Daily Links Archives: April, 2022

Charles Schwab Asset Management published its Schwab Money Funds Q1 2022 Commentary and submitted its Comment on Money Fund Reform to the SEC earlier this month. The Q1'22 update, written by Linda Klingman and Rick Holland, tells us, "If this outlook holds, it will likely mean that investors can expect overnight rates to be around 2.4% by year end and approaching 3% by the end of 2023 -- good news for those who rely on money market funds and other fixed income strategies to supplement their individual income needs.... According to Crane Data's Money Fund Intelligence reports, the money market fund industry saw a moderate decrease in total assets over the first quarter (~$139B), ending the period just above $5 trillion. All of the decline could be attributed to the Government/Treasury sector (~$149B) while the Prime and Municipal sectors remained steady, up approximately $10B and no real change, respectively." It explains, "On the surface, implications for a liftoff in the fed funds rate seem straightforward. Money market funds, like other short-term financial instruments, would expect to see higher net yields. However, two key points should be emphasized as we enter this tightening cycle: First, many money market fund share classes are still implementing some degree of voluntary fee waivers. These historically have been used across the industry in near-zero interest rate environments to insulate investors from potential negative returns. The need for waivers diminishes as market yields rise but may also cause an initial lag in the movement of 7-day yields for certain money market funds. We expect the money market fund industry to fully discontinue the use of voluntary fee waivers in the coming months, assuming the Fed continues its aggressive path upward. Second, money market fund 7-day net yields typically do not move in "lockstep" with the fed funds rate. Although there is generally a strong relationship between these two data points, money market fund yields may move prior to or after action taken by the Fed. While we expect money market fund net yields to generally follow the trend of the fed funds rate, there may be variances between the two moving forward." Klingman and Holland comment, "On the regulatory front, there were few material developments on Money Market Fund Reform during the first quarter of this year. In December 2021, the SEC proposed reform measures to potentially improve money market funds for investors and to increase the resiliency of the money market fund industry overall. Public comments on the proposed amendments were due April 11, 2022. Schwab's formal response reiterates the core position which has been noted in our prior comment letters to regulators in 2021 and addresses Schwab's current position related to the SEC's recently proposed amendments." They state, "Our position is summarized below: 1. Schwab believes the SEC should consider requiring a floating NAV for all prime and municipal money market funds to improve price transparency and remove any misperception of an implied 'guarantee.' Government money market funds would remain constant NAV and not be required to have a floating NAV. 2. Schwab supports the removal of liquidity fees and redemption gates and the thresholds aligned with fees and gates. 3. Schwab opposes swing pricing, but if an anti-dilutive measure is necessary, the use of a liquidity fee is preferred. 4. Schwab opposes making all prime and municipal money market funds price with a variable NAV in the event of negative rates. We support the utilization of the reverse distribution mechanism for managing negative rates. 5. Schwab supports increased liquidity requirements but is not opposed to lower liquidity requirements than those proposed. 6. Schwab generally supports proposals that enhance transparency for investors. We believe some elements of the proposed amendments should remain confidential. 7. Schwab supports the enhanced stress testing proposed by the Commission. Across the financial sector, stress testing has proven to be a useful tool for regulators." The piece adds, "While the exact timing is uncertain, we believe the SEC will seek to finalize these rules by year-end and mandate an effective date near the end of 2023.... Schwab continues to evaluate and evolve its liquidity management solutions to meet the changing financial and regulatory climate. We continue to collaborate with our clients, regulators, and industry peers, and we've also developed additional collateral to help support investor education as necessary in an ever-changing environment." Schwab's SEC Comment Letter," written by President Rick Wurster adds, "CSIM is one of the largest managers of money market fund assets in the United States, with 11 money market funds and $146.5 billion in assets under management as of December 31, 2021. Approximately $78 billion of those assets are in prime money market funds (including an institutional fund with a floating net asset value); $12 billion are in tax-exempt money market funds (or 'municipal money market funds'); and $56 billion are in government and treasury money market funds.... Money market funds provide investors with stability, convenience, liquidity and yield. CSIM's money market fund offerings are primarily used by clients of CS&Co and other Schwab affiliates. The Schwab Money Fund offerings appeal to individual retail investors and investment advisers who service individual investors to help manage their cash. Cash is a critical component of the portfolios of individual investor clients, offering a level of flexibility that helps them both manage their day-to-day finances and reach their longer-term financial goals. It is through our clients' eyes that we respond to the reform proposals."

