market Fund. The fund is a Rule 2a-7 registered government money market fund (MMF) managed by BNY Mellon Investment Adviser, Inc. (BNY Mellon).... The rating reflects Fitch's review of the fund's investment and credit guidelines, credit quality and diversification, liquidity profile, as well as the capabilities of BNY Mellon to manage the fund. The 'AAAmmf' rating assigned to the fund indicates an extremely strong capacity to achieve the investment objective of preserving principal and providing liquidity through limiting credit, market and liquidity risk." Fitch explains, "The fund invests solely in fixed and floating rate government securities, repurchase agreements collateralized by government securities, and cash. Specifically, government securities include obligations issued or guaranteed as to principal and interest by the U.S. government or by its agencies or instrumentalities." They add, "The Negative Rating Outlook assigned to the United States and to U.S. government sponsored entities does not have a direct impact on the fund's rating, nor would a hypothetical downgrade of U.S. government and agency debt to 'AA+', assuming no changes to the current portfolio. This is due to the fact that 'AA+'-rated investments are still viewed as supportive of a 'AAAmmf' rating, provided all other maturity, duration, diversification and liquidity guidelines outlined in Fitch's MMF rating criteria are satisfied. That said, in the event that a downgrade of the U.S. rating had material impacts on the fund's asset liquidity and/or ability to meet redemptions, these could adversely impact Fitch's rating analysis.... The fund seeks to limit interest rate and spread risk by maintaining a weighted average maturity and a weighted average life below 60 days and 120 days, respectively, consistent with Fitch's 'AAAmmf' criteria.... The fund seeks to maintain sufficient levels of daily and weekly liquidity to meet investors' redemption requests. Specifically, the pool invests at least 10% of total assets in securities offering daily liquidity and at least 30% of total assets in securities providing weekly liquidity. As of the review date, the fund met the liquidity requirements mandated by Rule 2a-7 and were in line with the liquidity guidelines outlined in Fitch's 'AAAmmf' rating criteria."

Last week, the Federal Reserve released its "Minutes of the Federal Open Market Committee, Nov. 2–3, 2021," which made a few mentions of money market funds and repo. They write, "Turning to money market developments, the manager noted that the transition away from LIBOR (London Interbank Offered Rate) had gained momentum with a pick-up in the interdealer trading volume of Secured Overnight Financing Rate (SOFR) derivatives; that said, much remained to be done to complete the LIBOR transition. Market participants were attentive to some temporary downward pressure on the SOFR over the period. This softness appeared to be the result of technical factors and was observed primarily in centrally cleared repurchase agreement markets. The Federal Reserve's administered rates -- the interest on reserve balances rate and the overnight reverse repurchase agreement (ON RRP) rate -- continued to support effective interest rate control and, outside of month- and quarter-end, the federal funds rate remained stable over the period. Regarding the debt ceiling, the short-term resolution reached in October increased the debt limit by $480 billion. Market participants' estimates of the new date when the Treasury would exhaust its extraordinary measures and cash balance were wide-ranging but some estimates suggested the date might be as early as mid-December. Most market participants anticipated that a resolution to the debt ceiling would again be reached without a delayed payment on maturing Treasury securities although uncertainty about the debt ceiling resolution remained a source of concern in financial markets." The minutes add, "The staff provided an update on indicators related to the stability of the financial system. Vulnerabilities associated with funding risks remained at money funds and other mutual funds. In addition, funding risks were an emerging concern at entities issuing stablecoins, because they appeared to have structural maturity and liquidity transformation vulnerabilities similar to those for money funds but with considerably less transparency and an underdeveloped regulatory framework. The staff noted that the President's Working Group on Financial Markets was engaged in interagency work to address these risks."

The Investment Company Institute's latest weekly "Money Market Fund Assets" report shows assets rising for the third week in a row and the fourth week out of the past five. The release says, "Total money market fund assets increased by $22.02 billion to $4.60 trillion for the six-day period ended Tuesday, November 23, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $27.19 billion and prime funds decreased by $4.76 billion. Tax-exempt money market funds decreased by $401 million." Money fund assets are up by $300 billion, or 7.0%, year-to-date in 2021. Inst MMFs are up $390 billion (14.1%), while Retail MMFs are down $90 billion (-5.9%). ICI's stats show Institutional MMFs increasing $19.5 billion and Retail MMFs increasing $2.5 billion in the latest week. Total Government MMF assets, including Treasury funds, were $4.061 trillion (88.3% of all money funds), while Total Prime MMFs were $448.7 billion (9.8%). Tax Exempt MMFs totaled $87.8 billion (1.9%). Over the past 52 weeks, money fund assets have increased by $273 billion, or 6.3%, with Retail MMFs falling by $98 billion (-6.4%) and Inst MMFs rising by $371 billion (13.3%). (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 Crane's asset series.) ICI explains, "Assets of retail money market funds increased by $2.49 billion to $1.44 trillion. Among retail funds, government money market fund assets increased by $3.13 billion to $1.15 trillion, prime money market fund assets decreased by $466 million to $206.85 billion, and tax-exempt fund assets decreased by $179 million to $77.13 billion." Retail assets account for just under a third of total assets, or 31.2%, and Government Retail assets make up 80.2% of all Retail MMFs. They add, "Assets of institutional money market funds increased by $19.54 billion to $3.16 trillion. Among institutional funds, government money market fund assets increased by $24.05 billion to $2.91 trillion, prime money market fund assets decreased by $4.30 billion to $241.79 billion, and tax-exempt fund assets decreased by $223 million to $10.63 billion." Institutional assets accounted for 68.8% of all MMF assets, with Government Institutional assets making up 92.0% of all Institutional MMF totals.

