Daily Links Archives: July, 2024
IN: Ameriprise Sued Over Sweeps
Investment News published the piece, "Ameriprise sued over sweep account rates," which tells us, "Ameriprise on Monday became the latest brokerage to be sued over its cash sweep account program, facing allegations that the company failed as a fiduciary by keeping big spreads for itself rather than giving clients higher rates. In the complaint filed in US District Court for the District of Minnesota, two plaintiffs wrote that, 'this case concerns a simple ruse: instead of fulfilling its fiduciary duties, contractual obligations, and a regulatory mandate to act only in the best interests of their clients, defendants implement a scheme whereby they use their clients' cash balances to generate massive profits for themselves while shortchanging their clients.' The case centers on the default holdings for brokerage clients who temporarily have assets in cash. Although customers have the option of putting their money into a Dreyfus-sponsored government money-market fund, the default is Ameriprise's money market account, which first directs uninvested cash into the company's affiliated bank, according to the complaint." The article continues, "While the rates offered for cash sweep accounts range from 0.3 percent to 2.18 percent for Ameriprise clients, competitors like Vanguard and Interactive Brokers have options of 4.6 percent and 4.83 percent, respectively, according to the complaint. Brokers, including Ameriprise, have a strong incentive to retain portions of the interest on uninvested cash, which boosts net interest income, the plaintiffs stated. 'Our cash sweep is intended for money in motion, not as an investment option for significant cash balances over extended periods,' an Ameriprise spokesperson said in an email. 'Our programs comply with legal and regulatory requirements.'" Investment News adds, "The lawsuit follows others that have been brought against firms including Merrill Lynch, Morgan Stanley, and LPL over sweep account rates. Adding to that is pressure from regulators. Last year, for example, Charles Schwab agreed to pay $187 million to settle an SEC case over an alleged lack of disclosure about how the firm's robo advisor used clients' cash to generate revenue. Also in 2023, Wells Fargo disclosed that it was facing an SEC investigation over cash sweep accounts, and that firm earlier this month announced that its Wealth and Investment Management group raised its pricing on sweep deposits and advisory brokerage accounts. Even so, sweep account rate changes have not been the norm this year, said Pete Crane, president of Crane Data. 'There have been repeated lawsuits in the sweep space, and none of them [have been successful],' Crane said, noting that the cash holdings are designed to be temporary. 'It's not like [clients] are being held hostage. They send you a checkbook.... Clearly there is some money in these channels that tend to be more sensitive to rates,' he said. A big issue for brokerages is maintaining profitability in connection with those assets, as net interest income can be critical to their bottom lines, he said. But the companies are well-aware of the issue, and the movement of money from bank deposits to money market funds across the industry is telling, he said. While some are hopeful that the assets will flow from money markets to the stock market, that is unlikely, as the $6 trillion in money funds competes with cash, not equities, he said. 'What makes people think it’s going into the stock market is beyond me.'"
CoinDesk on Coinbase Tokenized MMF
The website CoinDesk writes that, "Coinbase Asset Management Plans Tokenized Money-Market Fund," a news brief that tells us, "The asset management arm of U.S.-listed cryptocurrency exchange Coinbase (COIN) is creating a tokenized money-market fund, jumping into one of the hottest crypto-powered corners of finance, according to four people familiar with the plan. Tokenization, or representing ownership of real-world assets (RWAs) through blockchain-based products, has become one of the big trends in crypto of late. BlackRock, the world's biggest asset manager, introduced a fund called BUIDL that holds U.S. Treasuries. That fund quickly hit $500 million of assets following its introduction in March." The piece explains, "Two of the people familiar with the matter said Coinbase Asset Management has been working with Bermuda-based Apex Group to help facilitate its tokenized fund. Apex services over $3 trillion of assets across custody, administration, depositary and managed funds. In March 2023, Coinbase acquired One River Digital Asset Management, which led to the creation of Coinbase Asset Management."
PFII: State LGIPs Total $700 Billion
The "Public Funds Investment Institute (PFII) posted a press release titled, "New Research Report Details the Role of State-Sponsored Local Government Investment Pools as the Foundation of a $900 Billion Industry." It tells us, "A new research report by the Public Funds Investment Institute details the role of state treasurer-sponsored local government investment pools as a foundation of the $900 billion industry that provides money market-like investments to state and local governments. State treasurers in 32 states offer these funds and their assets total nearly $700 billion. Local-sponsored LGIPs with an estimated $200 billion of assets supplement these state programs." See the full report, "`State-Sponsored Local Government Investment Pools" here.) The release explains, "Among the report's fundings: (1) Thirty-two states offer these pools with the vast majority modeled after money market mutual funds offering daily liquidity and a stable net asset value; (2) States offer government-oriented portfolios that closely resemble institutional government money market funds and prime portfolios that resemble institutional prime funds. Because LGIPs are not subject to the Securities and Exchange Commission's money fund rules the prime LGIPs are able to offer a stable net asset value and are not required to charge liquidity fees; (3) Most assets in the state-sponsored LGIPs are managed internally by state treasurer staff, but about 26% of assets are managed by outside investment managers; (4) Fees and expenses of these funds are, on average, much lower than fees and expenses of institutional money market funds. They average about a quarter of the fees charged by institutional government money market funds; (5) Transparency and disclosure for the state-sponsored LGIPs varies tremendously, with some closely tracking the requirements for SEC-registered money market funds while others provide less disclosure."