Earlier this month, S&P Global Ratings published the FAQ, "What Is The Potential Impact To PSFRs Based On The Proposed Amendments To Money Market Funds?" They tell us, "On Dec. 15, 2021, the Securities and Exchange Commission (SEC) proposed for public comment amendments to Rule 2a-7. According to the proposal, the amendments are designed to improve the resiliency and transparency of MMFs following the liquidity stresses experienced in March 2020 in connection with the pandemic and the associated stresses in short-term credit markets. We are limiting our discussion in this FAQ to the key proposals that we have determined to be the most relevant to registered MMFs rated under our principal stability fund rating (PSFR) criteria. First, a material rule change under the proposed amendments includes the elimination of mandatory liquidity fee and redemption gate provisions, and decoupling these requirements from minimum liquidity thresholds.... Other proposed changes to Rule 2a-7 include the requirement for institutional prime and institutional tax-exempt MMFs to implement swing pricing policies and procedures. All MMFs would be required to clarify their use of reverse distribution mechanisms under a potential negative interest rate environment, increase their daily liquid asset (DLA) and weekly liquid asset (WLA) minimum requirements to 25% and 50% from 10% DLA and 30% WLA, respectively, and calculate WAM and WAL based on the percentage of each security's market value in the portfolio. Finally, technical changes to stress testing would decouple stress testing from liquidity fees." S&P explains, "A PSFR, commonly referred to as a money market fund rating, is forward-looking opinion about a fixed-income fund's ability to maintain principal value (i.e., net asset value [NAV]). PSFRs are typically assigned to funds that seek to maintain stable or, as is prevalent in non-U.S. funds, accumulating NAVs. The quantitative aspect of our PSFR analysis focuses primarily on the creditworthiness of the fund's investments and counterparties, and also assesses its investments' maturity structure and management's ability and policies to maintain the fund's stable NAV. Below, we answer questions on how we view these proposals under our current PSFR methodology." They tell us, "We would likely view the elimination of the regulatory linkage between the gates and fees to the minimum liquidity thresholds as a positive for MMF principal stability providing the removal reduces the risk of large redemption requests in anticipation of a gate or fee imposition.... In our view, the removal of automatic linkages will not, in practice, decouple investors' redemption decisions from their view of MMFs' liquidity positions, but it may reduce the likelihood of correlated shareholder redemption requests.... We would likely view the regulatory establishment of a minimum liquidity for MMFs as supportive of principal stability in concept. But the exact design of any metrics and stress tests could still lead to some potential distortions and are unlikely to reflect future stress conditions. We also anticipate investors would redeem their shares if they see a narrowing in the liquidity buffer over even a conservative minimum liquidity threshold.... We have assigned PSFRs since December 1983; as of Feb. 28, 2022, we rated about 260 funds globally totaling more than US$4 trillion. Quite often, no two MMFs have the same characteristics, particularly when viewing investor composition and each investor's unique liquidity requirements. We have opted not to establish minimum daily and weekly liquidity metrics as part of our PSFR criteria because we assess funds management's approach to maintaining adequate liquidity given their unique shareholder needs. Our qualitative review of fund management assesses a fund manager's strategy for maintaining sufficient liquidity based on specific shareholder needs and expectations." S&P asks, "How would S&P Global Ratings view the implementation of swing pricing, if adopted?" The piece responds, "We view swing pricing, which reduces redemption proceeds if made during a period of high shareholder redemption demand, as likely not supportive of principal stability. Although swing pricing can help reduce liquidity demands on funds, it also means investors may find the value of their investments being reduced. Consequently, such pricing may serve as a factor to shift potential liquidity pressures to other parts of the financial markets. A decision to use a liquidity management tool, such as swing pricing, could lead to a rating change due to a fund's inability to maintain NAV stability or to meet redemption requests on a full and timely basis, which could result in the investor getting less than the value of their investment back."

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 April 22) includes Holdings information from 87 money funds (up from 64 a week ago), which represent $2.805 trillion (up from $2.117 trillion) of the $4.923 trillion (57.0%) in total money fund assets tracked by Crane Data. (Our Weekly MFPH are e-mail only and aren't available on the website. See our April 12 News, "April MF Portfolio Holdings: Fed Repo Jumps; Treasuries, TDs Plunge," for more.) Our latest Weekly MFPH Composition summary again shows Government assets dominating the holdings list with Repurchase Agreements (Repo) totaling $1.327 trillion (up from $1.027 trillion a week ago), or 47.3%; Treasuries totaling $1.115 trillion (up from $823.3 billion a week ago), or 39.7%, and Government Agency securities totaling $151.7 billion (up from $112.4 billion), or 5.4%. Commercial Paper (CP) totaled $65.5 billion (up from a week ago at $48.8 billion), or 2.3%. Certificates of Deposit (CDs) totaled $49.8 billion (up from $40.1 billion a week ago), or 1.8%. The Other category accounted for $62.9 billion or 2.2%, while VRDNs accounted for $33.8 billion, or 1.2%. The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.115 trillion (39.7% of total holdings), the Federal Reserve Bank of New York with $864.1B (30.8%), BNP Paribas with $63.6B (2.3%), Federal Home Loan Bank with $63.2B (2.3%), Federal Farm Credit Bank with $60.3B (2.1%), Fixed Income Clearing Corp with $56.3B (2.0%), RBC with $41.5B (1.5%), Barclays PLC with $39.8B (1.4%), Societe Generale with $27.6B (1.0%) and Mitsubishi UFJ Financial Group Inc with $23.5B (0.8%). The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($246.9B), Goldman Sachs FS Govt ($215.9B), BlackRock Lq FedFund ($168.1.1B), Morgan Stanley Inst Liq Govt ($136.1B), Allspring Govt MM ($124.9B), Fidelity Inv MM: Govt Port ($117.7B), Federated Hermes Govt ObI ($116.5B), BlackRock Lq T-Fund ($115.7B), Dreyfus Govt Cash Mgmt ($115.7B), and BlackRock Lq Treas Tr ($114.9B). (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 again writes about "cash" in "Wall Street Finds New Value in Cash as Global Fears Weigh on Markets." The article says, "Worries about the war in Ukraine, China's Covid-19 outbreak, a U.S. or European recession and surging global inflation are making a long-spurned asset increasingly popular with Wall Street's top money managers these days: cash. As stock and bond prices have retreated from records in the tumult of headlines, more asset managers said they are looking to move funds into low-risk, cash-like assets." It quotes BlackRock's Rick Rieder, who "said the world's largest asset manager is increasing cash holdings by more than 50% in many portfolios to a weighting that is 'much, much higher' than it had been in years past.... 'For now, one of the most attractive things you can do is have patience, and if you can get paid to have patience that's a pretty good place to be,' Mr. Rieder said." The piece strangely says, "Prime money-market funds' holdings in the Americas rose from just under $146 billion in February to $193 billion in March, their highest levels of the year, according to data from the Investment Company Institute. Many expect such holdings to keep rising as rates on money markets, short-term bonds and other cash-like investments climb with interest-rates set by the Federal Reserve." The Journal adds, "Bank of America is expecting the Federal Reserve to raise U.S. interest rates to 3% by early next year from their current level of 0.25% to 0.50%. That would produce a similar rate for cash-like assets such as money-market funds, which track short-dated Treasurys, high-quality investment-grade bonds and commercial paper. That rate would be more than double the current 1.4% dividend yield of the S&P 500. Even though rates are well below that today, fund managers said they are ready to move into cash. Bank of America's April survey of global asset managers showed cash holdings are near the highest level since April 2020, which was the aftermath of the Covid-driven market selloff, and cash is one of the survey's most popular trades. Gaurav Mallik, chief investment strategist and global head of client solutions at State Street Global Advisors, said portfolios at his firm are holding at least 50% more cash than they did at the beginning of the year, with increased focus on 'keeping dry powder' by holding cash and money-market funds. 'Cash is king right now in terms of the return you're getting,' Mr. Mallik said." Pensions & Investments also writes on cash in, "Money market funds get a look amid rising rates." They comment, "As the Federal Reserve embarks on an aggressive interest-rate hike program to fight high inflation, some fixed-income specialists anticipate traditional money market funds will provide greater yields than the near-zero rates they have had in recent years. With rising rates along with other new macroeconomic worries, ... and rising inflation and commodity prices, more institutional investors could be motivated to move deeper into money markets -- not just for their yield, but for their low-risk and low-volatility characteristics, said Peter Yi, Chicago-based director of short-duration fixed income and head of taxable credit research for Northern Trust Asset Management. 'The market is pricing in the equivalent of at least eight more rate hikes this year,' Mr. Yi said. 'This trend could make money markets more attractive to investors, to help them generate yield while maintaining liquidity and safety.'" P&I adds, "John H. Tobin, New York-based chief investment officer at Dreyfus Cash Investment Strategies, a division of BNY Mellon Investment Management with about $370 billion in assets under management, said that money market funds perform well amid rising rates since they are highly liquid instruments and 'capture the rate hikes' very quickly."

