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The Investment Company Institute, the trade group representing the mutual fund industry, released its latest weekly "Money Market Fund Assets," its latest monthly "Trends in Mutual Fund Investing," and its latest monthly "Month-​End Portfolio Holdings of Taxable Money Funds" reports yesterday. The first shows that MMF assets rose for the sixth week in a row, increasing by $​105.​5 billion, or 3.​5%, since April 17, while the second release show money fund assets dipping lower in April. Money fund assets have increased by $​101 billion, or 3.​3%, year-​to-​date, according to ICI'​s weekly series, rising to MMFs' highest level since February 2010. Over the past 52 weeks, ICI'​s money fund asset series has increased by $​308 billion, or 10.​9%, with Retail MMFs rising by $​191 billion (​18.​6%) and Inst MMFs rising by $​118 billion (​6.​5%).

They write, "Total money market fund assets increased by $​17.​96 billion to $​3.​15 trillion for the week ended Wednesday, May 29, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $​17.​89 billion and prime funds increased by $​1.​92 billion. Tax-​exempt money market funds decreased by $​1.​84 billion." ICI'​s weekly series shows Institutional MMFs rising $​17.​1 billion and Retail MMFs rising $​0.​9 billion. Total Government MMF assets, including Treasury funds, stood at $​2.​350 trillion (​74.​7% of all money funds), while Total Prime MMFs rose to $​661.​2 billion (​21.​0%). Tax Exempt MMFs totaled $​136.​9 billion, or 4.​3%.

ICI states, "Assets of retail money market funds increased by $​899 million to $​1.​22 trillion. Among retail funds, government money market fund assets decreased by $​94 million to $​693.​66 billion, prime money market fund assets increased by $​2.​40 billion to $​395.​14 billion, and tax-​exempt fund assets decreased by $​1.​41 billion to $​127.​24 billion." Retail assets account for over a third of total assets, or 38.​6%, and Government Retail assets make up 57.​0% of all Retail MMFs.

The release adds, "Assets of institutional money market funds increased by $​17.​07 billion to $​1.​93 trillion. Among institutional funds, government money market fund assets increased by $​17.​98 billion to $​1.​66 trillion, prime money market fund assets decreased by $​483 million to $​266.​01 billion, and tax-​exempt fund assets decreased by $​434 million to $​9.​65 billion." Institutional assets accounted for 61.​4% of all MMF assets, with Government Institutional assets making up 85.​7% of all Institutional MMF totals.

ICI'​s "Trends: April 2019" report shows that MMF assets fell last month for the second month in a row after rising for the previous three months. Assets decreased by `$​8.​8 billion in April to $​3.​071 trillion. This follows a decrease of $​11.​5 billion in March, and increases of $​45.​5 billion in February and $​8.​2 billion in January. In the 12 months through April 30, 2019, money fund assets have increased by $​277.​9 billion, or 10.​0%.

It states, "The combined assets of the nation'​s mutual funds increased by $​393.​43 billion, or 2.​0 percent, to $​19.​65 trillion in April, according to the Investment Company Institute’​s official survey of the mutual fund industry. In the survey, mutual fund companies report actual assets, sales, and redemptions to ICI."

The monthly update explains, "Bond funds had an inflow of $​34.​32 billion in April, compared with an inflow of $​28.​90 billion in March.... Money market funds had an outflow of $​12.​78 billion in April, compared with an outflow of $​14.​89 billion in March. In April funds offered primarily to institutions had an inflow of $​3.​28 billion and funds offered primarily to individuals had an outflow of $​16.​06 billion."

The latest statistics show that Taxable and Tax Exempt MMFs lost assets last month. Taxable MMFs decreased by $​3.​6 billion in April to $​2.​937 trillion. Tax-​Exempt MMFs decreased $​5.​2 billion in April to $​133.​3 billion. Taxable MMF assets increased year-​over-​year by $​276.​6 (​10.​4%) while Tax-​Exempt funds rose by just $​1.​3 billion over the past year (​1.​0%). Bond fund assets increased by $​49.​2 billion in April (​1.​2%) to $​4.​319 trillion; they'​ve risen by $​237.​2 billion (​5.​8%) over the past year.

Money funds represent 15.​6% of all mutual fund assets (​down from 16.​0% the previous month), while bond funds account for 22.​0%, according to ICI. The total number of money market funds was 367, the same number as in March but down from 383 a year ago. Taxable money funds numbered 286 funds, and tax-​exempt money funds remained at 81 funds.

The "Month-​End Portfolio Holdings" update confirmed a plunge in Treasuries and a jump in Repo. Repurchase Agreements remained in first place among composition segments; they increased by $​70.​3 billion, or 7.​2%, to $​1,​050.​4 trillion, or 35.​8% of holdings. Repo holdings have risen by $​175.​1 billion, or 20.​0%, over the past year.

Treasury holdings in Taxable money funds dropped by $​133.​2 billion, or -​15.​1%, to $​747.​2 billion, or 25.​4% of holdings. Treasury securities have decreased by $​25.​6 billion, or -​3.​3%, over the past 12 months. U.​S. Government Agency securities were the third largest segment; they increased $​21.​5 billion, or 3.​3%, to $​677.​1 billion, or 23.​1% of holdings. Agency holdings have risen by $​20.​5 billion, or 3.​1%, over the past 12 months.

Certificates of Deposit (​CDs) stood in fourth place; they increased by $​14.​4 billion, or 6.​4%, to $​240.​8 billion (​8.​2% of assets). CDs held by money funds have grown by $​56.​7 billion, or 30.​8%, over 12 months. Commercial Paper remained in fifth place, down $​668 million, or -​0.​3%, to $​210.​6 billion (​7.​2% of assets). CP has increased by $​52.​1 billion, or 32.​8%, over one year. Notes (​including Corporate and Bank) were up by $​612 million, or 7.​8%, to $​8.​5 billion (​0.​3% of assets), while Other holdings increased to $​11.​6 billion.