ICI: Money Funds Lower on Week
The Investment Company Institute published its latest weekly "Money Market Fund Assets" report Thursday, which shows money market mutual fund lower to $6.142 trillion in the latest week after hitting a record early in July. Assets have risen in 11 of the last 14 weeks, increasing by $173.8 billion (or 2.9%) since April 24. MMF assets are up by $256 billion, or 5.4%, year-to-date in 2024 (through 7/24/24), with Institutional MMFs up $65 billion, or 2.1% and Retail MMFs up $191 billion, or 11.4%. Over the past 52 weeks, money funds have risen by $655 billion, or 11.9%, with Retail MMFs up by $448 billion (22.0%) and Inst MMFs rising by $208 billion (6.0%). The weekly release says, "Total money market fund assets decreased by $11.81 billion to $6.14 trillion for the week ended Wednesday, July 24, the Investment Company Institute reported.... Among taxable money market funds, government funds decreased by $7.73 billion and prime funds decreased by $2.86 billion. Tax-exempt money market funds decreased by $1.22 billion." ICI's stats show Institutional MMFs falling $8.1 billion and Retail MMFs falling $3.7 billion in the latest week. Total Government MMF assets, including Treasury funds, were $4.956 trillion (80.7% of all money funds), while Total Prime MMFs were $1.059 trillion (17.2%). Tax Exempt MMFs totaled $127.4 billion (2.1%). ICI explains, "Assets of retail money market funds decreased by $3.72 billion to $2.48 trillion. Among retail funds, government money market fund assets decreased by $4.42 billion to $1.58 trillion, prime money market fund assets increased by $2.03 billion to $789.40 billion, and tax-exempt fund assets decreased by $1.32 billion to $115.65 billion." Retail assets account for over a third of total assets, or 40.4%, and Government Retail assets make up 63.5% of all Retail MMFs. They add, "Assets of institutional money market funds decreased by $8.09 billion to $3.66 trillion. Among institutional funds, government money market fund assets decreased by $3.31 billion to $3.38 trillion, prime money market fund assets decreased by $4.88 billion to $269.68 billion, and tax-exempt fund assets increased by $100 million to $11.76 billion." Institutional assets accounted for 59.6% of all MMF assets, with Government Institutional assets making up 92.3% of all institutional MMF totals. According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets have risen by $23.6 billion in July (through 7/24) to $6.512 trillion. They hit a record $6.559 trillion on 7/11 but have since eased off a bit. Assets rose by $15.7 billion in June and $91.4 billion in May, but they fell $15.8 billion in April and $68.8 billion in March. They rose $72.1 billion in February, $93.9 billion in January, $32.7 billion in December and $226.4 billion in November. MMF totals fell by $31.9 billion in October. They rose $93.9 billion in September and $98.3 billion in August. Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're over $400 billion lower than Crane's asset series.
Barron's Writes on Pressure on Sweeps
Barron's published "Morgan Stanley Raises Rates on Cash. It's a Sign of Pressure Across Industry." The article explains, "For years, investors' uninvested cash has been a lucrative revenue source for the wealth management industry. Companies have been paying customers paltry interest on that cash even as rates overall soared over the past two years, allowing firms to earn much higher yields than they paid out to their clients in many cases. Now, that's beginning to change. Morgan Stanley will raise rates on some customers' uninvested cash in advisory accounts, a spokeswoman confirmed Wednesday. Effective Aug. 1, clients with $250,000 or more in deposits in the program will receive a yield of 2%. The company currently pays 0.01% on balances between $250,000 and $500,000. Morgan Stanley indicated last week that these changes were coming." The piece explains, "`It isn't the only wealth manager making adjustments. Wells Fargo said Friday July 12 that it had bumped up the interest it pays on clients' uninvested cash. That some of the nation's largest wealth managers are now raising rates on cash has shareholders concerned about the ripple effects on net interest income, an important profit center for wealth managers. Last week saw a selloff in wealth management stocks -- 11% on average -- as Wells Fargo and Morgan Stanley announced changes that raised alarms among analysts about potential hits to future profits as well as lurking competitive, regulatory, and legal pressures related to how firms have treated uninvested client cash." Barron's says, "The fact that some firms have been sweeping customers' uninvested cash into low-yielding bank accounts and then making a profit by lending out that cash at much higher interest rates is turning into a thorny legal issue. Across the industry, wealth managers generally pay clients about 1% or less on sweep deposits.... Rates at 5% are readily available in money-market funds." They add, "Newly filed lawsuits are taking aim at brokerage and wealth management companies' cash practices, which they say fall short of the fiduciary standard. Such suits are less likely to come from self-directed investors who have the opportunity to seek out higher yields for their uninvested cash if they want. Last week, a customer of LPL Financial sued the company for alleged breach of fiduciary duty and 'unjust enrichment' related to LPL's cash sweep programs."
Weekly Money Fund Portfolio Holdings
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 July 19) includes Holdings information from 79 money funds (up 11 from a week ago), or $3.412 trillion (up from $3.153 trillion) of the $6.521 trillion in total money fund assets (or 52.3%) tracked by Crane Data. (Our Weekly MFPH are e-mail only and aren't available on the website. See our latest Monthly Money Fund Portfolio Holdings here and our July 11 News, "July Money Fund Portfolio Holdings: Repo Jumps; TDs, Treasuries Down.") Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Treasuries totaling $1.487 trillion (up from $1.415 trillion a week ago), or 43.6%; Repurchase Agreements (Repo) totaling $1.280 trillion (up from $1.207 trillion a week ago), or 37.5%, and Government Agency securities totaling $272.8 billion (up from $254.5 billion), or 8.0%. Commercial Paper (CP) totaled $113.7 billion (up from a week ago at $98.3 billion), or 3.3%. Certificates of Deposit (CDs) totaled $87.7 billion (up from $69.0 billion a week ago), or 2.6%. The Other category accounted for $103.5 billion or 3.0%, while VRDNs accounted for $68.2 billion, or 2.0%. The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.487 trillion (43.6% of total holdings), Fixed Income Clearing Corp with $385.6B (11.3%), the Federal Home Loan Bank with $204.2 billion (6.0%), Citi with $87.3B (2.6%), the Federal Reserve Bank of New York with $86.7B (2.5%), BNP Paribas with $79.4B (2.3%), JP Morgan with $78.1B (2.3%), Federal Farm Credit Bank with $64.9B (1.9%), RBC with $61.5B (1.8%) and Goldman Sachs with $52.9B (1.6%). The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($252.9B), Goldman Sachs FS Govt ($235.2B), JPMorgan 100% US Treas MMkt ($207.7B), Fidelity Inv MM: Govt Port ($201.1B), Federated Hermes Govt ObI ($160.9B), BlackRock Lq FedFund ($146.8B), Fidelity Inv MM: MM Port ($131.3B), State Street Inst US Govt ($130.1B), BlackRock Lq Treas Tr ($119.8B) and Dreyfus Govt Cash Mgmt ($115.9B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary.)