The Wall Street Journal published "How to Stop Your Fund Manager From Feeding on Your Cash," which discusses rising yields and the removal of fee waivers on money market mutual funds. Columnist Jason Zweig writes, "As interest rates rise, the benefits are accruing to the people who manage cash, not to the investors who hold it. In the first quarter, the yield on three-month Treasury bills rose 0.46 percentage point. The yield on retail money-market mutual funds rose a measly 0.03 point -- while their expenses shot up 0.22 point." He comments, "With fund managers capturing nearly all the extra income from the Federal Reserve's 0.25-percentage-point interest-rate increase last month, you'll have to take matters into your own hands to maximize the return on your cash.... Money-market funds ... pay dividends that should rise and fall to track short-term interest rates. Why, then, has almost all the recent rise in rates gone to asset managers, rather than investors? Fund companies charge roughly 0.25% to 0.5% annually to manage retail money-market funds. With the Fed keeping interest rates within spitting distance of zero for most of the past decade, many money-market funds could barely cover what it cost to run them.... So asset-management companies have been subsidizing these funds with fee waivers for years. Look, for example, at Dreyfus Government Cash Management, with $115 billion in assets. According to a recent disclosure, this fund's manager, a unit of Bank of New York Mellon Corp., waived or reimbursed fees totaling $91 million between 2019 and 2021." The piece continues, "So, to some extent, it's only fair that the recent rise in yield has gone into asset managers' pockets (assuming expenses weren't too high in the first place).... To put it bluntly, '`the big dog's gotta eat first,' says Peter Crane, president of Crane Data, a firm that monitors cash and other short-term investments." The Journal adds, "Here's how heavy those subsidies have been: As of March, with rates heading up, Mr. Crane reckons money managers were pulling in total fees at a clip of about $10.3 billion a year. At the end of 2021, with rates so low that managers had to waive fees, their take was running at only about $4 billion a year.... In any event, money funds are already in the money for them, but not yet for you. The average yield on the Crane 100 index of the 100 largest funds stood this week at 0.20%. That's up a hair from 0.15% on March 31 and an improvement from its pathetic 0.02% at the end of February -- but still far below the yield this week on one-month and three-month U.S. Treasury bills, at 0.33% and 0.83%, respectively."

ICI's latest "Money Market Fund Assets" report shows assets plummeting for the third week in a row and for the fifth week out of the past seven. It was the 8th largest weekly decline ever. Assets have declined by $121.9 billion over 3 weeks and by $137.6 billion over 7 weeks. Year-to-date, MMFs are down by $237 billion, or -5.0% <b:>`_, with Institutional MMFs down $177 billion, or -5.5% and Retail MMFs down $59 billion, or -4.0%. Over the past 52 weeks, money fund assets are flat, decreasing by $2 billion, or 0.0%, with Retail MMFs falling by $61 billion (-4.2%) and Inst MMFs rising by $59 billion (2.0%). ICI's weekly release says, "Total money market fund assets decreased by $61.28 billion to $4.47 trillion for the week ended Wednesday, April 20, the Investment Company Institute reported.... Among taxable money market funds, government funds decreased by $56.02 billion and prime funds decreased by $3.97 billion. Tax-exempt money market funds decreased by $1.29 billion." ICI's stats show Institutional MMFs falling $41.8 billion and Retail MMFs decreasing $19.5 billion in the latest week. Total Government MMF assets, including Treasury funds, were $3.966 trillion (88.7% of all money funds), while Total Prime MMFs were $412.4 billion (9.2%). Tax Exempt MMFs totaled $90.5 billion (2.0%). ICI explains, "Assets of retail money market funds decreased by $19.48 billion to $1.41 trillion. Among retail funds, government money market fund assets decreased by $16.44 billion to $1.13 trillion, prime money market fund assets decreased by $2.29 billion to $192.44 billion, and tax-exempt fund assets decreased by $752 million to $82.02 billion." Retail assets account for just under a third of total assets, or 31.5%, and Government Retail assets make up 80.5% of all Retail MMFs. They add, "Assets of institutional money market funds decreased by $41.80 billion to $3.06 trillion. Among institutional funds, government money market fund assets decreased by $39.59 billion to $2.83 trillion, prime money market fund assets decreased by $1.68 billion to $219.94 billion, and tax-exempt fund assets decreased by $535 million to $8.46 billion." Institutional assets accounted for 68.5% of all MMF assets, with Government Institutional assets making up 92.5% of all Institutional MMF totals. (Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're approximately $400 billion lower than Crane's asset series.)