The Number of Accounts Outstanding in ICI'​s series for taxable money funds increased by 424.​4 thousand to 34.​734 million, while the Number of Funds remained at 286. Over the past 12 months, the number of accounts rose by 2.​553 million and the number of funds decreased by 13. The Average Maturity of Portfolios was 31 days, down 1 day from March. Over the past 12 months, WAMs of Taxable money funds have lengthened by 1 day.

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Boutique cash manager Capital Advisors Group published a paper entitled, "The New Money Fund Reality," which discusses changes in the money market environment over the past five years since Money Fund Reform was passed in 2014. The "Abstract" explains, "The 2014 money market fund reform brought forth drastic change to the corporate cash management landscape, significantly impacting investors, issuers and fund sponsors. While there is little doubt that money market funds are more resilient following the implementation of the reform'​s higher credit, liquidity, transparency, and oversight standards, it also had some unanticipated side-​effects."

It continues, "Changes in the utility of MMFs, particularly prime funds, and concurrent changes in investor perceptions of these instruments, led to a large-​scale migration in assets from prime to government funds. Resulting changes in the demand dynamics of the short-​term debt markets may have had unintended consequences for fund manager incentives. Three years after the reform'​s implementation, we believe it is worthwhile to evaluate the reform'​s regulatory outcomes against the backdrop of its original intentions. Following the recent completion of the European Union'​s MMF reform, the opportunity to compare and contrast differences in outcomes can also add value to the discussion -- especially given the two regulators' differing approaches. While there is strong evidence that the reform hit close to its mark, we note that there may still be room for improvement."

Capital Advisors' "Introduction" tells us, "Money market funds, since their inception, have provided investors with a deposit-​like option for parking idle cash. Through careful risk management and the use of book value accounting, they aimed to offer a dollar-​in dollar-​out utility to investors at market rates. But the financial crisis of 2008 and the collapse of Lehman Brothers demonstrated that this model was unsustainable. Investor panic following the Reserve Primary Fund '​breaking the buck' led to collective runs on prime money market funds (​MMFs) which disrupted the short-​term funding markets and risked impacting the rest of the financial system. The severity of the shock necessitated government intervention to contain the panic and return short-​term markets to operation. This experience spurred calls for regulatory reform to fortify the MMF industry."

It says, "The SEC enacted its first round of reforms in 2010, where it pushed MMFs to increase transparency, reduce the average maturity of their holdings and boost liquidity. While this improved the risk profile of prime MMF portfolios, the European sovereign debt crisis that soon followed showed that significant run risk was still present. US MMFs with European bank exposures experienced substantial outflows, which in turn impacted short-​term funding conditions. This indicated that the recently implemented reforms had missed their mark."

The paper explains, "In 2014, the SEC announced changes to the original 2010 reforms that went on to more radically change the face of the MMF industry. Notably, in seeking to reduce run incentives for investors during periods of stress, this reform changed the deposit-​like nature of prime and municipal MMFs by introducing a variable NAV (​net asset value) and the possibility of redemption limitations should certain liquidity barriers be breached. In this paper, we examine how the new 2a-​7 reform has impacted the money market landscape, focusing on prime MMFs which were most heavily affected. We review recent literature and evaluate the extent to which the reform has been successful in meeting regulators' goals of safer portfolios with a lower probability of runs. We then briefly compare and contrast the outcomes of the US MMF reform with those of its European counterpart and conclude with a look at current challenges facing cash investors."

CAG Research Analyst Spyros Qendro writes, "​Prime funds have long served as a reliable source of short-​term funding for corporations. The large asset migration from prime to government during the implementation period of the MMF reform presented a funding challenge for short-​term borrowers, as demand shifted from the private sector to government and government-​sponsored issuers. Market participants expressed concerns over potential spikes in funding costs from short-​term volatility, as well as longer-​term funding availability due to the structural change in the market.... However, these concerns were somewhat overblown."

He comments, "The European approach to MMF reform provides an interesting point for comparison of policy impacts on the state of the industry. Formally concluded on March 21st, the reform carries some similarities to its US counterpart in terms of higher liquidity requirements and the potential imposition of fees and gates on withdrawals, though the EU version requires that be the case for constant net asset value (​CNAV) funds also. The reform also contains some differences, such as the explicit prohibition of external support for MMFs."

The piece states, "Perhaps most notably, it spelled the creation of a third type of MMF, the limited variability NAV (​LVNAV) fund, which acts as a compromise between the variable NAV (​VNAV) and constant NAV (​CNAV) funds of the US. LVNAV funds maintain a stable share-​value as long as the underlying NAV is within a 0.​20% band of their currency unit. On the other hand, if the NAV breaks that band, the fund converts to a variable NAV. This implies that LVNAV funds would behave as CNAV funds in a low volatility environment but could convert to VNAV funds during periods of stress. The similarity of this vehicle to the previous status quo for prime funds in Europe has been viewed positively by investors. Following the reform, the majority of prime assets ... landed in LVNAV funds."

It tells us, "In this environment, flows appear to have been driven by perceived confidence in managers' ability to maintain the LVNAV fund'​s CNAV-​like utility. As such, there are management incentives to ensure the funds remain within the 0.​20% band that enables them to resemble CNAV funds.... The retention of prime MMFs deposit-​like utility through the LVNAV vehicle prevented the type of outflows seen in the US. At the same time, LVNAV portfolios can be expected to be safer than the pre-​reform CNAV prime funds from a credit and liquidity standpoint.... [H]​ow it performs during periods of market stress remains to be seen. It is not impossible that given the popularity of LVNAV funds, a period of market stress could result in lumpy flows and potential funding disruption at a time when it would be least desirable."