Crane 100 Inches Back Up to 5.13%
Money fund yields rose 1 bp to 5.13% on average (as measured by our Crane 100 Money Fund Index, an average of 7-day yields for the 100 largest taxable money funds) in the week ended July 19. Yields were 5.13% on 6/28, 5.14% on 5/31, 5.13% on 4/30, 5.14% on 3/31 and 2/29/24, 5.17% on 1/31/24, 5.20% on 12/31/23, 4.94% on 6/30/23, 4.61% on 3/31/23 and 4.05% on 12/31/22. The vast majority of money market fund assets now yield 5.0% or higher. Assets of money market funds fell by $11.3 billion last week to $6.521 trillion according to Crane Data's Money Fund Intelligence Daily. Weighted average maturities were unchanged last week at 34 days. The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 709), shows a 7-day yield of 5.03%, up 1 bp in the week through Friday. Prime Inst MFs were up 1 bp at 5.18% in the latest week. Government Inst MFs were unchanged at 5.11%. Treasury Inst MFs were up 1 bp to 5.07%. Treasury Retail MFs currently yield 4.85%, Government Retail MFs yield 4.83%, and Prime Retail MFs yield 5.02%, Tax-exempt MF 7-day yields were down 2 bps to 2.42%. According to Monday's Money Fund Intelligence Daily, with data as of Friday (7/19), 120 money funds (out of 829 total) yield under 3.0% with $131.9 billion in assets, or 2.0%; 4 funds yield between 3.00% and 3.99% ($810 million, or 0.0%), 255 funds yield between 4.0% and 4.99% ($1.127 trillion, or 17.3%) and 450 funds now yield 5.0% or more ($5.261 trillion, or 80.7%). Our Brokerage Sweep Intelligence Index, an average of FDIC-insured cash options from major brokerages, was unchanged at 0.62%. The latest Brokerage Sweep Intelligence, with data as of July 19, shows that there were no changes over the past week. Eight weeks ago, we removed the rates for TD Ameritrade from the listings, which completed its merger with Charles Schwab and which pushed the averages higher (2 bps). Three of the 10 major brokerages tracked by our BSI still offer rates of 0.01% for balances of $100K (and lower tiers). These include: E*Trade, Merrill Lynch and Morgan Stanley.
Schwab: How Much Cash Is Too Much?
Charles Schwab recently published a brief titled, "How Much Cash Is Too Much Cash?" Subtitled, "Today's relatively high yields from savings accounts and other cash investments are tempting, but don't overdo it," it tells us, "Despite inflation's spike in 2022, the attendant rise in interest rates has been a welcome development for savers, who piled more than $1 trillion into money market funds between the third quarter of 2022 and the third quarter of 2023. Unfortunately, the downside of higher rates is that some investors may now have cash allocations out of step with their goals. 'It makes sense that investors have been taking advantage of these relatively high rates,' says Rob Williams, managing director of financial planning and wealth management at the Schwab Center for Financial Research. 'But with the Federal Reserve expected to lower rates in 2024, the current yields on cash may not last much longer. And if your current cash allocation is larger than your target allocation in a long-term portfolio, even today's relatively high yield isn't likely to exceed the returns you could get from stocks and bonds over time.'" The piece continues, "For example, in 2023 -- which by most accounts was expected to be a rough year for the stock market -- the S&P 500 Index's total return was a stunning 26.3%. 'Cash still belongs in your portfolio, but it is first and foremost a way to help buffer against losses or fund a near-term goal -- not a way to achieve meaningful returns,' Rob says. That said, deciding whether you have 'too much' cash depends on your personal situation. 'If you have a shorter-term goal on the horizon -- say, college tuition or the down payment on a second home -- having more investment cash on hand, as well as historically less volatile investments such as high-quality short-term bonds, may make sense,' Rob says. 'Plus, some people simply aren't comfortable with increased market volatility, and these higher rates are a way of getting a bit more return without much risk, at least for the time being.'" Schwab's piece adds, "The important thing is to let your needs, risk tolerance, and time horizon -- rather than the novelty of higher rates—dictate your allocation."
ICI: MMFs Inch Up Towards Record
The Investment Company Institute published its latest weekly "Money Market Fund Assets" report Thursday, which shows money market mutual fund rising higher to $6.154 trillion in the latest week after a dip the prior week and a huge jump two weeks prior. Assets have risen in 11 of the last 13 weeks, increasing by $186.0 billion (or 3.1%) since April 24. MMF assets are up by $268 billion, or 5.6%, year-to-date in 2024 (through 7/17/24), with Institutional MMFs up $73 billion, or 2.4% and Retail MMFs up $195 billion, or 11.6%. Over the past 52 weeks, money funds have risen by $696 billion, or 12.7%, with Retail MMFs up by $455 billion (22.4%) and Inst MMFs rising by $240 billion (7.0%). The weekly release says, "Total money market fund assets increased by $9.61 billion to $6.15 trillion for the week ended Wednesday, July 17, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $6.83 billion and prime funds increased by $4.66 billion. Tax-exempt money market funds decreased by $1.88 billion." ICI's stats show Institutional MMFs rising $2.3 billion and Retail MMFs rising $7.4 billion in the latest week. Total Government MMF assets, including Treasury funds, were $4.963 trillion (80.7% of all money funds), while Total Prime MMFs were $1.062 trillion (17.3%). Tax Exempt MMFs totaled $128.6 billion (2.1%). ICI explains, "Assets of retail money market funds increased by $7.36 billion to $2.48 trillion. Among retail funds, government money market fund assets increased by $5.54 billion to $1.58 trillion, prime money market fund assets increased by $3.59 billion to $787.38 billion, and tax-exempt fund assets decreased by $1.77 billion to $116.97 billion." Retail assets account for over a third of total assets, or 40.4%, and Government Retail assets make up 63.6% of all Retail MMFs. They add, "Assets of institutional money market funds increased by $2.25 billion to $3.67 trillion. Among institutional funds, government money market fund assets increased by $1.29 billion to $3.38 trillion, prime money market fund assets increased by $1.07 billion to $274.56 billion, and tax-exempt fund assets decreased by $108 million to $11.66 billion." Institutional assets accounted for 59.6% of all MMF assets, with Government Institutional assets making up 92.2% of all institutional MMF totals. According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets have risen by $47.7 billion in July (through 7/17) to $6.537 trillion. They hit a record $6.559 trillion on 7/11 but have since eased off a bit. Assets rose by $15.7 billion in June and $91.4 billion in May, but they fell $15.8 billion in April and $68.8 billion in March. They rose $72.1 billion in February, $93.9 billion in January, $32.7 billion in December and $226.4 billion in November. MMF totals fell by $31.9 billion in October. They rose $93.9 billion in September and $98.3 billion in August. Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're over $400 billion lower than Crane's asset series.