Vanguard's comment letter to the SEC is mostly supportive of the Money Market Fund Reform Proposals. But they express concerns over Prime MMFs, CP and swing pricing. CIO Greg Davis writes, "Vanguard believes MMFs are an important choice for retail investors' cash management and principal preservation needs. For more than a decade, we have been actively involved in researching and evaluating MMF reform proposals, including SEC amendments to Rule 2a-7 that were implemented in 2010 and 2014. Those changes enhanced MMFs' credit quality, liquidity self-provisioning, and disclosures. In March 2020, the economic shock of the COVID-19 pandemic led to an unprecedented flight to liquidity and safety by investors and other market participants. Not surprisingly, government MMFs had significant inflows as investors sought the principal preservation, stability and safety that they offer. Prime MMFs experienced significant redemptions and, concurrently, the commercial paper ('CP') market on which they rely, froze." Davis explains, "In response, Vanguard looked closely at its MMF offerings, and in August 2020 announced that Vanguard Prime Money Market Fund would be reorganized into a government MMF. We recognized that retail investors prioritize stability when selecting money market investments and the change in investment strategy would enable the fund to continue to meet investors' expectations in all market conditions without ad hoc government intervention. Our decision to exit prime also took into account changing market dynamics that warrant review by financial market regulators so that the short-term markets are more resilient in future crises." Vanguard comments, "We recognize the Commission has taken several steps to strengthen prime MMFs and, having carefully considered the relevant tradeoffs associated with prime MMFs and the markets in which they invest, we write generally in support of the Commission's proposal, which is consistent with many of the recommendations from our April 2021 letter. We support the proposals to eliminate liquidity fees and redemption gates and to increase daily and weekly liquidity requirements, which we believe are critical to improving the resilience of MMFs in periods of market stress. We also agree with the Commission's desire to ensure MMFs are prepared to float their net asset value in an extended negative interest rate environment but would encourage the Commission to consider a longer implementation timeframe that would better balance the costs and benefits associated with the approach, particularly in the current rate environment." They add, "Although we support the reforms noted above and recognize their value in helping to strengthen prime MMFs, we continue to have concerns about prime MMFs given their reliance on the CP market. Further, while we recognize the Commission's desire to implement additional reforms to these products, such as swing pricing, policymakers should consider what additional steps can be taken to improve CP market structure and ensure sufficient liquidity exists during times of stress. Though the proposed product reforms outlined would address the run risk presented by fees and gates within the fund structure, fund reform alone does not -- and cannot -- eliminate liquidity risk in the underlying short-term wholesale funding markets. Policymakers should look closely at these markets, their tools and the various events surrounding the March 2020 volatility, to improve resiliency in this critical segment of our markets." Davis concludes, "Finally, we encourage policymakers to carefully consider the operational costs and benefits associated with requiring swing pricing in the United States. Given the history of prime MMFs, we recognize the desire to do more but, at least with respect to other open-end bond funds, the data suggest the operational costs of swing pricing may outweigh its benefits."

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 April 15) includes Holdings information from 64 money funds (up from 63 two weeks ago), which represent $2.117 trillion (down from $2.168 trillion) of the $4.876 trillion (43.4%) in total money fund assets tracked by Crane Data. (Our Weekly MFPH are e-mail only and aren't available on the website. See our April 12 News, "April MF Portfolio Holdings: Fed Repo Jumps; Treasuries, TDs Plunge," for more.) Our latest Weekly MFPH Composition summary again shows Government assets dominating the holdings list with Repurchase Agreements (Repo) totaling $1.027 trillion (down from $1.048 trillion two weeks ago), or 48.5%; Treasuries totaling $823.3 billion (down from $824.8 billion two weeks ago), or 38.9%, and Government Agency securities totaling $112.4 billion (down from $119.3 billion), or 5.3%. Commercial Paper (CP) totaled $48.8 billion (down from two weeks ago at $59.2 billion), or 2.3%. Certificates of Deposit (CDs) totaled $40.1 billion (up from $38.9 billion two weeks ago), or 1.9%. The Other category accounted for $43.2 billion or 2.0%, while VRDNs accounted for $22.0 billion, or 1.0%. The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $823.3 billion (38.9% of total holdings), the Federal Reserve Bank of New York with $697.0B (32.9%), BNP Paribas with $50.8B (2.4%), Federal Home Loan Bank with $46.1B (2.2%), Federal Farm Credit Bank with $43.1B (2.0%), RBC with $38.0B (1.8%), Fixed Income Clearing Corp with $25.3B (1.2%), Societe Generale with $25.2B (1.2%), Mitsubishi UFJ Financial Group Inc with $19.6B (0.9%) and Sumitomo Mitsui Banking Corp with $17.4B (0.8%). The Ten Largest Funds tracked in our latest Weekly include: Goldman Sachs FS Govt ($238.9B), JPMorgan US Govt MM ($232.2B), Morgan Stanley Inst Liq Govt ($138.8B), Allspring Govt MM ($126.7B), Fidelity Inv MM: Govt Port ($118.1B), Dreyfus Govt Cash Mgmt ($116.4B), Goldman Sachs FS Treas Instruments ($109.2B), State Street inst US Govt ($90.6B), First American Govt Oblg ($90.1B), and JPMorgan 100% US Treas MMkt ($82.9B). (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.)

Bank of New York Mellon hosted its Q1'22 Earnings Call yesterday, and briefly discussed bank deposits and money fund fee waivers. CEO Todd Gibbons comments, "We also continued building momentum as a leader in digital assets, having been selected by Circle as primary custodian for the USD coin reserves." CFO Emily Portney tells us, "Money market fee waivers, net of distribution and servicing expense were $199 million in the quarter, an improvement of $44 million compared to the prior quarter. This reflects the benefit of higher average short-term interest rates partially offset by higher money market fund balances. Once again, our growth in money market fund balances meaningfully outpaced the industry. Together, the impact of lower waivers and higher balances drove a sequential increase in pre-tax income of close to $60 million. On a year-over-year basis, fee waivers had a de minimis impact to our fee revenue.... Net interest revenue was up 19%, reflecting higher interest rates as well as higher deposits and loan balances." During the Q&A, Portney says, "We would expect deposit probably run off maybe about 10% over the course of this year.... Just as a reminder, our deposit base is largely institutional NIBs [noninterest bearing accounts]. Part of the growth you've seen has been in NIBs, so we expect that to kind of normalize to over time. The other thing I would mention is that as we see deposit runoff, we also could see a migration to money market funds. And if that does indeed happen, then obviously, that could be a nice tailwind for us as well.... Specifically on waivers, we do see the Fed raising rates by 50 basis points in May, as I think we are all kind of expecting. Obviously, that will be a nice uptick in terms of recouping waivers and it's to the tune of, call it, like $100 million or so is what I ... would estimate it." Late last week, Morgan Stanley also reported earnings and hosted its Q1 earnings call. CEO James Gorman comments, "We saw our first rate hike in the year in the first quarter, and with our strong and growing deposit base, this will have a near immediate economic impact to our business." CFO Sharon Yeshaya explains, "Deposits increased $6 billion in the quarter to $352 billion. The average rate on deposits declined to 9 basis points.... Net interest income was $1.5 billion.... Back in January, we indicated that the fourth quarter NII was a reasonable base to inform 2022 and that we would expect $500 million of incremental NII on the back of rising rates. Due to the further moves in rate expectations since January, we should see this benefit at least double if the forward curve and our modeled assumptions are realized over the remaining nine months of the year." Asked about money fund waivers, she adds, "So our money market guidance we gave you was about plus $200 million and we stand by plus $200 million ... for the full year. It's really based on two factors that are contributing into that. One is the balances, as well as the industry and the waivers, how quickly those waivers roll off. So we are -- $200 million for the remainder of the year for the increase for Investment Management."