Capital Advisors also writes, "While the dust following the reform'​s implementation has mostly settled, the new money fund landscape has yet to be tested. To add to the observations made in the previous sections of this paper, we see certain risks on the horizon that may present challenges for cash investors."

They state, "The MMF reform has by design raised the importance of due diligence for cash investors. By decreasing the deposit-​likeness of prime MMFs, there are now fewer options for capturing market yields while also limiting the risk of principal losses. For prime investors, credit research and monitoring needs are now greater, given the closer link between portfolio quality and value preservation. Investing in prime funds today requires greater research capabilities, which may not be available to all investors.... While government funds have retained their utility as sweep vehicles for overnight liquidity, the reform'​s stricter maturity and liquidity requirements have also limited their yield advantage over bank deposits. In this context, direct purchases or separately managed accounts (​SMAs) can be a viable option for investors seeking solutions customized to their risk and return goals. By managing a portfolio to an individual mandate, investors can outsource credit research costs while achieving individualized liquidity and retaining the opportunity to exploit market inefficiencies."

The paper concludes, "In this whitepaper, we examined some of the second order effects of the 2016 money fund reform, its overall impact on funding markets, how it compares to its European counterpart, and the extent to which it met regulators' goals of improving industry resilience. We reviewed research showing that the introduction of fees and gates and a floating NAV changed investors' perception of prime MMFs, creating incentives for fund managers to take on more credit risk. The asset migration from prime to government, combined with the rise in demand for riskier assets, resulted in changes in the demand dynamics of short-​term funding markets which were mitigated by greater involvement of the FHLB system and offshore funds in funding intermediation. This outcome increases the dependency of large domestic financial institutions on FHLB'​s status and creates some sensitivity for highly rated domestic corporations to foreign operating environments."

It adds, "Lastly, we conclude that the US MMF reform of 2014 did indeed improve the resilience of the MMF industry by strengthening liquidity and making investors' exposure to fund portfolios explicit in the case of prime funds. However, the accompanying risk-​taking incentives work counter to the reform'​s original intentions.... At the same time, changes to fund compensation structure to focus on creating and sustaining long-​term sponsor shareholder value might be a step in the right direction. While the utility of MMFs has become less universal post-​reform, cash investors may benefit from evaluating alternative cash management strategies that can better align with their liquidity needs, credit risk tolerance and yield requirements."

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Federated Investors' Vice President and CFO Thomas Donahue presented Tuesday at a Deutsche Bank Global Financial Services Conference and discussed acquisitions, brokerage sweeps and bank deposits. (​See Federated’​s press release.) Donahue comments, "The biggest thing about acquisitions is: what'​s going to happen with the money? Is it going to stay? What'​s the stability? And can we grow? So you have the roll-​ups, and that'​s really a stability question. Who are the clients? How is it sold? Which funds are they merging into? Like in the PNC deal, we have great merger [​opportunities]. They'​re merging into our funds that have excellent track records. We think we have a pretty good capability of maintaining these assets."

He was asked, "To what extent are people still shifting cash from lower yielding bank deposits in the system your money funds?" Donahue responds, "​So we look at money funds as a long-​term business. So what'​s going on [​currently], that'​s nice and we'​ll deal with it, and we'​ve been dealing with it since 1973. We expect the business to grow.... [Versus] the deposit market, money funds have had a pretty significant yield [​advantage] and we'​ve had a pretty good run here collecting assets. There'​s trillions of dollars there, [​and we see] that as an opportunity.... We continue to be able to see and expect to grow."

Regarding brokerage sweeps, Federated Head of Investor Relations Ray Hanley comments, "​So we offer a money market-​based sweep product, and that'​s been stable. Over the last several years, we have seen brokers who have converted to deposit-​based programs. You know that still can happen and does happen on occasion. But what we'​ve also seen is the ability to have money flow into money market alternatives out of deposit-​based sweep products, because the money fund alternative offers literally a couple hundred basis point yield advantage.... There'​s been a lot of publicity even in the mainstream press over the last several months about how low deposit rates are, and contrasting that to the favorable deposits available in money market alternatives. So that'​s benefited us at the retail level ... and it'​s also benefited us even at the institutional level."

Hanley adds, "​It continues to be a very favorable macro for us, even with the Fed on pause.... It'​s never happened in past up cycles that that deposit rate caught up to money market rates. So there'​s still a pretty wide spread there. And even when we put that on hold [​with] a flat yield curve, we expect that positive macro to stay in place. And don'​t forget with the flat curve ... the money fund yield looks even better than extending out [​the curve]."

Donahue explain, "If they cut rates ... the bigger dynamic with the money fund is what'​s going on in the equity markets. We seem to always benefit where things are in trouble on the money front side in terms of collecting people'​s flight to safety.... We'​re pretty significant benefactors of that. And we always seem to keep more of the assets, higher highs and higher lows ... our guy calls it."

On zero rates, they say, "​We'​re experienced with that. [W]​e dealt with zero rates for years and ... big-​time waivers that cost us hundreds of millions of dollars in operating cash flow [​which] our clients shared with us. As we went down, they went down and the asset level stayed pretty consistent with we'​ve always thought about it. As I said in the beginning, this is a long-​term business for us. It'​s a money management cash management business. It'​s not viewed as an investment vehicle. They'​re using it to manage their cash. And that'​s how we look at it."

When asked about "​roll-​ups," Donahue tells us, "In terms of roll ups and money funds, we [​look at] all the players who we'​ve done them with in the past -- they'​re our customers, that'​s our attitude. Okay, we have to go through a bidding process. We have to win the investment bankers and negotiations, but they'​re our customers. So we treat them like our customers, which means we take care of their clients and have a smooth transition and continue to have their clients have no issues, no hiccups, no problems in the deal. So ... when it'​s time to exit ... it'​s not up to us it'​s up to the client, to the money fund provider, because if they control the asset they don'​t have to exit. They can stay as long as they want and they won'​t have problems and they manage it properly."