ICI's Money Fund Holdings Summary
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. This release says, "The Investment Company Institute (ICI) reports that, as of the final Friday in July, prime money market funds held 45.3 percent of their portfolios in daily liquid assets and 62.9 percent in weekly liquid assets, while government money market funds held 77.5 percent of their portfolios in daily liquid assets and 88.4 percent in weekly liquid assets." Prime DLA was up from 44.6% in June, and Prime WLA was up from 61.6%. Govt MMFs' DLA dipped to 77.5% and Govt WLA increased from 87.9% the previous month. ICI explains, "At the end of July, prime funds had a weighted average maturity (WAM) of 28 days and a weighted average life (WAL) of 46 days. Average WAMs and WALs are asset-weighted. Government money market funds had a WAM of 35 days and a WAL of 83 days." Prime WAMs were 2 days shorter and WALs were 2 days shorter from the previous month. Govt WAMs and WALs were 1 day shorter from June. Regarding Holdings by Region of Issuer, the release tells us, "Prime money market funds' holdings attributable to the Americas declined from $559.01 billion in June to $510.21 billion in July. Government money market funds' holdings attributable to the Americas declined from $4,476.77 billion in June to $4,476.07 billion in July." The Prime Money Market Funds by Region of Issuer table shows Americas-related holdings at $510.2 billion, or 48.6%; Asia and Pacific at $194.7 billion, or 18.5%; Europe at $324.6 billion, or 30.9%; and, Other (including Supranational) at $20.4 billion, or 1.9%. The Government Money Market Funds by Region of Issuer table shows Americas at $4.476 trillion, or 88.8%; Asia and Pacific at $145.3 billion, or 2.9%; Europe at $405.5 billion, 8.0%, and Other (Including Supranational) at $12.8 billion, or 0.3%.
Weekly Money Fund Portfolio Holdings
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 July 12) includes Holdings information from 68 money funds (up 7 from a week ago), or $3.153 trillion (up from $2.974 trillion) of the $6.346 trillion in total money fund assets (or 49.7%) tracked by Crane Data. (Our Weekly MFPH are e-mail only and aren't available on the website. See our latest Monthly Money Fund Portfolio Holdings here and our July 11 News, "July Money Fund Portfolio Holdings: Repo Jumps; TDs, Treasuries Down.") Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Treasuries totaling $1.415 trillion (up from $1.347 trillion a week ago), or 44.9%; Repurchase Agreements (Repo) totaling $1.207 trillion (up from $1.140 trillion a week ago), or 38.3%, and Government Agency securities totaling $254.5 billion (up from $238.8 billion), or 8.1%. Commercial Paper (CP) totaled $98.3 billion (up from a week ago at $89.6 billion), or 3.1%. Certificates of Deposit (CDs) totaled $69.0 billion (up from $67.0 billion a week ago), or 2.2%. The Other category accounted for $76.3 billion or 2.4%, while VRDNs accounted for $32.5 billion, or 1.0%. The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.415 trillion (44.9% of total holdings), Fixed Income Clearing Corp with $304.7B (9.7%), the Federal Home Loan Bank with $189.7 billion (6.0%), the Federal Reserve Bank of New York with $98.4B (3.1%), JP Morgan with $83.0B (2.6%), Citi with $83.0B (2.6%), BNP Paribas with $79.3B (2.5%), RBC with $63.2B (2.0%), Federal Farm Credit Bank with $61.5B (2.0%) and Goldman Sachs with $51.2B (1.6%). The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($254.8B), Goldman Sachs FS Govt ($233.0B), JPMorgan 100% US Treas MMkt ($204.5B), Fidelity Inv MM: Govt Port ($198.2B), BlackRock Lq FedFund ($148.3B), Morgan Stanley Inst Liq Govt ($144.3B), Fidelity Inv MM: MM Port ($130.4B), BlackRock Lq Treas Tr ($125.0B), State Street Inst US Govt ($121.5B) and Dreyfus Govt Cash Mgmt ($121.4B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary.)
Crane 100 Index Flat at 5.12%
Money fund yields remained at 5.12% on average (as measured by our Crane 100 Money Fund Index, an average of 7-day yields for the 100 largest taxable money funds) in the week ended July 12. Yields were 5.13% on 6/28, 5.14% on 5/31, 5.13% on 4/30, 5.14% on 3/31 and 2/29/24, 5.17% on 1/31/24, 5.20% on 12/31/23, 4.94% on 6/30/23, 4.61% on 3/31/23 and 4.05% on 12/31/22. The vast majority of money market fund assets now yield 5.0% or higher. Assets of money market funds fell by $1.3 billion last week to $6.532 trillion according to Crane Data's Money Fund Intelligence Daily. Weighted average maturities were unchanged last week at 34 days. The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 710), shows a 7-day yield of 5.02%, unchanged in the week through Friday. Prime Inst MFs were unchanged at 5.17% in the latest week. Government Inst MFs were unchanged at 5.11%. Treasury Inst MFs were up 1 bp to 5.06%. Treasury Retail MFs currently yield 4.84%, Government Retail MFs yield 4.82%, and Prime Retail MFs yield 5.02%, Tax-exempt MF 7-day yields were down 56 bps to 2.44%. According to Monday's Money Fund Intelligence Daily, with data as of Friday (7/12), 120 money funds (out of 830 total) yield under 3.0% with $133.6 billion in assets, or 2.0%; 4 funds yield between 3.00% and 3.99% ($810 million, or 0.0%), 258 funds yield between 4.0% and 4.99% ($1.347 trillion, or 20.6%) and 448 funds now yield 5.0% or more ($5.050 trillion, or 77.3%). Our Brokerage Sweep Intelligence Index, an average of FDIC-insured cash options from major brokerages, was unchanged at 0.62%. The latest Brokerage Sweep Intelligence, with data as of July 12, shows that there were no changes over the past week. Seven weeks ago, we removed the rates for TD Ameritrade from the listings, which completed its merger with Charles Schwab and which pushed the averages higher (2 bps). Three of the 10 major brokerages tracked by our BSI still offer rates of 0.01% for balances of $100K (and lower tiers). These include: E*Trade, Merrill Lynch and Morgan Stanley.