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 Nov. 19, 2021) includes Holdings information from 78 money funds (up from 71 a week ago), which represent $2.458 trillion (down from $2.549 trillion) of the $4.925 trillion (49.9%) 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 Repurchase Agreements (Repo) totaling $1.086 trillion (down from $1.127 trillion a week ago), or 44.2%; Treasuries totaling $1.004 trillion (down from $1.086 trillion a week ago), or 40.8%, and Government Agency securities totaling $148.9 billion (up from $147.1 billion), or 6.1%. Commercial Paper (CP) totaled $73.4 billion (up from a week ago at $64.4 billion), or 3.0%. Certificates of Deposit (CDs) totaled $49.0 billion (up from $42.9 billion a week ago), or 2.0%. The Other category accounted for $71.8 billion or 2.9%, while VRDNs accounted for $24.4 billion, or 1.0%. The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.004 Trillion (40.8% of total holdings), the Federal Reserve Bank of New York with $590.1B (24.0%), Fixed Income Clearing Corp with $63.7B (2.6%), Federal Home Loan Bank with $63.0B (2.6%), RBC with $62.8B (2.6%), BNP Paribas with $62.6B (2.5%), Federal Farm Credit Bank with $48.9B (2.0%), Societe Generale with $27.2B (1.1%), Sumitomo Mitsui Banking Corp with $27.2B (1.1%) and Federal National Mortgage Association with $25.4B (1.0%). The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($235.4B), Goldman Sachs FS Govt ($212.3B), Morgan Stanley Inst Liq Govt ($151.0B), Wells Fargo Govt MM ($142.7B), Fidelity Inv MM: Govt Port ($136.0B), Federated Hermes Govt Obl ($127.6B), Dreyfus Govt Cash Mgmt ($121.3B), Goldman Sachs FS Treas Instruments ($112.4B), JPMorgan 100% US Treas MMkt ($99.7B) and State Street Inst US Govt ($89.4B). (See our Nov. 10 News, "Nov. MF Portfolio Holdings: Treasuries Recover But Repo Still No. 1" for more, and 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.)

The Wall Street Journal writes, "Pension Cash Dwindles, Risking Liquidity Crunch," which tells us, "Cash allocations have dropped to a seven-year low at the funds that manage more than $4.5 trillion in retirement savings for America's teachers, police and firefighters. Public pension funds, which have increasingly turned to illiquid private markets to drive up returns, are now aiming to keep about 0.8% of their holdings in cash, according to data from the Boston College Center for Retirement Research. These funds are managing a juggling act faced by many institutional and household investors who want to put their money to work but also want easy access to it in a pinch." The piece explains, "The $496 billion California Public Employees' Retirement System, despite aiming for a slightly more conservative 6.8%, still plans to invest more in private markets, borrow against up to 5% of the fund, and keep less cash on hand, to meet that target, under a plan the board approved this month. Meanwhile, smaller pension funds serving school employees in Ohio, city workers in Illinois and other public employees across the country are putting more of their money into real estate, private equity or private debt. Public pension funds have hundreds of billions of dollars less on hand than the amount they will need to cover promised benefits after two decades of underfunding, unrealistic demands from public-employee unions, and losses during the 2007-2009 financial crisis." It adds, "Calpers staff said at a meeting earlier this month that the fund uses a dashboard to closely monitor liquidity, which is a measure of how easily holdings can be converted to cash without losses. The retirement fund, which is the nation's largest, eliminated its target of holding 1% of its assets in cash as part of the new asset allocation approved this month, which takes effect July 1, 2022. Finding a strategy that can accomplish what bonds once did, providing yield in good times and accessible cash in bad, is 'not a problem with an easy solution,' said Ash Williams, who recently retired as executive director and chief investment officer of the State Board of Administration, which manages investments for the Florida Retirement System. 'Everybody's wrestling with this same thing,' he said."