Finally, he says, "But if they want to focus on other things and not bother with that anymore, then we have been the go-​to player. Go back and look at the history of who we'​ve done them with. Then you can we have a list of who else is out there, but it'​s not like a calling effort is going to make that happen.... When we get into the negotiations and if we get into ... the second round we do very well."

In other news, Crane Data'​s Brokerage Sweep Intelligence report shows rates unchanged in the latest week. But yields on brokerage cash remain slightly higher than at the start of the year and substantially higher than a year ago. Our latest Brokerage Sweep Intelligence Index, an average of the 11 largest brokerage firms' "​sweep" rates, continues to yield 0.​24% for balances under $​50K, 0.​25% for balances under $​100K, 0.​31% for balances under $​250K, 0.​39% for balances under $​500K, 0.​44% for balances under $​1 million, 0.​63% for balances under $​5 million and 0.​76% for balances over $​5 million. A year earlier, average sweep rates were 0.​14% (​under $​100K), 0.​18% (​under $​250K), 0.​23% (​under $​500K), 0.​25% (​under $​1M), 0.​37% (​under $​5M), and 0.​46% (​under $​5M).

Fidelity is still offering by far the highest FDIC-​insured sweep rates among the $​100K balance tier, with a yield of 0.​79% as of May 24. RW Baird occupies the No. 2 spot in the weekly survey, paying out 0.​55% on its $​100K tier. Raymond James ranks third with a rate of 0.​40% at the $​100K tier, followed by Schwab'​s 0.​33% rate. Ameriprise, UBS and Wells Fargo are all yielding 0.​25% on balances of $​100K. E*​Trade and Morgan Stanley offer just 0.​15%, Merrill pays 0.​14% and TD Ameritrade ranks last at just 0.​10%.

For more on brokerage sweeps, see these Crane Data News articles: Brokerage Sweep Rates Inch Down, But Raymond James Raises; Weekly" (​5/​23/​19), Brokerage Sweep Rates Flat; MS, E*​Trade Earnings; TD Lowers Rates (​4/​23/​19), BNY Keeps Dreyfus Name on Money Funds; Brokerage Sweep Rates Flat (​3/​5/​19), Edward Jones Latest to Shift to FDIC Sweeps; ICI: MMFs Break $​3T in '​18 (​1/​31/​19), Schwab, Brokerages Discuss Sweeps, Money Funds on Earnings Calls (​1/​25/​19), SF Chronicle on Brokerage Sweeps; Bloomberg on Europe Rejecting RDM (​11/​28/​18), TD Ameritrade, Morgan Stanley on Sweeps; Money Fund Assets Rebound (​10/​26/​18) and Money Fund Yields, Sweep Rates Move Higher; WSJ on Savings, Deposits (​10/​18/​18).

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Investment News recently wrote an article entitled, "Carson Group advisers will soon be able to offer clients banking accounts," which discusses the latest "​fin-​tech" entrant to try and challenge the brokerage, bank deposit and money market mutual fund system with a product to "provide white-​labeled, FDIC-​insured cash accounts." The piece tells us, "Carson Group announced several new products and services at its annual Excell conference, including a mobile-​only banking service that advisers can offer clients. Through a partnership with financial technology firm Galileo, the 108 firms supported by Carson Group will be able to offer accounts that mimic traditional checking and savings accounts with no monthly service fees."

They write, "The first type of account, Galileo Money+ Spending, offers 1.​24% annual interest and is intended for everyday purchases, paying bills, peer-​to-​peer money transfers and withdrawing money from ATMs. Galileo will custody the assets with Bancorp Bank, and up to $​2.​5 million will be insured by the Federal Deposit Insurance Corp., said Andrew Rogers, Carson Group adviser solutions manager."

Investment News explains, "The second type, Galileo Money+ Reserve, acts as a savings account and pays 2% interest. Mr. Rogers said Carson Group and Galileo are "​exploring" exactly what these accounts will look like, and whether they are FDIC-​insured savings accounts or a brokerage account invested in low-​risk Treasury funds."

They add, "Mobile brokerage startup Robinhood sparked a backlash late last year when it announced checking and savings, with critics arguing the fintech company wasn'​t being transparent enough about the fact that the accounts were not FDIC-​insured. Mr. Rogers said Carson Group is making sure it avoids anything similar."

A press release, "Galileo Announces Money+ and Signs Carson Group as Its First Partner," further explains, "Galileo Money+ empowers financial advisors to compete for the $​10 trillion in low- or no-​interest U.​S. bank deposits by offering their customers supercharged, white-​labeled accounts for spending and wealth accumulation, featuring market-​based interest rates tied to the Effective Federal Funds Rate. Account functionality includes online and in-​store shopping and access to 32,​000 no-​fee ATMs; a mobile app for moving money, including paying bills; and FDIC insurance -- all offered with no monthly service fees."

Galileo CEO Clay Wilkes comments, "Last year Americans paid billions in bank fees while getting the bare minimum rate of return on their deposits. How can that still be happening? In partnership with financial advisors, which have a fiduciary responsibility to their clients, we'​ve launched a scalable, sustainable banking solution that puts people before profit and offers market-​based interest rates. We'​re ready to begin this journey with Carson and, together, to make a real impact on people'​s lives."

Ron Carson, CEO and founder of Carson Group, adds, "​Every decision we make -- and every partner we consider -- must always bring us a step closer to doing what'​s right for our clients.... By extending our menu of services into cash management solutions with Galileo Money+, we'​ll offer our advisors -- and their clients -- an instant alternative to low-​interest, high-​fee bank accounts, positioning them for more optimal returns and reducing the risk of underperforming assets. It'​s a value-​add for our advisors, an added benefit for their clients and it furthers our mission to make the complex simple for the more than 25,​000 families we serve."