European Money Fund Symposium
We hope you'll join us for our 10th Annual European Money Fund Symposium, which will take place Sept. 19-20 at the London Tower Bridge Hilton in London, England. The latest agenda is available here and we continue to take registrations. (Make your hotel reservations soon if you do plan on attending!) Below are more details on our upcoming shows, but feel free to contact us for more information. Our 2023 European MF Symposium event in Edinburgh attracted over 140 money fund professionals, sponsors and speakers, and we again expect our show in London to once again be the largest gathering of money market professionals outside the U.S. "European Money Fund Symposium offers European, global and 'offshore' money market portfolio managers, investors, issuers, dealers and service providers a concentrated and affordable educational experience, and an excellent and informal networking venue," says Crane Data President Peter Crane. "Our mission is to deliver the best possible conference content at an affordable price to money market fund professionals," he adds. Registration for European Money Fund Symposium is $1,000 USD. EMFS will be held at the Hilton London Tower Bridge. Hotel rooms must be booked before August 14 to receive our discounted rate of E329. Visit www.craneeurosymposium.com to register, and contact us to request the PDF brochure. (Let us know too if you'd like information on speaking or sponsorships.) Also, start making plans for our next Crane's Money Fund University, which will be held in Providence, RI, Dec. 19-20, 2024. Money Fund University covers the history of money funds, interest rates, regulations (Rule 2a-7), ratings, rankings, money market instruments such as commercial paper, CDs and Treasuries, and portfolio construction and credit analysis. We also include segments on offshore money funds and ultra-short bond funds. Money Fund University's comprehensive program is good for both beginners and experienced professionals looking for a refresher. Finally, mark your calendars for our next Bond Fund Symposium, which will be held March 27-28, 2025 in Newport Beach, Calif., and our next Money Fund Symposium, which will be held in June 23-25, 2025 in Boston, Mass. Again, let us know if you'd like more details on any of our events, and we hope to see you in London in September, in Providence in December, in Newport Beach in March 2024, or in Boston in June 2025. Thanks to all of our speakers and sponsors for your support!
Money Fund Assets Dip After Record
The Investment Company Institute published its latest weekly "Money Market Fund Assets" report Thursday, which shows money market mutual fund dipping lower to $6.144 trillion in the latest week after huge jump the prior week. Assets have risen in 10 of the last 12 weeks, increasing by $176.0 billion (or 2.9%) since April 24. MMF assets are up by $258 billion, or 5.4%, year-to-date in 2024 (through 7/10/24), with Institutional MMFs up $71 billion, or 7.3% and Retail MMFs up $187 billion, or 11.2%. Over the past 52 weeks, money funds have risen by $690 billion, or 12.7%, with Retail MMFs up by $455 billion (22.5%) and Inst MMFs rising by $235 billion (6.8%). The weekly release says, "Total money market fund assets decreased by $10.30 billion to $6.14 trillion for the eight-day period ended Wednesday, July 10, the Investment Company Institute reported.... Among taxable money market funds, government funds decreased by $19.02 billion and prime funds increased by $9.53 billion. Tax-exempt money market funds decreased by $815 million." ICI's stats show Institutional MMFs falling $14.0 billion and Retail MMFs rising $3.7 billion in the latest week. Total Government MMF assets, including Treasury funds, were $4.957 trillion (80.7% of all money funds), while Total Prime MMFs were $1.057 trillion (17.2%). Tax Exempt MMFs totaled $130.5 billion (2.1%). ICI explains, "Assets of retail money market funds increased by $3.74 billion to $2.48 trillion. Among retail funds, government money market fund assets decreased by $1.16 billion to $1.57 trillion, prime money market fund assets increased by $5.39 billion to $783.79 billion, and tax-exempt fund assets decreased by $493 million to $118.74 billion." Retail assets account for over a third of total assets, or 40.3%, and Government Retail assets make up 63.6% of all Retail MMFs. They add, "Assets of institutional money market funds decreased by $14.04 billion to $3.67 trillion. Among institutional funds, government money market fund assets decreased by $17.86 billion to $3.38 trillion, prime money market fund assets increased by $4.14 billion to $273.48 billion, and tax-exempt fund assets decreased by $322 million to $11.77 billion." Institutional assets accounted for 59.7% of all MMF assets, with Government Institutional assets making up 92.2% of all institutional MMF totals. According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets have risen by $44.3 billion in July (through 7/10) to $6.533 trillion. They hit a record $6.551 trillion on 7/2 but have since eased off a bit. Assets rose by $15.7 billion in June and $91.4 billion in May, but they fell $15.8 billion in April and $68.8 billion in March. They rose $72.1 billion in February, $93.9 billion in January, $32.7 billion in December and $226.4 billion in November. MMF totals fell by $31.9 billion in October. They rose $93.9 billion in September, $98.3 billion in August and $34.7 billion in July. Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're over $400 billion lower than Crane's asset series.
PFII on LGIP Returns in First Half
The Public Funds Investment Institute posted a piece entitled, "Cash and Short-Term Portfolios Had Strong Returns in the First Half of the Year." It tells us, "LGIP yields have been locked around the Federal Funds rate. They are within a few basis points of their levels at the start of the year and likely will not move until the Fed changes its federal funds target. The challenge that LGIP managers face is that the money market yield curve has provided little advantage to extending maturities.... That is likely the reason managers have kept weighted average maturities in the low to mid 30-day range even if they believe the Fed will reduce rates later this year." The brief continues, "The spread between the PFII Prime LGIP Index and the government index has narrowed from 22 basis points in January to 16 basis points last week. Investing in commercial paper and negotiable CDs offers a smaller advantage than it did for much of 2023. Investors have once again discounted concerns about creditworthiness and liquidity and the risk premium for these instruments has shrunk." The site adds, "S&P reports that the stable value LGIPs it rates added about $35 billion in assets this year. As we noted in a recent Beyond the News piece, public unit investment assets are growing very slowly and managers seem to be favoring liquid investments like LGIPs with the objective of building liquidity in the face of financial uncertainty.... Separate portfolios have lagged cash, but returns have been solid. The PFII 1–3-year model portfolio returned 1.47% for the first six months of the year (that is an annual rate of 2.97%) and 4.93% for the prior 12 months. This lags returns on cash/LGIPs of 5.25% to 5.45%, but portfolios with maturities of two to four years -- the PFII model has a duration of 1.64 -- will maintain their income for a longer period if/when the Fed cuts rates."