As we wrote in our Nov. 18 News, "Treasury'​s OFR Posts Annual Report, Money Funds, Repo Among Risks," the "OFR 2021 Annual Report to Congress" analyzes threats to the financial stability of the U.S. and contains several sections relating to money market funds. Today, we quote two more sections that weren't included in our original coverage. The first is a sidebar discussing, "Sponsor Support to Money Market Funds." It says, "`Sponsors can help prevent money market funds from letting the net asset value of their shares drop below $1 and mitigate potential spillovers to affiliate funds and short-term funding markets more broadly. Both Moody's Investors Service and the SEC have identified several events over the years where some fund sponsors chose to provide support or take other measures to maintain either price stability or share liquidity.... The SEC data show that some sponsors' support extends beyond prime funds to government and municipal money market funds." It continues, "Voluntary support over several decades may have lessened investors' perception of the risk in money market funds; however, uncertainty about the availability of sponsor support has fueled runs. The implicit support connects the health of a sponsor to the stability of a fund's net asset value; however, the sponsor's ability to provide support has not been a focal point for regulators." Another section comments, "From January 2020 to July 2020, bank deposits rose by $2.3 trillion, while reserves grew by $1.3 trillion, mostly for the largest banks. Money also moved into alternative types of deposits, such as money market funds, and rose to $1 trillion over the same period before decreasing gradually. The increase in bank deposits compounded the negative effect of declining interest rates on banks' net interest margins.... But after March 2020, spreads between rates on deposits and rates on other short-term investments narrowed. The flow of deposits caused banks' net interest margins to fall from 3.28% at the end of 2020 to 2.56% at the end of the first quarter of 2021."

The Investment Company Institute's latest weekly "Money Market Fund Assets" report shows assets rising for the second week in a row and the third week out of the past four. The release says, "Total money market fund assets increased by $8.85 billion to $4.58 trillion for the week ended Wednesday, November 17, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $9.20 billion and prime funds decreased by $915 million. Tax-exempt money market funds increased by $571 million." Money fund assets are up by $278 billion, or 6.5%, year-to-date in 2021. Inst MMFs are up $371 billion (13.4%), while Retail MMFs are down $93 billion (-6.1%). ICI's stats show Institutional MMFs increasing $9.2 billion and Retail MMFs decreasing $0.3 billion in the latest week. Total Government MMF assets, including Treasury funds, were $4.034 trillion (88.2% of all money funds), while Total Prime MMFs were $453.4 billion (10.0%). Tax Exempt MMFs totaled $88.2 billion (1.9%). Over the past 52 weeks, money fund assets have increased by $246 billion, or 5.7%, with Retail MMFs falling by $106 billion (-6.9%) and Inst MMFs rising by $352 billion (12.6%). (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 Crane's asset series.) ICI explains, "Assets of retail money market funds decreased by $320 million to $1.43 trillion. Among retail funds, government money market fund assets increased by $317 million to $1.15 trillion, prime money market fund assets decreased by $856 million to $207.32 billion, and tax-exempt fund assets increased by $219 million to $77.31 billion." Retail assets account for just under a third of total assets, or 31.3%, and Government Retail assets make up 80.1% of all Retail MMFs. They add, "Assets of institutional money market funds increased by $9.17 billion to $3.14 trillion. Among institutional funds, government money market fund assets increased by $8.88 billion to $2.89 trillion, prime money market fund assets decreased by $59 million to $246.09 billion, and tax-exempt fund assets increased by $352 million to $10.85 billion." Institutional assets accounted for 68.7% of all MMF assets, with Government Institutional assets making up 91.8% of all Institutional MMF totals.

The website JDSupra contains a brief entitled, "Regulatory restrictions on ancillary assets held by UCITS," which was written by law firm Allen & Overy LLP. It says, "On 3 November 2021, the CSSF [Luxembourg's Commission de Surveillance du Secteur Financier] published a press release 21/26 regarding the updates of its FAQ on the law of 17 December 2010 and FAQ on money market funds (MMFs) regulation (MMFR), which respectively clarify (i) the circumstances and the extent to which UCITS may hold ancillary liquid assets, as well as (ii) the UCITS and MMF diversification rules.... The updated FAQ clarifies that ancillary liquid assets under article 41(2) of the UCI Law are limited to bank deposits at sight, which means that the deposits must be accessible on demand or after a very short notice period. For instance, cash held in current bank accounts - accessible at any time - to cover (ordinary or exceptional) payments or which is temporarily retained for the period strictly necessary pending reinvestment or more favourable market conditions, is a deposit at sight. Ancillary liquid assets may not exceed 20% of the UCITS (or the relevant sub-fund’s) net assets, except in extraordinary unfavourable market conditions (the CSSF mentions as examples the ones following the 9/11 attacks or the Lehman Brothers bankruptcy) and for a period strictly necessary when circumstances so require and the investors’ interests so justify. This contrasts with the previously accepted position that ancillary liquidity could represent up to 49% of net assets." The brief continues, "The updated FAQ further specifies that bank deposits, money market instruments (MMIs) and MMFs that meet the criteria of article 41(1) of the UCI Law are eligible assets but cannot be included in the ancillary liquid assets." It adds, "In its updated FAQ on MMFR, the CSSF confirms that the 10% concentration limit in deposits held with the same credit institution also applies to ancillary liquid assets. Ancillary liquid assets held by an MMF are also limited to 20% of its net assets."

Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics on Friday, which track a shifting subset of our monthly Portfolio Holdings collection. The most recent cut (with data as of Nov. 12, 2021) includes Holdings information from 71 money funds (up from 61 two weeks ago), which represent $2.549 trillion (up from $2.325 trillion) of the $4.925 trillion (51.8%) 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 Repurchase Agreements (Repo) totaling $1.127 trillion (up from $1.006 trillion two weeks ago), or 44.2%; Treasuries totaling $1.086 trillion (up from $1.017 trillion two weeks ago), or 42.6%, and Government Agency securities totaling $147.1 billion (up from $128.5 billion), or 5.8%. Commercial Paper (CP) totaled $64.4 billion (down from two weeks ago at $65.5 billion), or 2.5%. Certificates of Deposit (CDs) totaled $42.9 billion (same from $42.9 billion two weeks ago), or 1.7%. The Other category accounted for $58.1 billion or 2.3%, while VRDNs accounted for $23.9 billion, or 0.9%. The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.086 Trillion (42.6% of total holdings), the Federal Reserve Bank of New York with $618.0B (24.2%), Fixed Income Clearing Corp with $71.8B (2.8%), BNP Paribas with $69.2B (2.7%), Federal Home Loan Bank with $65.2B (2.6%), RBC with $55.1B (2.2%), Federal Farm Credit Bank with $41.3B (1.6%), JP Morgan with $29.6B (1.2%), Federal National Mortgage Association with $28.0B (1.1%) and Societe Generale with $26.3B (1.0%). The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($234.9B), Goldman Sachs FS Govt ($209.2B), BlackRock Lq FedFund ($164.8B), Morgan Stanley Inst Liq Govt ($153.8B), Wells Fargo Govt MM ($141.3B), Fidelity Inv MM: Govt Port ($132.3B), BlackRock Lq T-Fund ($123.1B), Dreyfus Govt Cash Mgmt ($120.6B), BlackRock Lq Treas Tr ($109.1B) and Goldman Sachs FS Treas Instruments ($107.3B). (See our Nov. 10 News, "Nov. MF Portfolio Holdings: Treasuries Recover But Repo Still No. 1" for more, and 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.)

ICI released its latest monthly "Money Market Fund Holdings" summary, 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 Nov. 10 News, "Nov. MF Portfolio Holdings: Treasuries Recover But Repo Still No. 1." The MMF Holdings release says, "The Investment Company Institute (ICI) reports that, as of the final Friday in October, prime money market funds held 28.1 percent of their portfolios in daily liquid assets and 47.8% in weekly liquid assets, while government money market funds held 84.5 percent of their portfolios in daily liquid assets and 92.6% in weekly liquid assets." Prime DLA was down from 30.4% in September, and Prime WLA stayed the same at 47.8%. Govt MMFs' DLA increased from 80.8% in September and Govt WLA increased from 89.4% from the previous month. ICI explains, "At the end of October, prime funds had a weighted average maturity (WAM) of 48 days and a weighted average life (WAL) of 63 days. Average WAMs and WALs are asset-weighted. Government money market funds had a WAM of 36 days and a WAL of 83 days." Prime WAMs were six days longer than September, while WALs were four days higher than the previous month. Govt WAMs and WALs were three days and two days higher than September, respectively. Regarding Holdings By Region of Issuer, the release tells us, "Prime money market funds' holdings attributable to the Americas declined from $206.69 billion in September to $167.46 billion in October. Government money market funds' holdings attributable to the Americas rose from $3,608.59 billion in September to $3,668.75 billion in October." The Prime Money Market Funds by Region of Issuer table shows Americas-related holdings at $167.5 billion, or 36.8%; Asia and Pacific at $91.3 billion, or 20.1%; Europe at $190.2 billion, or 41.8%; and, Other (including Supranational) at $5.8 billion, or 1.4%. The Government Money Market Funds by Region of Issuer table shows Americas at $3.669 trillion, or 90.9%; Asia and Pacific at $116.6 billion, or 2.9%; Europe at $240.9 billion, 6.0%, and Other (Including Supranational) at $8.9 billion, or 0.2%.