Galileo'​s release also says, "The Galileo Money+ Spending Account, which currently offers 1.​24 percent APY interest, is for everyday financial activities, like purchasing groceries or a cup of coffee, paying bills, getting pocket cash from ATMs and transferring money to friends and family. The Galileo Money+ Reserve Account, currently offering 2.​00 percent APY interest, is for wealth accumulation."

Finally, Wilkes states, "The average high net worth household keeps $​450,​000 in bank checking, savings and CDs, and keeping those accounts with brick-​and-​mortar banks is leaving money on the table.... That money should be under the financial advisors' guidance. With Galileo Money+, financial advisors can offer white-​label services to finally compete with brick-​and-​mortar banks in a meaningful way."

For more on "​fin-​tech" and cash management, see these Crane Data News stories: "Inv News on Fin-​​Techs Invading Cash Mgmt" (​5/​13/​19), "Wealthfront Cash Brings in $​1 Billion" (​4/​29/​19), "Wealthfront Cash Targets Deposits" (​2/​20/​19), "MarketWatch Has More on Robinhood" (​1/​3/​19), "SIPC Concerns About Robinhood" (​12/​17/​18) and "Robinhood Stealing Millennial'​s Cash" (​12/​14/​18).

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The ICI'​s latest weekly "Money Market Fund Assets" shows that assets rose for the fifth week in a row, rising by $​87.​5 billion after falling $​55.​3 billion the week including April 15. They'​ve moved into the black year-​to-​date, up $​83 billion, or 2.​7%, and to MMFs' highest level since February 2010. Over the past 52 weeks, ICI'​s money fund asset series has increased by $​305 billion, or 10.​8%, with Retail MMFs rising by $​190 billion (​18.​5%) and Inst MMFs rising by $​116 billion (​6.​4%). (​For the SEC'​s latest monthly money fund asset series, see our May 22 News, "SEC Stats: MMF Assets Flat at Just Under $​3.​5 Tril, Prime Hits $​1 Trillion," and see our May MFI XLS for Crane Data'​s latest monthly MMF asset totals or our MFI Daily for our latest daily series.)

They write, "Total money market fund assets increased by $​29.​94 billion to $​3.​13 trillion for the week ended Wednesday, May 22, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $​25.​41 billion and prime funds increased by $​6.​22 billion. Tax-​exempt money market funds decreased by $​1.​69 billion." ICI'​s weekly series shows Institutional MMFs rising $​24.​7 billion and Retail MMFs rising $​5.​3 billion. Total Government MMF assets, including Treasury funds, stood at $​2.​333 trillion (​74.​5% of all money funds), while Total Prime MMFs rose to $​659.​2 billion (​21.​1%). Tax Exempt MMFs totaled $​138.​7 billion, or 4.​4%.

ICI states, "Assets of retail money market funds increased by $​5.​26 billion to $​1.​22 trillion. Among retail funds, government money market fund assets increased by $​2.​62 billion to $​693.​75 billion, prime money market fund assets increased by $​3.​35 billion to $​392.​74 billion, and tax-​exempt fund assets decreased by $​708 million to $​128.​64 billion." Retail assets account for over a third of total assets, or 38.​8%, and Government Retail assets make up 57.​1% of all Retail MMFs.

The release adds, "Assets of institutional money market funds increased by $​24.​68 billion to $​1.​92 trillion. Among institutional funds, government money market fund assets increased by $​22.​79 billion to $​1.​64 trillion, prime money market fund assets increased by $​2.​87 billion to $​266.​49 billion, and tax-​exempt fund assets decreased by $​978 million to $​10.​08 billion." Institutional assets accounted for 61.​2% of all MMF assets, with Government Institutional assets making up 85.​6% of all Institutional MMF totals.

In other news, a press release entitled, "Moody'​s Assigns A-​mf ratings to Schroders Sterling Liquidity Plus and Schroder ISF EURO liquidity, withdraws Aa-​bf ratings," tells us, "Moody'​s Investors Service ("​Moody'​s") has assigned A-​mf ratings to the SSSF Sterling Liquidity Plus Fund (​Schroders Sterling Liquidity Plus Fund) and SISF - Euro Liquidity (​Schroder ISF EURO Liquidity Fund), two standard variable net asset value money market funds (​MMF). The funds are domiciled in Luxembourg and comply with the European Union'​s money market fund rules. At the same time, Moody'​s withdrew the Aa-​bf bond fund ratings of these two funds."

Moody'​s explains, "In light of the new European MMF rules effective since Jan 21 2019, Schroders has adjusted the investment strategy of the SSSF Sterling Liquidity Plus Fund and SISF Euro Liquidity in line with the expectations of the MMF rules. The funds qualify as standard MMFs. Following the change to the funds' investment objectives, Moody'​s has decided to change the primary methodology used to rate these funds under to the Money Market Funds rating methodology from Moody'​s Bond Fund Rating Methodology."

They write, "The Funds' A-​mf ratings reflect Moody'​s expectation that those funds will have a moderate ability to meet their objectives of providing liquidity and preserving capital. The funds were previously rated by Moody'​s under the Bond Fund methodology as ultra-​short duration BFs. They now operate under a standard variable net asset value (​VNAV) MMF structure. They offer a t+​1 settlement and continue to be managed by the same team. The investors in the funds are internal funds as well as institutional entities such as corporates and insurance companies."

The release says, "​The Funds invest in high credit quality securities, primarily commercial paper and deposit securities, short-​dated bonds from government, agency, corporate and financial issuers. The Funds' weighted average maturity (​WAM) will remain below 180 days and we expect the Funds to maintain an adequate liquidity profile in line with regulatory requirement for Standard VNAV MMFs. As a result, Moody'​s expects the Funds to have moderate exposure to market risk."