SustainableInvest.com on ESG MMFs
The website SustainableInvest.com writes that "Focused sustainable MMKT funds are disappearing while sustainable MMKT funds expand" in its latest "Chart of the Week." They tell us, "Focused sustainable money market fund assets are disappearing while non-focused sustainable money market funds are expanding along with conventional money fund assets.... Investors have been powering up the assets of money market funds to record levels since the Federal Reserve Bank began raising interest rates, reaching $6.15 trillion as of July 2nd around quarter-end and the holiday weekend, according to the Investment Company Institute. The Fed has raised the federal funds rate eleven times from near zero since March 2022 to a range between 5.25% and 5.5% on July 24, 2023, in an effort to cool the economy and bring down the rate of inflation. Short-term rates at these levels are at their highest in two decades and money market fund investors are currently realizing 12-month yields that have reached as high as 5.5% at the end of June. Almost 50% of funds at the end of June are recording 12-month yields equal to or greater than 5%." The site states, "At the same time, the number and assets of focused sustainable money market mutual funds are disappearing. The number of funds and assets under management of focused sustainable money market mutual funds have been shrinking. These are funds classified by Morningstar as sustainable money market funds in large part on the basis that they explicitly describe a fund's sustainable investing approach or strategy in the fund's prospectus within its investment objective and investment policy or Statement of Additional Information (SAI). `The segment now consists of just three funds/17 share classes, largely institutional prime funds. However, the segment continues to decline further. DWS has announced the termination and liquidation of the DWS ESG Liquidty Fund on or about August 14, 2024 while BlackRock has disclosed that the BlackRock Liquid Environmentally Aware Fund will liquidate on or about September 5, 2024. Following these liquidations, and assuming no new focused sustainable fund formations, the segment will be reduced to just one fund -- the BlackRock Wealth Liquid Environmentally Aware Fund and its five share classes. The fund considers factors such as emissions, energy and water intensity, waste generation, green revenues and environmental disclosure levels in evaluating the environmental performance of an issuer or guarantor." The brief adds, "While focused sustainable money market funds have now been reduced to just one fund offering, retail and institutional investors have other sustainable money market fund options beyond focused money funds. According to Crane Data, there are currently 14 firms offering 47 funds/share classes that systematically integrate financially material ESG factors into their investment decisions (along with other relevant factors) with the goal of managing risk and improving long term returns and/or offer dedicated share classes that screen out particular types of sectors or companies or that meet specific sustainable investment goals, such as social goals. For example, the Federated Hermes Government Obligations Fund SDG share commits to donating, via Federated Hermes and/or its affiliates, 5% of the quarterly management fee revenue and administrative fee revenue attributable to the SDG class, net of any waivers to a designated organization whose mission is aligned with one or more of the United Nations Sustainable Development Goals (UN SDGs). With a combined total of $99 billion in net assets, up from $87.8 billion at the end of 2021, these funds/share classes are largely offered to institutional investors, but they are also available to retail investors either directly or through financial intermediaries."
Money Fund Yields Inch Down to 5.12%
Money fund yields inched one basis point lower to 5.12% on average (as measured by our Crane 100 Money Fund Index, an average of 7-day yields for the 100 largest taxable money funds) in the week ended July 5. Yields were 5.13% on 6/28, 5.14% on 5/31, 5.13% on 4/30, 5.14% on 3/31 and 2/29/24, 5.17% on 1/31/24, 5.20% on 12/31/23, 4.94% on 6/30/23, 4.61% on 3/31/23 and 4.05% on 12/31/22. The vast majority of money market fund assets now yield 5.0% or higher. Assets of money market funds rose by $44.5 billion last week to $6.533 trillion according to Crane Data's Money Fund Intelligence Daily. Weighted average maturities were unchanged last week at 34 days. The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 710), shows a 7-day yield of 5.02%, down 1 bp in the week through Friday. Prime Inst MFs were down 1 bp to 5.17% in the latest week. Government Inst MFs were down 1 bp at 5.11%. Treasury Inst MFs were down 2 bps to 5.05%. Treasury Retail MFs currently yield 4.84%, Government Retail MFs yield 4.82%, and Prime Retail MFs yield 5.02%, Tax-exempt MF 7-day yields were down 63 bps to 3.00%. According to Monday's Money Fund Intelligence Daily, with data as of Friday (7/5), 4 money funds (out of 830 total) yield under 3.0% with $28 million in assets, or 0.0%; 114 funds yield between 3.00% and 3.99% ($125.6 billion, or 1.9%), 261 funds yield between 4.0% and 4.99% ($1.347 trillion, or 20.8%) and 451 funds now yield 5.0% or more ($5.016 trillion, or 77.3%). Our Brokerage Sweep Intelligence Index, an average of FDIC-insured cash options from major brokerages, was unchanged at 0.62%. The latest Brokerage Sweep Intelligence, with data as of June 28, shows that there was no changes over the past week. six weeks prior we saw the removal of TD Ameritrade from the listings pushed the averages higher (2 bps). Three of the 10 major brokerages tracked by our BSI still offer rates of 0.01% for balances of $100K (and lower tiers). These include: E*Trade, Merrill Lynch and Morgan Stanley. (Note: seven weeks ago we removed rates for TD Ameritrade from BSI since it completed its merger with Charles Schwab.)