The Investment Company Institute's latest weekly "Money Market Fund Assets" report shows assets rising after a drop last week and a big jump the prior week. The release says, "Total money market fund assets increased by $12.22 billion to $4.57 trillion for the week ended Wednesday, November 10, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $13.66 billion and prime funds decreased by $256 million. Tax-exempt money market funds decreased by $1.18 billion." Money fund assets are up by $270 billion, or 6.3%, year-to-date in 2021. Inst MMFs are up $362 billion (13.1%), while Retail MMFs are down $92 billion (-6.0%). ICI's stats show Institutional MMFs increasing $13.4 billion and Retail MMFs decreasing $1.1 billion in the latest week. Total Government MMF assets, including Treasury funds, were $4.025 trillion (88.1% of all money funds), while Total Prime MMFs were $454.3 billion (9.9%). Tax Exempt MMFs totaled $87.6 billion (1.9%). Over the past 52 weeks, money fund assets have increased by $238 billion, or 5.5%, with Retail MMFs falling by $106 billion (-6.9%) and Inst MMFs rising by $343 billion (12.3%). (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 Crane's asset series.) ICI explains, "Assets of retail money market funds decreased by $1.13 billion to $1.43 trillion. Among retail funds, government money market fund assets increased by $208 million to $1.15 trillion, prime money market fund assets decreased by $966 million to $208.17 billion, and tax-exempt fund assets decreased by $372 million to $77.09 billion." Retail assets account for just under a third of total assets, or 31.4%, and Government Retail assets make up 80.1% of all Retail MMFs. They add, "Assets of institutional money market funds increased by $13.35 billion to $3.13 trillion. Among institutional funds, government money market fund assets increased by $13.45 billion to $2.88 trillion, prime money market fund assets increased by $710 million to $246.15 billion, and tax-exempt fund assets decreased by $809 million to $10.50 billion." Institutional assets accounted for 68.6% of all MMF assets, with Government Institutional assets making up 91.8% of all Institutional MMF totals.

An SEC filing for Meeder Prime Money Market Fund tells us, "The Board of Trustees of Meeder Funds has determined that it is in the best interests of shareholders to liquidate the Prime Money Market Fund, a series of the Trust, pursuant to a plan of liquidation approved by the Board. The Board has determined to liquidate the Fund with the liquidation payment to shareholders expected to take place on or about December 28, 2021. After the close of business on November 30, 2021, the Fund will discontinue accepting purchase orders, including investments made by check, electronic funds transfer or automated account builder programs. Any checks presented for payment to the Fund's transfer agent pursuant to the Fund's check-writing redemption feature on or after the Liquidation Date will not be honored." It adds, "Shareholders should be aware that while the Fund is preparing to liquidate, it will not be pursuing its stated investment objective or engaging in any business activities except for the purposes of winding up its business and affairs, preserving the value of its assets, paying its liabilities, and distributing its remaining assets to shareholders. Shareholders may redeem their holdings of the Fund until market close on December 27, 2021 and may incur typical transaction fees from their broker-dealer. Shareholders who do not redeem their shares of the Fund before market close on December 27, 2021 will receive cash equal to the amount of the net asset value of their shares, which will include any capital gains and dividends, delivered by check to their address of record or through deposit to the cash portion of their brokerage accounts, on or about the Liquidation Date. Shareholders may exchange shares of the Fund for shares of any other Fund within the Trust, pursuant to the Trust's exchange policy, through the last business day immediately preceding the Liquidation Date. The liquidation of the Fund may result in one or more taxable events for shareholders subject to federal income tax. Shareholders should consult their personal tax professionals concerning all tax consequences applicable to their investment in the fund and the tax impact of the liquidation of the fund." For more on recent liquidations, see our Oct. 25 Link of the Day, "BMO MMFs Merging Into Goldman."

The Wall Street Journal writes, "Tim Cook Owns Crypto, but Apple Won't Invest Its Cash Into It." The piece explains, "Apple Inc. Chief Executive Tim Cook said the company is looking into digital currencies and that cryptocurrency is part of his personal portfolio. Though what Apple's cryptocurrency-related projects might look like remains unclear, potential endeavors into digital currencies wouldn't involve investing Apple's sizable cash balance into them, Mr. Cook said. 'I don't think people buy an Apple stock to get exposure to crypto,' Mr. Cook said in a prerecorded interview for the New York Times DealBook Online Summit Tuesday. Cryptocurrency is already part of Mr. Cook's personal investments, he said in response to a question asking whether he owns cryptocurrencies like bitcoin or ethereum. Mr. Cook said he has been interested in digital currencies 'for a while' and doing research on them." The article adds, "Mr. Cook said the company has no immediate plans to accept cryptocurrency on Apple Pay or as a means of tender for its products. 'But there are other things that we are definitely looking at,' he said, without specifying more.... Other companies and executives have ventured into the realm of crypto. Tesla Inc. disclosed a $1.5 billion investment in bitcoin in February and soon after began accepting the cryptocurrency as payment for its vehicles. The company quickly reversed course, however, suspending that initiative in May as Elon Musk expressed worry about the source of the electricity being used to power bitcoin mining."