ICI's latest "Money Market Fund Assets" report shows assets plummeting for the second week in a row and for the fourth week out of the past six. Year-to-date, MMFs are down by $175 billion, or -3.7%, with Institutional MMFs down $135 billion, or -4.2% and Retail MMFs down $40 billion, or -2.7%. Over the past 52 weeks, money fund assets have increased by $75 billion, or 1.7%, with Retail MMFs falling by $49 billion (-3.3%) and Inst MMFs rising by $125 billion (4.2%). ICI's weekly release says, "Total money market fund assets decreased by $29.87 billion to $4.53 trillion for the week ended Wednesday, April 13, the Investment Company Institute reported today. Among taxable money market funds, government funds decreased by $25.16 billion and prime funds decreased by $6.49 billion. Tax-exempt money market funds increased by $1.79 billion." ICI's stats show Institutional MMFs falling $25.2 billion and Retail MMFs decreasing $4.7 billion in the latest week. Total Government MMF assets, including Treasury funds, were $4.022 trillion (88.8% of all money funds), while Total Prime MMFs were $416.4 billion (9.2%). Tax Exempt MMFs totaled $91.8 billion (2.0%). ICI explains, "Assets of retail money market funds decreased by $4.71 billion to $1.43 trillion. Among retail funds, government money market fund assets decreased by $5.66 billion to $1.15 trillion, prime money market fund assets decreased by $1.36 billion to $194.72 billion, and tax-exempt fund assets increased by $2.32 billion to $82.77 billion." Retail assets account for just under a third of total assets, or 31.5%, and Government Retail assets make up 80.6% of all Retail MMFs. They add, "Assets of institutional money market funds decreased by $25.16 billion to $3.10 trillion. Among institutional funds, government money market fund assets decreased by $19.50 billion to $2.87 trillion, prime money market fund assets decreased by $5.13 billion to $221.62 billion, and tax-exempt fund assets decreased by $528 million to $8.99 billion." Institutional assets accounted for 68.5% of all MMF assets, with Government Institutional assets making up 92.6% of all Institutional MMF totals. (Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're approximately $400 billion lower than Crane's asset series.)

BlackRock reported its Q1 2022 earnings and hosted a conference call with analysts yesterday that mentioned money market, bond funds and stablecoins several times. (See the earnings release here and Seeking Alpha’s earnings call transcript here.) CFO Gary Shedlin says, "BlackRock generated total net flows of $86 billion in the first quarter, representing 3% annualized organic asset growth with $114 billion of long-term net inflows partially offset by $27 billion of generally seasonal cash management outflows.... We incurred approximately $75 million of gross discretionary yield support waivers in the first quarter. However, waivers for our flagship funds were essentially removed following rate hikes by the Bank of England and Federal Reserve in March. Recall that approximately 50% of gross fee waivers are generally shared with distributors, so the benefit to base fees is partially offset by higher distribution expense." Shedlin also tells us, "As Larry will discuss in more detail, earlier this week we announced the minority investment in Circle, the operator of the market infrastructure for USDC, a dollar-based fully reserved stablecoin and one of the fastest-growing digital assets with more than $52 billion in circulation. Circle's technology currently enables the frictionless and real-time transfer of payments and is being explored for other applications across the financial ecosystem.... BlackRock's cash management platform saw net outflows of $27 billion, driven by redemptions from offshore prime and U.S. government money market funds, in line with the broader money market fund industry. BlackRock has steadily grown our share of the cash management industry by leveraging our scale and delivering innovative distribution and risk management solutions for clients. We are an existing manager of the cash reserves that underpin USDC, and we look forward to partnering with Circle to expand that relationship and become their primary manager in the future." CEO Larry Fink comments, "Earlier this week, we announced that BlackRock made a minority investment in Circle, a global Internet payment firm and the sole issuer of USD coin, a dollar-based fully reserved stablecoin, which is one of the fastest-growing digital assets in the world. BlackRock is already the manager of USDC cash reserves, and we look forward to begin expanding our relationship to become the primary manager of the cash reserves." During the Q&A, Fink responds, "Tactically, investors can move out of longer durations to lower duration or shorter duration. Obviously, if cash and money market funds begin yielding 2%, 2.5%, you'll see movement away from maybe longer-dated funds into shorter-dated funds. So let's be clear, movement within fixed income is quite large."

The Federal Reserve Bank of New York's Liberty Street Economics blog posted two articles on "The Fed's Balance Sheet" earlier this week. The first, "The Fed's Balance Sheet Runoff and the ON RRP Facility," tells us, "A 2017 Liberty Street Economics post described the balance sheet effects of the Federal Open Market Committee's decision to cease reinvestments of maturing securities -- that is, the mechanics of the Federal Reserve's balance sheet 'runoff.' At the time, the overnight reverse repo (ON RRP) facility was fairly small (less than $200 billion for most of July 2017) and was not mentioned in the post for the sake of simplicity. Today, by contrast, take-up at the ON RRP facility is much larger (over $1.5 trillion for most of 2022). In this post, we update the earlier analysis and describe how the presence of the ON RRP facility affects the mechanics of the balance sheet runoff." Written by Marco Cipriani, James Clouse, Lorie Logan, Antoine Martin, and Will Riordan, the blog states, "In the exhibit below, we describe simplified balance sheets for the Fed, the Treasury, banks, and money market funds (MMFs). We only show the balance sheet items that are essential for understanding the mechanics related to the Fed's actions. In a follow-up post, we consider the role of levered nonbank financial institutions and households.... On MMFs' balance sheet, the asset side contains Treasury securities, deposits at banks, and investments in the ON RRP facility; on the liability side, there are MMF shares held by households. In contrast to banks and the Treasury, MMFs cannot hold balances in a Fed account; however, MMFs have access to the ON RRP facility (MMFs with ON RRP access accounted for approximately 80 percent of MMF assets under management at the end of 2021)." The second posting, "The Fed's Balance Sheet Runoff: The Role of Levered NBFIs and Households," comments, "In a Liberty Street Economics post that appeared yesterday, we described the mechanics of the Federal Reserve's balance sheet 'runoff' when newly issued Treasury securities are purchased by banks and money market funds (MMFs). The same mechanics would largely hold true when mortgage-backed securities (MBS) are purchased by banks. In this post, we show what happens when newly issued Treasury securities are purchased by levered nonbank financial institutions (NBFIs) -- such as hedge funds or nonbank dealers—and by households." This post adds, "`The actual evolution of private-sector balance sheets could involve adjustments similar to those outlined in the various scenarios described in our previous post on balance sheet runoff and in this one. These scenarios indicate that the adjustments in private-sector balance sheets can be quite complex, involving flows across markets and institutions that exceed the dollar value of the net increase in securities holdings by the private sector. Also, whether the adjustment on the Fed's balance sheet happens through a reduction of reserves or of ON RRP investment depends on the type of securities that the Treasury issues (that is, whether MMFs can hold these securities), as well as on the relative return on different types of money market instruments."