Federated Switch from Amortized Cost
A Prospectus Supplement for Federated Hermes Institutional Prime Obligations Fund (Institutional Shares, POIXX, and Service Shares, PRSXX) tells us, "Effective August 1, 2024, the above-named fund, a portfolio of Federated Hermes Money Market Obligations Trust, will implement a change to the Fund's valuation policy whereby the Fund will no longer use the 'amortized cost' method of valuing its portfolio securities with remaining maturities of 60 Days or less ('60 Day Security'), which provides that a 60 Day Security's amortized cost value is approximately the same as its fair market value determined without the use of amortized cost based on certain factors ('shadow price' or 'shadow pricing'). The Fund will instead price all portfolio securities, including 60 Day Securities, using the fair market value. The change in valuation policy will streamline the Fund's operational processes impacted by certain components of the recent amendments to Rule 2a-7 under the Investment Company Act of 1940, as amended ('Rule 2a-7') (as further described below) and is not anticipated to have a material impact on the valuation of the Fund. Accordingly, effective August 1, 2024, all disclosures related to amortized cost valuation are deleted in their entirety." It continues, "In July 2023, the U.S. Securities and Exchange Commission ('SEC') adopted amendments ('2023 Amendments') to Rule 2a-7 and certain requirements thereunder. Under the 2023 Amendments, the Fund may impose discretionary liquidity fees on redemptions subject to a determination by the Fund's Board, or its delegate, that such a liquidity fee is in the Fund's best interests. If the Fund's Board, including a majority of the independent Trustees, or its delegate, determines that imposing a liquidity fee is in the Fund's best interests, the Fund will impose a discretionary liquidity fee not to exceed 2% of the value of the shares redeemed. Such determination, including the timing of the application of the liquidity fee, will be based on current market conditions and the Fund's particular circumstances. The discretionary liquidity fee would be applied to all Fund redemptions and would remain in effect until the Fund's Board, or its delegate, determines that the fee is no longer in the Fund's best interests." Federated writes, "The 2023 Amendments also provide that, effective October 2, 2024, pursuant to Rule 2a-7, the Fund is required to impose a mandatory liquidity fee when the Fund experiences daily net redemptions that exceed 5% of net assets based on flow information available within a reasonable period after the last computation of the Fund's net asset value on that calendar day. The Fund will not be required to apply a mandatory liquidity fee if the amount of the fee is less than 0.01% of the value of the shares redeemed. If the Fund imposes a liquidity fee, depending on how the redemption order is communicated, the proceeds delivered may be for an amount that is less than the original redemption. Imposition of discretionary or mandatory liquidity fees will be reported to Fund shareholders on the Fund's website or by press release and will be reported to the SEC on Form N-MFP." They add, "Effective October 2, 2024, Fund shares purchased and redeemed must be transmitted to the Fund on a gross basis (i.e., purchase orders must be transmitted separately from redemption orders)." Federated also made a similar filing for its Federated Hermes Institutional Tax-Free Cash Trust," which states, "Effective August 1, 2024, the above-named fund, a portfolio of Federated Hermes Money Market Obligations Trust, will implement a change to the Fund's valuation policy whereby the Fund will no longer use the 'amortized cost' method of valuing its portfolio securities with remaining maturities of 60 Days or less ('60 Day Security'), which provides that a 60 Day Security's amortized cost value is approximately the same as its fair market value determined without the use of amortized cost based on certain factors."
UBS on Appeal of Money Funds
UBS Asset Management published an article titled, "Money market funds: Why their appeal is set to endure as rates fall." It states, "Money market funds offer a range of advantages for use as collateral in financial transactions. Their appeal may expand if proposed regulatory changes are implemented. Money market funds (MMFs) in general, and government and Treasury MMFs in particular, are high-quality, actively managed investments that typically hold low-risk securities such as Treasury bills and other government-issued bonds, and in some cases, repurchase agreements (repo) backed by these instruments. These funds are usually run in a way that ensures they have a stable or constant net asset value (CNAV) of US$1 per share, and they offer investors a high level of liquidity and safety of principal." The piece continues, "Treasury and government MMFs offer a range of advantages for use as collateral in financial transactions: 1. Lower haircuts (typically 2% of pledged value): When assets are used as collateral in financial transactions, they are normally subject to a haircut -- a percentage discount on their market value that reflects the risk inherent in the asset.... While securities with shorter maturity dates than noted above may have lower haircuts, they still require monitoring and rebalancing due to changes in market value, whereas MMF haircuts remain constant.... 2. Lower ongoing management and administrative burden: Managing a MMF position as collateral is also significantly easier than with other eligible assets.... As such, MMFs can be considered a viable solution for investors who are looking to reduce the administrative burden attached to collateral management." It adds, "3. Interest-rate exposure management across the cycle: The ability of MMF managers to adjust the duration -- the interest-rate sensitivity -- by adjusting the weighted average maturity (WAM) of the portfolio can deliver benefits when rates are rising as well as falling.... Being able to raise, maintain, or capture yields as rates change while also maintaining a stable NAV level is a key benefit of MMFs. 4. Greater trading flexibility: The use of repo in MMFs enables these vehicles to accommodate late-day purchases, including large purchases that Treasury-only funds are unable to facilitate. This results in later cutoff times for MMFs that use repo, something that offers significantly greater flexibility for investors looking to use such funds as margin collateral." Finally, it discusses, "Plans to relax rules on the use of MMFs as collateral," saying, "In mid-2023, the Commodities Futures Trading Commission (CFTC) announced plans to broaden the type of MMFs that could be used as initial margin collateral in derivatives trading. The regulator said it wanted to end the ban on MMFs that use repo and other forms of securities lending from being used as initial margin collateral in commodity futures transactions. These changes are set to increase the appeal of the asset class even further. As interest rates on both sides of the Atlantic have risen to their highest levels in 15 years, inflows into MMFs have increased: figures published at the start of 2024 showed that MMF assets in the US rose by US$1.1 trillion in 2023 to reach a total of US$6 trillion.... In addition, allowing MMFs to use repo would more closely align the CTFC with its global counterparts, most of which currently allow for funds using repo as eligible collateral for their markets. For firms with multinational domains, this development is likely to provide a broader and more simplified solution. Whatever the outcome of the CFCT's proposals, MMFs offer a wide range of advantages to market participants looking for collateral for initial margin trading and other forms of risk-management transactions. These benefits should see their popularity endure across the market cycle, even in a falling interest-rate environment."