It adds, "As of end of March 2019, the average credit quality of SSSF Sterling Liquidity Plus Fund as measured by Moody'​s credit matrix was Aa2. The fund had a WAM of 142 days, 13% of the fund was invested in overnight securities and the adjusted NAV was 0.​9828 mapping to a score of 4, in line with Moody'​s expectation for an A-​mf MMF."

Finally, Moody'​s comments, "As of end of March 2019, the average credit quality of SISF - Euro Liquidity as measured by Moody'​s credit matrix was Aa2. The fund had a WAM of 119 days, 14% of the fund was invested in overnight securities and the adjusted NAV was 0.​9833 mapping to a score of 4, in line with Moody'​s expectation for an A-​mf MMF. Schroders is the investment manager of the funds. Both are part of Schroders which managed GBP 8 billion in liquidity strategies at the end of 2018." (Note: Crane Data currently does not track this fund, but we'​ll be looking to add this to our Money Fund Intelligence International in coming weeks.)

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While the Federal Reserve appears committed to keeping rates flat for the foreseeable future, brokerages continue to tweak their sweep rates, with some cutting, and one hiking, yields over the past several weeks. Rates tracked by our Brokerage Sweep Intelligence report were unchanged in the latest week, but UBS cut rates on select tiers for the second time this month. UBS reduced the rate on assets under $​250K from 0.​30% to 0.​25%, reduced the rate on assets under $​500K (​but over $​250K) from 0.​35% to 0.​30%, and cut rates on assets under $​2 million (​but over $​1 million) from 0.​70% to 0.​65% during the week ended May 17.

UBS cut rates on balances under $​250K from 0.​35% to 0.​30% earlier this month, and E*​Trade also cut rates on a number of its tiers. Meanwhile, Raymond James increased sweep rates on its tiers over $​100K in mid-​May. It is now paying 0.​30% on bank balances under $​100K, 0.​40% (​up from 0.​30%) on balances under $​250K, 0.​60% (​up from 0.​50%) on balances under $​500K, 0.​70% (​up from 0.​60%) on balances under $​1 million, 0.​85% (​up from 0.​80%) on balances under $​2.​5M and 1.​00% (​up from 0.​85%) on balances over $​2.​5M.

Our Crane Brokerage Sweep Index, an average of the 11 largest brokerage firms' "​sweep" rates, is currently 0.​24% for balances under $​50K, 0.​25% for balances under $​100K, 0.​31% for balances under $​250K, 0.​39% for balances under $​500K, 0.​44% for balances under $​1 million, 0.​63% for balances under $​5 million and 0.​76% for balances over $​5 million <​b:>`​_. Most tiers for the Crane Brokerage Sweep Indexes inched lower by one basis point in the latest week, but they remain slightly higher than at the start of the year and substantially higher than a year ago. A year earlier, average sweep rates were 0.​14% (​under $​100K), 0.​18% (​under $​250K), 0.​23% (​under $​500K), 0.​25% (​under $​1M), 0.​37% (​under $​5M), and 0.​46% (​under $​5M).

Fidelity is offering by far the highest FDIC-​insured sweep rates among the $​100K balance tier, with a yield of 0.​79% as of May 17. RW Baird occupies the No. 2 spot in the weekly survey, paying out 0.​55% on its $​100K tier. Raymond James ranks third with a rate of 0.​40% at the $​100K tier, followed by Schwab'​s 0.​33% rate. Both UBS and Wells Fargo are yielding 0.​30%, while Ameriprise is paying 0.​25% on balances of $​100K. E*​Trade and Morgan Stanley offer just 0.​15%, Merrill pays 0.​14% and TD Ameritrade ranks last at just 0.​10%.

For more on brokerage sweeps, see these Crane Data News articles: Brokerage Sweep Rates Flat; MS, E*​Trade Earnings; TD Lowers Rates (​4/​23/​19), BNY Keeps Dreyfus Name on Money Funds; Brokerage Sweep Rates Flat (​3/​5/​19), Edward Jones Latest to Shift to FDIC Sweeps; ICI: MMFs Break $​3T in '​18 (​1/​31/​19), Schwab, Brokerages Discuss Sweeps, Money Funds on Earnings Calls (​1/​25/​19), SF Chronicle on Brokerage Sweeps; Bloomberg on Europe Rejecting RDM (​11/​28/​18), TD Ameritrade, Morgan Stanley on Sweeps; Money Fund Assets Rebound (​10/​26/​18) and Money Fund Yields, Sweep Rates Move Higher; WSJ on Savings, Deposits (​10/​18/​18).

In other news, Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics and summary Wednesday. Our weekly holdings track a shifting subset of our monthly Portfolio Holdings collection, and the latest cut (​with data as of May 17) includes Holdings information from 69 money funds (​up from 67 on 5/​10), representing $​1.​425 trillion (​up from $​1.​299 trillion) of the $​3.​269 (​43.​6%) in total money fund assets tracked by Crane Data. (​For our latest monthly Money Fund Portfolio Holdings numbers, see our May 10 News, "May Money Fund Portfolio Holdings: Repo, Agencies, CP Up; T-​Bills Drop.")

Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Repurchase Agreements (​Repo) totaling $​545.​1 billion (​up from $​497.​4 billion a week ago), or 38.​2%, Treasury debt totaling $​418.​4 billion (​up from $​371.​7 billion) or 29.​4%, and Government Agency securities totaling $​267.​2 billion (​up from $​248.​9 billion), or 18.​7%. Commercial Paper (​CP) totaled $​68.​3 billion (​up from $​64.​4 billion), or 4.​8%, and Certificates of Deposit (​CDs) totaled $​69.​4 billion (​up from $​66.​4 billion), or 4.​9%. A total of $​23.​1 billion or 1.​6%, was listed in the Other category (​primarily Time Deposits), and VRDNs accounted for $​33.​9 billion, or 2.​4%.