BNY Mellon published the piece, "A Panoramic View for Treasurers" in its latest "Aerial View. They explain, "The pandemic highlighted the need among cash managers for automated workstations, with real-time feeds, analytics and a broader swath of investment choices.... Although some calm returned to markets and there was a significant reversal out of government money market funds, the stark realities of the COVID-19 market meltdown altered treasurers' methods of cash forecasting and investing forever, much like the changes that were made in the aftermath of the 2007-2009 financial crisis for different reasons." The article, published for this week's AFP Conference in Washington, continues, "Last year, treasury and risk management platform provider GTreasury collaborated with BNY Mellon's LiquidityDirect short-term investing portal to give clients greater visibility into their cash, counterparties and money market fund positions across multiple time zones.... BNY Mellon Treasury Services, for example, this year delivered an array of new global liquidity management solutions that support clients’ needs to efficiently manage counterparty and currency risk, as well as optimize liquidity across all providers. Other trends coming into play are the greater use of 'virtual accounts' and faster payment systems. [T]reasurers in the U.S. have been starting to use them as a way of consolidating their banking relationships and reducing cash sweeps between standard bank accounts. Separately, there are opportunities in portfolio optimization and tools for tracking environmental, social and governance (ESG) investing. This fall, BNY Mellon added a host of new products to its LiquidityDirect portal, including an ESG data analytics app, cleared repo, commercial paper, brokered certificates of deposit and short-duration exchange-traded funds (ETFs)." BNY Mellon adds, "Ultra-short duration ETFs held $130 billion in assets as of September 30, according to Bloomberg, up 11% in the past year, whereas assets in institutional and offshore money market funds grew 6%.... In the months ahead, LiquidityDirect, which processed $9.85 trillion in transaction flows in the 12 months ended September 30, will cater to investments in mutual funds and FDIC-insured deposits offered through the ICS and CDARS banking networks. The moves are taking the portal from one historically dedicated to money market funds to one that delivers a broad range of investment options integrated with the bank's collateral management, treasury services and custody platform, all from one central repository. These enhancements have helped the amount of cash deposited into LiquidityDirect to grow 65% since January 1, 2020, compared to 38% for assets into institutional and offshore money market funds. 'The move to virtual environments in the pandemic highlighted what was ripe for change in treasury workflows, and the opportunities to advance digital ecosystems are endless,' says George Maganas, head of Margin and Liquidity Services at BNY Mellon."

ICD distributed a press release entitled, "Coca-Cola, Summit Utilities, ICD to Discuss Treasury Technology at AFP 2021." They tell us, "Finance professionals attending the #AFP2021 Annual Conference in Washington, D.C. will hear treasury leaders from The Coca-Cola Company and Summit Utilities share how they integrated technology to optimize their cash and investment workflows in a live session, 'Deeply Connected: Integrating Cash & Investments for Optimal Efficiency,' moderated by ICD, treasury's trusted independent portal provider of institutional money market funds and other short-term investments. The session is part of the Capital Markets and Investments track and will run from 2:00 pm to 3:00 pm in room 145B of the Walter E. Washington Convention Center. Speakers Andrea Guntren, Director, Treasury, Summit Utilities, Inc; Aidan Monahan, Director, Treasury Operations, The Coca-Cola Company; and Thomas C. Knight, CCM, EVP & Treasurer, ICD Portal, will show how their technology projects created a seamless workflow, enabling teams to closely watch, act and report on available cash, in-house banking, forecasts, and short-term investments. Session attendees will earn 1.2 CTP, FPAC or CPE credits, and conference goers will have the opportunity to participate in other learning activities and entertainment by visiting ICD booth, #607. Visit https://icdportal.com/2021-afp-annual-conference/ to learn more." See also our Sept. 27 Link of the Day, "AFP Conference Preps for Washington," which says, "We're looking forward to our next in-person conference and business travel ... the Association for Financial Professionals' Annual Conference, which is scheduled for Nov. 7-10, 2021 in Washington, DC (and virtually). AFP is the largest gathering of corporate and institutional treasurers and cash managers, and most large institutional money market fund managers host exhibit booths there. (Crane Data will be exhibiting too, See us at Booth#1136.) We took a look at the latest agenda, and saw the following money market and cash investing related topics: "Are Zero Interest Rates Really Different This Time?" with State Street Global Advisors' William Goldthwait, Snowflake Computing's Vaibhav Natu, Fastly's Michael Scott and Creative Artists Agency's Garima Thakur; and, "The Blockchain Revolution: How A Decentralized Ledger May Disrupt The $5 Trillion Money Market Fund Industry" with Western Asset Management's Jason Straker and Franklin Templeton's Chris Franta." See you next week in Washington!