Weekly Money Fund Portfolio Holdings
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 June 28) includes Holdings information from 61 money funds (down 12 from a week ago), or $2.974 trillion (down from $3.132 trillion) of the $6.489 trillion in total money fund assets (or 45.8%) tracked by Crane Data. (Our Weekly MFPH are e-mail only and aren't available on the website. See our latest Monthly Money Fund Portfolio Holdings here and our June 12 News, "June Money Fund Portfolio Holdings: Repo Remains No. 1, Assets Jump.") Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Treasuries totaling $1.347 trillion (up from $1.250 trillion a week ago), or 45.3%; Repurchase Agreements (Repo) totaling $1.140 trillion (down from $1.253 trillion a week ago), or 38.3%, and Government Agency securities totaling $238.8 billion (down from $273.7 billion), or 8.0%. Commercial Paper (CP) totaled $89.6 billion (down from a week ago at $118.4 billion), or 3.0%. Certificates of Deposit (CDs) totaled $67.0 billion (down from $84.2 billion a week ago), or 2.3%. The Other category accounted for $59.0 billion or 2.0%, while VRDNs accounted for $33.4 billion, or 1.1%. The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.347 trillion (45.3% of total holdings), Fixed Income Clearing Corp with $265.1B (8.9%), the Federal Reserve Bank of New York with $200.9 billion (6.8%), Federal Home Loan Bank with $183.5B (6.2%), JP Morgan with $84.8B (2.9%), BNP Paribas with $70.9B (2.4%), Citi with $65.6B (2.2%), RBC with $54.3B (1.8%), Federal Farm Credit Bank with $52.5B (1.8%) and Goldman Sachs with $49.7B (1.7%). The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($251.5B), Goldman Sachs FS Govt ($233.1B), JPMorgan 100% US Treas MMkt ($204.1B), Fidelity Inv MM: Govt Port ($196.2B), Morgan Stanley Inst Liq Govt ($143.6B), BlackRock Lq FedFund ($142.2B), Fidelity Inv MM: MM Port ($128.9B), State Street Inst US Govt ($125.7B), Allspring Govt MM ($117.6B) and BlackRock Lq Treas Tr ($114.8B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary.)
Crane 100 Index Returns to 5.13%
Money fund yields were up 1 bp at 5.13% on average (as measured by our Crane 100 Money Fund Index) in the week ended June 28, after falling 2 basis points four weeks ago. Our Crane 100 is an average of 7-day yields for the 100 largest taxable money funds. Yields were 5.13% on 4/30, 5.14% on 3/31 and 2/29/24, 5.17% on 1/31/24, 5.20% on 12/31/23, 4.94% on 6/30/23, 4.61% on 3/31/23 and 4.05% on 12/31/22. The vast majority of money market fund assets now yield 5.0% or higher. Assets of money market funds rose by $6.1 billion last week to $6.489 trillion according to Crane Data's Money Fund Intelligence Daily. Weighted average maturities were unchanged last week. The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 710), shows a 7-day yield of 5.03%, up 1 bp in the week through Friday. Prime Inst MFs were unchanged at 5.18% in the latest week. Government Inst MFs were up 1 bp at 5.12%. Treasury Inst MFs were up 1 bp at 5.07%. Treasury Retail MFs currently yield 4.85%, Government Retail MFs yield 4.83%, and Prime Retail MFs yield 5.03%, Tax-exempt MF 7-day yields were up 29 bps at 3.63%. According to Monday's Money Fund Intelligence Daily, with data as of Friday (6/28), 4 money funds (out of 830 total) yield under 3.0% with $28 million in assets, or 0.0%; 114 funds yield between 3.00% and 3.99% ($125.6 billion, or 1.9%), 261 funds yield between 4.0% and 4.99% ($1.347 trillion, or 20.8%) and 451 funds now yield 5.0% or more ($5.016 trillion, or 77.3%). Our Brokerage Sweep Intelligence Index, an average of FDIC-insured cash options from major brokerages, was unchanged at 0.62%. The latest Brokerage Sweep Intelligence, with data as of June 28, shows that there was no changes over the past week. six weeks prior we saw the removal of TD Ameritrade from the listings pushed the averages higher (2 bps). Three of the 10 major brokerages tracked by our BSI still offer rates of 0.01% for balances of $100K (and lower tiers). These include: E*Trade, Merrill Lynch and Morgan Stanley. (Note: seven weeks ago we removed rates for TD Ameritrade from BSI since it completed its merger with Charles Schwab.)
Moody's Rates Pictet Money Funds AAA
A [press release titled, "Moody's Ratings assigns Aaa-mf ratings to three Pictet short-term VNAV money market funds," tells us, "Moody's Ratings (Moody's) has assigned Aaa-mf ratings to Pictet - Short Term Money Market GBP, Pictet Sovereign ST MMF EUR, and Pictet Sovereign ST MMF USD, short-term variable net asset value (VNAV) money market funds domiciled in Luxembourg. The Funds' primary objective is to preserve capital, provide high liquidity, and achieve a return in line with the money market rates.... The Aaa-mf rating on Pictet - Short Term Money Market GBP reflects this Fund's very strong ability to meet its objectives of providing liquidity and preserving capital. Pictet - Short Term Money Market GBP's Aaa-mf rating is underpinned by the Fund's portfolio high credit quality and liquidity, strong asset profile, and low exposure to market risk." The release explains, "The Pictet - Short Term Money Market GBP invests in a diversified portfolio of short-term securities, instruments, and obligations that are of high credit quality at the time of purchase. While this Fund may also invest in currencies other than GBP, any such exposures are hedged against foreign exchange risk. We expect the Fund to benefit from further investor base diversification as it expands in size. The Aaa-mf ratings on Pictet Sovereign ST MMF EUR and Pictet Sovereign ST MMF USD funds reflect these Funds' very strong ability to meet their objectives of providing liquidity and preserving capital. The Funds' ability to meet their objectives is supported by the high credit quality and liquidity of their underlying investments, their strong asset profile, and low exposure to market risk." Pictet adds, "The Pictet - Short Term Money Market GBP was launched in May 2023 while the Pictet Sovereign ST MMF EUR and the Pictet Sovereign ST MMF USD were launched in June 2008. The investment manager of the Funds is Pictet Asset Management SA, which is a part of the asset management arm of Pictet Group. The investment manager had CHF 230 bn in assets under management as of 30 September 2023."