The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $​418.​4 billion (​29.​4% of total holdings), Federal Home Loan Bank with $​198.​8B (​13.​9%), Fixed Income Clearing Co with $​65.​8B (​4.​6%), BNP Paribas with $​64.​2 billion (​4.​5%), RBC with $​45.​4B (​3.​2%), Federal Farm Credit Bank with $​42.​1B (​3.​0%), JP Morgan with $​30.​8B (​2.​2%), Societe Generale with $​30.​4B (​2.​1%), Barclays PLC with $​28.​6B (​2.​0%) and Wells Fargo with $​27.​6B (​1.​9%).

The Ten Largest Funds tracked in our latest Weekly include: JP Morgan US Govt ($​134.​7B), Fidelity Inv MM: Govt Port ($​115.​7B), Goldman Sachs FS Govt ($​100.​1B), BlackRock Lq FedFund ($​89.​6B), Wells Fargo Govt MMkt ($​79.​4B), BlackRock Lq T-​Fund ($​66.​0B), Fidelity Inv MM: MMkt Port ($​58.​2B), Goldman Sachs FS Trs Instruments ($​56.​8B), Dreyfus Govt Cash Mgmt ($​55.​7B) and JP Morgan 100% US Trs MMkt ($​55.​2B). (​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.)

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The Securities and Exchange Commission released its latest "Money Market Fund Statistics" summary yesterday, which shows that total money fund assets were flat last month, rising by just $​690 million in April to $​3.​495 trillion. Prime MMFs increased $​27.​8 billion in April to close at $​1.​000 trillion, Govt & Treasury funds declined by $​20.​7 billion to $​2.​356 trillion. Tax Exempt funds fell by $​6.​4 billion to $​138.​6 billion. Yields jumped for Tax Exempt MMFs, but were flat or slightly lower for Govt and Prime MMFs in April. The SEC'​s Division of Investment Management summarizes monthly Form N-​MFP data and includes asset totals and averages for yields, liquidity levels, WAMs, WALs, holdings, and other money market fund trends. (​The SEC revised this report earlier this year to include more history and to split Prime into Prime Inst and Prime Retail and Muni into Muni Inst and Muni Retail.) We review the latest numbers below.

Overall assets gained just $​690 million in April, following an increase of $​87.​9 billion in March, $​76.​9 billion in February and $​31.​4 billion in January. Over the 12 months through 4/​30/​19, total MMF assets increased $​390.​0 billion, or 12.​6%. (​Note that the SEC'​s series includes a number of private and internal money funds not reported to ICI or others, though Crane Data tracks most of these.)

Of the $​3.​495 trillion in assets, $​1.​000 trillion was in Prime funds, which rose $​27.​8 billion in April after increasing $​99.​2 billion in March and $​57.​9 billion in February. Prime funds represented 28.​6% of total assets at the end of April. They'​ve increased by a whopping $​314.​6 billion, or 45.​9%, over the past 12 months. Government & Treasury funds totaled $​2.​356 trillion, or 67.​4% of assets. They declined by $​20.​7 billion in April after declining by $​12.​7 billion in March and increasing $​21.​1 billion in February. Govt & Treas MMFs are up $​72.​7 billion over 12 months, or 3.​2%. Tax Exempt Funds decreased $​6.​4B to $​138.​6 billion, 4.​0% of all assets. The number of money funds was 370 in April, unchanged from the previous month but down 11 funds from a year earlier.

Yields for Taxable MMFs were mixed again in April (​and March) following 16 months in a row of increases. The Weighted Average Gross 7-​Day Yield for Prime Institutional Funds on April 30 was 2.​58%, down 1 basis point from the previous month. The Weighted Average Gross 7-​Day Yield for Prime Retail MMFs was `​2.​63%, down 2 basis points from the previous month. Gross yields remained at 2.​49% for Government Funds, unchanged from last month. Gross yields for Treasury Funds decreased 1 basis point to 2.​48%. Gross Yields for Muni Institutional MMFs jumped from 1.​53% in March to 2.​23%. Gross Yields for Muni Retail funds increased from 1.​59% to 2.​20% in April.

The Weighted Average 7-​Day Net Yield for Prime Institutional MMFs was 2.​50%, down 2 bps from the previous month and up 0.​65% since 4/​30/​18. The Average Net Yield for Prime Retail Funds was 2.​37%, also down 2 bps from the previous month but up 0.​67% since 4/​30/​18. (​Note: These averages are asset-​weighted.)

WALs and WAMs were mostly lower in April. The average Weighted Average Life, or WAL, was 56.​4 days (​down 0.​5 days from last month) for Prime Institutional funds, and 62.​5 days for Prime Retail funds (​down 4.​5 days). Government fund WALs averaged 90.​9 days (​down 2.​1 days) while Treasury fund WALs averaged 92.​6 days (​up 0.​1 days). Muni Institutional fund WALs were 12.​9 days (​down 1.​7 day), and Muni Retail MMF WALs averaged 25.​1 days (​down 2.​5 days).

The Weighted Average Maturity, or WAM, was 32.​9 days (​down 0.​4 days from the previous month) for Prime Institutional funds, 34.​2 days (​down 5.​2 days from the previous month) for Prime Retail funds, 28.​2 days (​down 1.​5 days) for Government funds, and 31.​6 days (​down 0.​8 days) for Treasury funds. Muni Inst WAMs were down 1.​6 days to 12.​6 days, while Muni Retail WAMs decreased by 2.​6 days to 22.​7 days.

Total Daily Liquid Assets for Prime Institutional funds were 39.​9% in April (​down by 1.​3% from the previous month), and DLA for Prime Retail funds was 26.​0% (​down 1.​6% from previous month) as a percent of total assets. The average DLA was 43.​1% for Govt MMFs and 91.​5% for Treasury MMFs. Total Weekly Liquid Assets was 54.​2% (​down 1.​6% from the previous month) for Prime Institutional MMFs, and 41.​2% (​the same as the previous month) for Prime Retail funds. Average WLA was 69.​3% for Govt MMFs and 98.​3% for Treasury MMFs.