The Wall Street Journal writes that "Bank Deposits Could Drop for First Time Since World War II." The piece says, "U.S. banks have a streak of increasing deposits as a group every year since at least World War II. This year could break it. Over the past two months, bank analysts have slashed their expectations for deposit levels at the biggest banks. The 24 institutions that make up the benchmark KBW Nasdaq Bank Index are now expected to see a 6% decline in deposits this year. Those 24 banks account for nearly 60% of what was $19 trillion in deposits in December, according to the Federal Deposit Insurance Corp. While some analysts doubt the full-year decline will happen, even the possibility would have been unthinkable a few months ago. Bank deposits have grown sharply during the pandemic." The Journal tells us, "Banks were supposed to benefit from a slow and methodical increase in interest rates. That would allow them to charge more on loans and keep near zero the amount they pay depositors. Banks, after all, won't pay more for funding they don't need. That combination would boost what had been record-low profit margins. The last time the Fed increased rates, deposit growth slowed but was still positive, so bankers expected the same. But what happened the past two years to set the stage for this year has no precedent. During the pandemic, consumers stashed away stimulus checks and businesses stockpiled cash to deal with shutdowns and supply-chain issues. Total deposits increased $5 trillion, or 35%, over the past two years, according to FDIC data." They explain, "Analysts and bankers think those aren't likely to stay around. Citigroup estimated banks have $500 billion to $700 billion in excess noninterest-paying deposits that could move quickly. The most likely beneficiaries are money-market funds, short-term investments that often capture overflowing deposits from banks. Historically, consumers and businesses have been slow to move most deposits out of banks to chase interest rates. But the sheer volume of excess cash floating around could change that behavior, especially if the Fed moves rates faster than it usually does. The Fed is now expected to boost interest rates by half a percentage point at its next meeting, instead of the typical quarter percentage point increase." The article adds, "The money-market funds started parking the overflow at a newer program at the Federal Reserve Bank of New York for short-term storage. That program, known as the reverse repo, has about $1.7 trillion in it now after being mostly ignored since its 2013 creation. Because it is so new, and suddenly so big, bankers and analysts have been unsure what will happen with those funds as the Fed started moving rates. For months, many viewed them as excess funds that would follow the general idea of 'last in, first out.' Now, some analysts are reversing that theory. They expect money-market funds to march their rates higher along with the Fed, which would keep them more attractive than bank deposits. The average rate on savings accounts stood at roughly 0.06% on March 21, according to the FDIC, compared with 0.08% for money-market accounts. Savings account interest rates aren't expected to move much until loan demand and deposit levels come back into balance. Demand for the New York Fed program has increased in recent weeks as expectations for bigger Fed hikes have emerged, said Isfar Munir, U.S. economist at Citigroup."

A press release entitled, "ICD Surveys Trends in Institutional Money Markets, Treasury Technology," tells us, "More than 100 treasury organizations in the U.S., U.K. and Europe shared their plans regarding cash, investments and the interplay between staff and technology in the 2022 ICD Client Survey, which closed in February. ICD is an independent portal provider of money market funds and other short-term investments, exclusively serving the treasury industry." ICD CEO Tory Hazard comments, "We see treasury teams preserving capital and keeping investments short to take advantage of expected yield in a rising interest rate environment. Further, institutional investors are looking to grow their investments in prime money market funds in the Americas and LVNAV assets in the U.K. and Europe." The release tells us, "Highlights of the 2022 ICD Survey include: 71% - Treasury teams expect to maintain or increase cash balances in the first half of 2022, up from 61% reported last year, suggesting uncertainty over macroeconomic and geopolitical developments. 83% - Organizations are maintaining or increasing investment in money market funds ahead of rate hikes to maximize yield while maintaining liquidity and safety. 94% - Most UK/Europe respondents are invested in or planning on investing in Short-Term LVNAV money market funds, an increase of 52% over last year. 46% - Treasury teams in the Americas are investing in or planning on investing in Demand Bank Deposits; down 19% from last year. 56% - Respondents in the Americas said they are invested in or planning on investing in prime money market funds, up 19% from last year, to take advantage of increased yields. [and] 62% - Organizations are engaging in treasury transformations over the course of the year, turning to technology to close the gap between limited resources and increasing responsibilities." The release adds, "To read the full `2022 ICD Survey, visit icdportal.com/resources." The full "2022 ICD Client Survey" shows that 83% are currently invested in Government/US Treasury MMFs, and another 8% plan on investing in these in 2022. For US Prime MMFs, ICD's survey shows 46% of respondents are currently invested with 10% planning on investing in 2022. Just 10% are invested in "Short Duration Bond Funds," but another 13% plan on investing in these in 2022. It also says that 22% are currently invested in "ESG or other Socially Responsible Investing products," 34% are planning on investing in these in 2022, and 44% are not planning on investing in these.