The Investment Company Institute's latest weekly "Money Market Fund Assets" report shows assets dipping after jumping the previous week. The release says, "Total money market fund assets decreased by $4.57 billion to $4.55 trillion for the week ended Wednesday, November 3, the Investment Company Institute reported today. Among taxable money market funds, government funds decreased by $1.70 billion and prime funds decreased by $4.02 billion. Tax-exempt money market funds increased by $1.16 billion." Money fund assets are up by $257 billion, or 6.0%, year-to-date in 2021. Inst MMFs are up $348 billion (12.6%), while Retail MMFs are down $91 billion (-6.0%). ICI's stats show Institutional MMFs decreasing $4.8 billion and Retail MMFs increasing $0.3 billion in the latest week. Total Government MMF assets, including Treasury funds, were $4.011 trillion (88.1% of all money funds), while Total Prime MMFs were $454.6 billion (10.0%). Tax Exempt MMFs totaled $88.8 billion (1.9%). Over the past 52 weeks, money fund assets have increased by $219 billion, or 5.1%, with Retail MMFs falling by $107 billion (-6.9%) and Inst MMFs rising by $326 billion (11.7%). (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 Crane's asset series.) ICI explains, "Assets of retail money market funds increased by $256 million to $1.43 trillion. Among retail funds, government money market fund assets increased by $1.34 billion to $1.15 trillion, prime money market fund assets decreased by $1.22 billion to $209.14 billion, and tax-exempt fund assets increased by $134 million to $77.46 billion." Retail assets account for just under a third of total assets, or 31.5%, and Government Retail assets make up 80.0% of all Retail MMFs. They add, "Assets of institutional money market funds decreased by $4.83 billion to $3.12 trillion. Among institutional funds, government money market fund assets decreased by $3.05 billion to $2.86 trillion, prime money market fund assets decreased by $2.80 billion to $245.44 billion, and tax-exempt fund assets increased by $1.02 billion to $11.31 billion." Institutional assets accounted for 68.5% of all MMF assets, with Government Institutional assets making up 91.8% of all Institutional MMF totals.

Morningstar writes about "Bond Funds That Are All Defense." They explain, "The prospects for investors seeking income within the relative safety of the ultrashort bond Morningstar Category have been muted for the past few years. This is largely by design, as the very traits that make ultrashort bond funds attractive in both rocky credit markets and rising rate environments also put a damper on their yields. Investors may find themselves attracted to ultrashort bond funds for a number of reasons. At a time when most savings and money market accounts have yielded close to zero for a number of years, the incremental yield offered by a 'cash plus' ultrashort bond fund could be attractive to the investor seeking a place to park cash for a period of time." Morningstar's piece continues, "On the other hand, with many intermediate core bond category funds posting duration figures approaching multidecade highs, investors interested in broad fixed-income exposure may find themselves attracted to an ultrashort bond fund simply to lower their interest-rate risk. If investors stay cognizant of these funds' distinct profiles relative to other fixed-income funds and to one another, ultrashort bond funds can be valuable portfolio building blocks in a variety of market environments." It adds, "Ultrashort bond funds invest largely in investment-grade fare (though some will invest modestly in high-yield debt) and have an effective duration, a measure of interest-rate risk, 25% or less than the three-year average effective duration of the Morningstar Core Bond Index. In practice, most ultrashort funds post duration figures of less than one year and prove far more resilient in rising rate environments than their counterparts farther up the maturity ladder. When yields spiked in the first quarter of 2021, the average intermediate core bond fund posted a 2.9% drop, whereas the average ultrashort bond fund eked out a 0.2% gain. Two ultrashort bond strategies illustrate the category's relative risk and rewards: Fidelity Conservative Income Bond (FCONX) and Pimco Short-Term (PSHAX)."

Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics on Tuesday, which track a shifting subset of our monthly Portfolio Holdings collection. The most recent cut (with data as of Oct. 29, 2021) includes Holdings information from 61 money funds (down from 79 a week ago), which represent $2.325 trillion (down from $2.449 trillion) of the $4.853 trillion (47.9%) 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 Repurchase Agreements (Repo) totaling $1.006 trillion (down from $1.111 trillion a week ago), or 43.3%; Treasuries totaling $1.017 trillion (up from $954.2 billion a week ago), or 43.7%, and Government Agency securities totaling $128.5 billion (down from $156.2 billion), or 5.5%. Commercial Paper (CP) totaled $65.5 billion (down from a week ago at $80.2 billion), or 2.8%. Certificates of Deposit (CDs) totaled $42.9 billion (down from $48.0 billion), or 1.8%. The Other category accounted for $42.4 billion or 1.8%, while VRDNs accounted for $22.6 billion, or 1.0%. The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.017 Trillion (43.7% of total holdings), the Federal Reserve Bank of New York with $579.3B (24.9%), BNP Paribas with $67.6B (2.9%), Federal Home Loan Bank with $55.0B (2.4%), Fixed Income Clearing Corp with $47.9B (2.1%), RBC with $41.2B (1.8%), Federal Farm Credit Bank with $38.4B (1.7%), Federal National Mortgage Association with $24.7B (1.1%), Societe Generale with $22.5B (1.0%) and JP Morgan with $21.7B (0.9%). The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($242.5B), Goldman Sachs FS Govt ($230.5B), BlackRock Lq FedFund ($170.1B), Wells Fargo Govt MM ($145.7B), Fidelity Inv MM: Govt Port ($132.6B), Dreyfus Govt Cash Mgmt ($121.4B), BlackRock Lq T-Fund ($119.0B), Goldman Sachs FS Treas Instruments ($101.5B), BlackRock Lq Treas Tr ($99.0B) and JPMorgan 100% US Treas MMkt ($96.4B). (See our Oct. 13 News, "Oct. MF Portfolio Holdings: Repos Surpass Treasuries as Largest Slice" for more, and 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.)