ICI's latest "Money Market Fund Assets" report shows assets plunging over the past week after jumping the week before. Year-to-date, MMFs are down by $146 billion, or -3.1%, with Institutional MMFs down $110 billion, or -3.4% and Retail MMFs down $35 billion, or -2.4%. Over the past 52 weeks, money fund assets have increased by $75 billion, or 1.7%, with Retail MMFs falling by $54 billion (-3.6%) and Inst MMFs rising by $129 billion (4.3%). ICI's weekly release says, "Total money market fund assets decreased by $30.79 billion to $4.56 trillion for the week ended Wednesday, April 6, the Investment Company Institute reported.... Among taxable money market funds, government funds decreased by $30.88 billion and prime funds decreased by $2.49 billion. Tax-exempt money market funds increased by $2.57 billion." ICI's stats show Institutional MMFs falling $27.2 billion and Retail MMFs decreasing $3.6 billion in the latest week. Total Government MMF assets, including Treasury funds, were $4.047 trillion (88.8% of all money funds), while Total Prime MMFs were $422.8 billion (9.3%). Tax Exempt MMFs totaled $90.0 billion (2.0%). ICI explains, "Assets of retail money market funds decreased by $3.64 billion to $1.43 trillion. Among retail funds, government money market fund assets decreased by $5.27 billion to $1.16 trillion, prime money market fund assets decreased by $580 million to $196.08 billion, and tax-exempt fund assets increased by $2.22 billion to $80.45 billion." Retail assets account for just under a third of total assets, or 31.4%, and Government Retail assets make up 80.7% of all Retail MMFs. They add, "Assets of institutional money market funds decreased by $27.16 billion to $3.13 trillion. Among institutional funds, government money market fund assets decreased by $25.60 billion to $2.89 trillion, prime money market fund assets decreased by $1.91 billion to $226.75 billion, and tax-exempt fund assets increased by $354 million to $9.52 billion." Institutional assets accounted for 68.6% of all MMF assets, with Government Institutional assets making up 92.4% of all Institutional MMF totals. (Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're approximately $400 billion lower than Crane's asset series.)

The Federal Reserve Board posted its "Minutes of the Federal Open Market Committee, March 15-16, 2022" yesterday, which tells us, "Market participants almost universally expected a 25 basis point increase in the target range for the federal funds rate at the current meeting. Moreover, futures prices implied that the federal funds rate would increase around 170 basis points through year-end, about 70 basis points more than had been priced in at the time of the January meeting. Similarly, the median projection of the target range for the federal funds rate in the Open Market Desk's most recent surveys of primary dealers and market participants showed an increase of 150 basis points this year. The median projected path for the target range beyond 2022 rose another 100 basis points by the first half of 2024 to a level modestly above the median projected longer-run level before returning closer to the longer-run level in 2025." The Minutes also explain, "Market participants expected the interest on reserve balances rate and overnight reverse repurchase agreement (ON RRP) offering rate to be increased by 25 basis points at the current meeting, in line with their expected increase in the target range, and anticipated that the changes would fully pass through to market overnight interest rates. There was uncertainty around how ON RRP usage might evolve in the near term as money market rates increased. If banks lifted their deposit rates by less than the increase in returns available on alternative investments, depositors could shift funds into these alternatives, leading to downward pressure on rates and increased ON RRP take-up. If instead deposit rates moved up in line with net yields on alternative investments, ON RRP takeup could remain relatively steady. Over the longer term, however, ON RRP balances were expected to decline as the Federal Reserve's balance sheet runoff proceeded and gradually lifted money market rates relative to the ON RRP rate." Finally, the Fed says, "Short-term funding markets were mostly stable over the intermeeting period, although spreads in some segments widened. The effective federal funds rate and the Secured Overnight Financing Rate generally held steady at 8 basis points and 5 basis points, respectively. Overnight rates on commercial paper (CP) across most sectors also held steady, although rates and spreads on longer-tenor CP and negotiable certificates of deposit increased amid the escalation of the Ukraine invasion. Spreads between three-month forward rate agreements and overnight index swaps widened as borrowers increased precautionary issuance of longer-tenor debt while money market investors preferred shorter-duration investments. ON RRP take-up was little changed, averaging about $1.6 trillion."

Federated Hermes' MM CIO Deborah Cunningham titles her latest monthly commentary, "Balancing expectations." She asks, "Is WIRP out of whack, or are Treasuries tardy? It's a difficult but crucial question for investors. The fed funds futures market -- the WIRP (World Interest Rate Probabilities) function on the trusty Bloomberg terminal -- is showing expectations for a hike at every Federal Reserve meeting this year, including some of the 50 basis-point variety, on the way to 2.25% in December. But yields on U.S. Treasuries have not risen in step. Which curve should investors follow?" Cunningham explains, "The dislocation is partly due to the massive flight-to-quality trade stemming from the Russian invasion of Ukraine. It's also a function of the cutback in supply due to lower bill issuance by the Treasury Department and the restraints of quarter-end transactions. The imbalance has pushed yields on the front end below even the Fed's Reverse Repo Facility, set at 30 basis points. Yields of securities with maturities out to one year have sharply steepened, but not steep enough to match policy expectations, especially with inflation ascending its own cliff." She writes, "But the discrepancy also seems another case of the market trying to lead the Fed. That's not something policymakers like. The last time it happened was when anticipation had built for a half-percentage-point hike at the March policy meeting. Fed Chair Jerome Powell shot that down by saying he favored a quarter-point rise. He isn't scheduled to speak or make a public appearance soon, but New York Fed President John Williams and soon-to-be Fed Vice Chair Lael Brainard give speeches in early April. Those and the minutes of the March Federal Open Market Committee meeting, released April 6, should provide insight. Indication that members are closer to reducing the balance sheet would be welcome, as more supply is needed to right-size the yield curve." (See Lael Brainard's speech yesterday, where she says, "It is of paramount importance to get inflation down. Accordingly, the Committee will continue tightening monetary policy methodically through a series of interest rate increases and by starting to reduce the balance sheet at a rapid pace as soon as our May meeting.") The Federated piece tells us, "In contrast, the tax-free money market is normalizing. It has been fighting the Fed, with issuers able to find funding at lower-than-expected rates. But the SIFMA Municipal Swap Index surged after the March meeting to hit 0.51%, a strong level even before factoring in potential tax benefits. Issuance of short-term commercial paper, asset-backed commercial paper and other prime instruments also has grown, offering attractive rates." She adds, "When it comes to finance, many Americans have April 18 and the IRS on their minds. For cash managers, it's April 11. That's the deadline for submitting comments to the SEC about its proposal of money market fund reform. Letters from industry participants, including ours, are arriving. The next step will be to wait, and wait, as the agency weighs the responses and makes its ruling. In light of the uncertainty of the yield curve, we shortened the weighted average maturities (WAM) of our prime and muni money market funds to a target range of 25-35 days, matching that of our government products."

Yesterday's Wall Street Journal featured the piece, "Short Sellers Bet Tether, Crypto's Central Bank, Is Vulnerable to a Run." They tell us, "A few investment firms, including Fir Tree Partners and Viceroy Research LLC, have placed substantial bets in recent months that the price of tether will fall, according to people familiar with the matter. Tether is the most popular currency for trading bitcoin and is supposed to have a fixed value pegged to the U.S. dollar. Some hedge funds arranged short sales of tether with Genesis Global Trading Inc., one of the larger crypto brokerages for professional investors, said Matt Ballensweig, Genesis's co-head of trading and lending.... With about $82 billion tether in circulation, tether is the largest so-called stablecoin, a digital asset linked to the dollar and backed by reserves of cash or other financial instruments. The short sellers follow a pack of regulators, lawmakers, prosecutors, plaintiffs attorneys and amateur sleuths who have spent months, or years, in some cases, attempting to unearth details about a cryptocurrency whose usage has far outpaced its transparency." The Journal says, "Short sellers are betting that the $82 billion portfolio that underpins tether's value, now the size of a big money-market fund, is at risk of losses that the parent company hasn't disclosed, according to some of the people familiar with the short positions. The Tether spokesperson said that the company takes transparency seriously. 'Tether manages a portfolio of conservative, diversified, liquid assets,' Tether said. It said that its reserve-fund assets exceeded their liabilities. Regulators, lawmakers and other critics have accused tether of being too opaque. Tether Holdings Ltd., its parent company, has promised a full audit of its reserves for years but never produced one. It took a yearslong investigation by New York's attorney general, and an eventual $18.5 million settlement of accusations that Tether misled clients, for Tether to reveal what it holds in only broad terms each quarter through its accounting firm. To prevent more disclosure, even of mundane matters like the name of its chief investment officer, Tether has gone to court to block public-records requests about its business." They add, "Some short sellers believe that a chunk of Tether's commercial-paper holdings, which totaled $24 billion at the end of 2021 and made up a little less than one-third of Tether's reserves, came from shaky Chinese property developers. A faltering Chinese real-estate market and concerns about developers' excessive debt levels have led to selloffs and ratings downgrades in their bonds. Tether said that it has consciously reduced its commercial-paper holdings since its settlement with New York's attorney general, including a 21% drop in the last three months of 2021. In response to questions about credit exposure to Chinese property developers, Tether referred to a January report from crypto exchange Coinbase that looked at what Tether has disclosed about its commercial paper. That report said that even if Tether 'had owned any short-term liabilities associated with weak sectors, such as Chinese real estate, it would no longer be in its portfolio, as rating agencies have downgraded much of that debt to sub-investment grade over the past year.' One short seller also sees trouble in Tether's holdings of money-market funds and Treasury bills. That firm learned that an affiliate of Deltec Bank & Trust Ltd., a Bahamian bank where Tether does business, sought to invest billions of dollars in outside hedge funds that invest in highly liquid securities, people familiar with the matter said. That money, much of which the short seller believed came from Tether, could be locked up in those funds for months or years, meaning Tether would have a hard time getting it back in a timely manner to meet a wave of redemption requests, the people said. Tether declined to comment on Deltec's dealings with hedge funds."

The New York Times writes, "How to Endure the Big Decline in Bonds." They explain, "It's been a horrible start of the year for the bond market, the worst in decades. If you hold bonds in a mutual fund or exchange-traded fund, it's highly likely that your quarterly statement next month will show that you have lost money. Last week, I wrote about the market rout and about the signals that the bond market may be sending about the state of the economy. Many readers have asked for further explanation of what has happened and what, if anything, they should do about it. Here are some answers." The piece asks, "How bad are the bond market declines?" They reply, "Really, truly, historically bad. The most important measure of the overall investment-grade U.S. bond market is probably the Bloomberg Aggregate Bond index. It was down 6.66 percent this year through Thursday. How terrible is that? Well, Sebastien Page, the CIO for T. Rowe Price ... said the overall bond market's three-month performance is the worst since 1980. For Treasurys, it's the worst three months since at least 1926, when comparable data began to be available." The Times also asks, "Will interest rates keep rising?" They respond, "Short-term interest rates almost certainly will, because the Federal Reserve says so. It controls the federal funds rate, the rate that banks charge one another for overnight loans, which it increased by 0.25% on March 16, from nearly zero. The Fed has held rates extraordinarily low since the start of the Covid-19 pandemic in 2020 in an effort to jump-start the economy. Now, the Fed says it intends to keep increasing rates to combat inflation, which has gotten out of hand. Prices increased at an annual 7.9% pace in February, as measured by the Consumer Price Index. And the March numbers are likely to be even worse when they come out on April 12."

The Guardian writes "Fund manager failed to declare benefits from Greensill, says UK regulator." The article says, "A star fund manager who invested £1.5bn of his clients' money in the scandal-hit Greensill Capital failed to report a dinner at Buckingham Palace, a £15,000 private jet trip to Sardinia, or secret fees and share options offered to his company by the since-collapsed lender, an investigation by the UK City regulator has revealed. The details emerged in final notices given to Swiss asset manager GAM and its former top fund manager, Tim Haywood, who will pay fines of £9.1m and £230,000 respectively for their failures." It explains, "GAM, which has significant operations in London, sacked Haywood in July 2018 with little explanation, causing shocked investors to withdraw their money from the absolute return bond funds he managed. His fund had invested in some of the debt issued by Greensill, although it returned all money to investors before Greensill collapsed in 2021.... Greensill, which employed David Cameron as an adviser, collapsed early last year after investors lost confidence, in part because of its deep exposures to Sanjeev Gupta's GFG metals empire, including Liberty Steel and major aluminium and mining assets." For more, see our March 9, 2021, "Link of the Day," "WSJ: Greensill's Woes Continue."