A press release, "President’s Working Group on Financial Markets Releases Report and Recommendations on Stablecoins," tells us, "The President's Working Group on Financial Markets (PWG), joined by the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC), released a report on stablecoins. Stablecoins are a type of digital asset generally designed to maintain a stable value relative to the U.S. dollar. While today stablecoins are primarily used to facilitate trading of other digital assets, stablecoins could be more widely used in the future as a means of payment by households and businesses." Treasury Secretary Janet Yellen comments, "Stablecoins that are well-designed and subject to appropriate oversight have the potential to support beneficial payments options. But the absence of appropriate oversight presents risks to users and the broader system. Current oversight is inconsistent and fragmented, with some stablecoins effectively falling outside the regulatory perimeter. Treasury and the agencies involved in this report look forward to working with Members of Congress from both parties on this issue. While Congress considers action, regulators will continue to operate within their mandates to address the risks of these assets." The release explains, "The potential for the increased use of stablecoins as a means of payments raises a range of concerns, related to the potential for destabilizing runs, disruptions in the payment system, and concentration of economic power. The PWG report highlights gaps in the authority of regulators to reduce these risks. To address the risks of payment stablecoins, the agencies recommend that Congress act promptly to enact legislation to ensure that payment stablecoins and payment stablecoin arrangements are subject to a federal framework on a consistent and comprehensive basis. Such legislation would complement existing authorities with respect to market integrity, investor protection, and illicit finance, and would address key concerns: To address risks to stablecoin users and guard against stablecoin runs, legislation should require stablecoin issuers to be insured depository institutions. To address concerns about payment system risk, in addition to the requirements for stablecoin issuers, legislation should require custodial wallet providers to be subject to appropriate federal oversight. Congress should also provide the federal supervisor of a stablecoin issuer with the authority to require any entity that performs activities that are critical to the functioning of the stablecoin arrangement to meet appropriate risk-management standards. To address additional concerns about systemic risk and concentration of economic power, legislation should require stablecoin issuers to comply with activities restrictions that limit affiliation with commercial entities. Supervisors should have authority to implement standards to promote interoperability among stablecoins. In addition, Congress may wish to consider other standards for custodial wallet providers, such as limits on affiliation with commercial entities or on use of users' transaction data." The PWG adds, "As discussed in the report, in addition to the risks noted above, stablecoins may also raise investor protection, market integrity, and illicit finance concerns. To the extent activity related to digital assets falls under the jurisdiction of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), the SEC and CFTC have broad enforcement, rulemaking, and oversight authorities that may address certain of these concerns. To prevent misuse of stablecoins and other digital assets by illicit actors, Treasury will continue leading efforts at the Financial Action Task Force (FATF) to encourage countries to implement international AML/CFT standards and pursue additional resources to support supervision of domestic AML/CFT regulations."

A new SEC filing for the Delaware Ivy Cash Management Fund tells us, "The liquidation of the Fund noted in supplements dated September 2021 and October 2021 has been temporarily suspended until a date to be announced in a future supplement. Shareholders will receive at least 60 days' notice of the new liquidation date. The dates that the Fund will be closed to new and existing shareholders remain the same as what was noted in the supplement dated October 1, 2021." (See "Delaware Ivy Cash Funds Liquidating" (10/4/21).) The Delaware supplement continues, "Effective on or about November 15, 2021, the portfolio manager team of the Fund will change to a new portfolio manager team of the Fund's investment manager, Delaware Management Company. On the Portfolio Manager Effective Date, Stephen Juszczyszyn and Kathleen Marnell Burst will serve as portfolio managers of the Fund. Upon the Portfolio Manager Effective Date, the following replaces the information in the sections entitled 'Investment Adviser' and 'Portfolio Manager': Investment manager, Delaware Management Company, a series of Macquarie Investment Management Business Trust (a Delaware statutory trust); Portfolio managers, Stephen Juszczyszyn, Managing Director, Senior Portfolio Manager (November 2021) and Kathleen Marnell Burst, Portfolio Manager (November 2021)." It adds, "Delaware Management Company (Manager) is an indirect wholly owned subsidiary of Macquarie Group Limited (MGL). Other than Macquarie Bank Limited (MBL), a subsidiary of MGL and an affiliate of the Manager, none of the entities noted are authorized deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities, unless noted otherwise. The Fund is governed by US laws and regulations." For more, see our earlier Crane Data News updates: "Delaware Liquidates Govt Cash Mgmt" (1/11/21) and "Delaware Investments' Cash Reserves Converting to Ultra Short Bond Fund" (10/28/15).