In the SEC'​s "Prime MMF Holdings of Bank-​Related Securities by Country table for April 2019," the largest entries included: Canada with $​124.​3 billion, the U.​S. with $​117.​0 billion, Japan with $​99.​7 billion, France with $​86.​5B, Germany with $​41.​3B, the U.​K. with $​40.​3B, Australia/​New Zealand with $​33.​8B, the Netherlands with $​31.​6B and Switzerland with $​28.​4B. The biggest gainers among the "Prime MMF Holdings by Country" include: France (​up $​21.​0B), the U.​S. (​up $​12.​8B), Japan (​up $​12.​8B), Switzerland (​up $​6.​8B), Canada (​up $​5.​6B) and Germany (​up $​1.​2B). The biggest drops came from the UK (​down $​4.​2B), Australia/​New Zealand (​down $​2.​2B) and the Netherlands (​down $​890M).

The SEC'​s "Trend in Prime MMF Holdings of Bank-​Related Securities by Major Region" table shows Europe had $​293.​6B (​up $​17.​5B from last month), the Eurozone subset had $​169.​1B (​up $​23.​1B). The Americas had $​241.​9 billion (​up $​18.​4B), while Asia Pacific had $​152.​9 billion (​up $​11.​4B).

The "​Prime MMF Portfolio Composition" chart shows that of the $​1.​000 trillion in Prime MMF Portfolios as of April 30, $​298.​7B (​29.​8%) was in CDs and Time Deposits (​up from $​282.​8B), $​310.​3B (​31.​0%) was in Government & Treasury securities (​direct and repo) (​down from $​313.​3B), $​140.​9B (​14.​1%) was held in Non-​Financial CP and Other securities (​up from $​130.​1B), $​192.​1B (​19.​2%) was in Financial Company CP (​up from $​186.​9B), and $​59.​5B (​5.​9%) was in ABCP (​down from $​58.​0B).

The SEC'​s "Government and Treasury MMFs Bank Repo Counterparties by Country" table shows the U.​S. with $​194.​5 billion, Canada with $​140.​4 billion, France with $​217.​6 billion, Germany with $​18.​2 billion, Japan with $​134.​7 billion, the U.​K. with $​99.​9 billion and Other with $​41.​8 billion. All MMF Repo with the Federal Reserve decreased by $​716 million in April to $​5 million.

Finally, a "Percent of Securities with Greater than 179 Days to Maturity" table shows Prime Inst MMFs with 8.​2%, Prime Retail MMFs with 7.​6%, Muni Inst MMFs with 0.​8%, Muni Retail MMFs with 2.​8%, Govt MMFs with 16.​6% and Treasury MMFs with 17.​7%.

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Crane'​s Money Fund Symposium, the largest gathering of money market fund managers and cash investors in the world, will take place June 24-​26, 2019 at The Renaissance Boston Waterfront Hotel, in Boston, Mass. Final preparations are being made, the latest agenda is available and registrations are still being taken. (​Alas, our hotel has sold out already though.) Our last MFS in Pittsburgh attracted 575 attendees, and we expect a record turnout for our 11th annual event in Boston. Money Fund Symposium attracts money fund managers, marketers and servicers, cash investors, money market securities dealers, issuers, and regulators. We review the latest agenda, as well as Crane Data'​s 2019 conference calendar, below.

Our June 24 Symposium Opening (​afternoon) Agenda kicks off with a "The State of the Money Fund Industry & MMs," with Peter Crane, Pia McCusker of SSGA and Alex Roever of J.​P. Morgan Securities. The rest of the Day 1 agenda includes: "Brokerage Sweep: Deposits vs. Money Funds," with Rick Holland from Charles Schwab I.​M., Joe Hooker from Promontory Interfinancial Network and Tuyen Tu from Raymond James; Refreshments sponsored by Fidelity Investments and a "Risks & Ratings: Credit, Liquidity & NAV Moves" panel with Robert Callagy of Moody'​s Investors Service, Greg Fayvilevich of Fitch Ratings, and Michael Masih of S&​P Global Ratings. The opening day finishes with "Major Money Fund Issues 2019" featuring Tracy Hopkins of ` Dreyfus/​BNY Mellon CIS <​i:​http://​www.​dreyfus.​com>`​_, Jeff Weaver of ` Wells Fargo A.​M. <​i:​https://​www.​wellsfargo.​com>`​_, and Peter Yi of Northern Trust AM (​The evening'​s reception is sponsored by Bank of America Merrill Lynch.)

Day 2 of Money Fund Symposium 2019 begins with "Strategists Speak '​19: Fed & Rates, Repo & SOFR," which features Mark Cabana of Bank of America, Joseph Abate of Barclays, and Chris Chadie of Credit Suisse, followed by a "Senior Portfolio Manager Perspectives" panel, including Todd Bean of State Street Global Advisors, Deborah Cunningham of Federated Investors and Jonas Kolk of Morgan Stanley I.​M. (​invited).

Next up is "Government & Treasury Money Fund Issues," with moderator Priya Misra of TD Securities, Adam Ackerman of J.​P. Morgan Asset Management and Ed Dombrowski of AB Funds. The morning concludes with "Muni & Tax Exempt Money Fund Update," featuring Colleen Meehan of Dreyfus, Sean Saroya of J.​P. Morgan Securities, and John Vetter of Fidelity.

The Afternoon of Day 2 (​after a Dreyfus-​sponsored lunch) features the segments: "Dealer'​s Choice: Supply, New Securities & CP," moderated by Rob Sabatino of UBS Asset Management, along with Stewart Cutler of Barclays, Ron Flynn of J.​P. Morgan Securities and Nick Ro of Toyota Financial Services; "Analysts Roundtable: Concerns in Credit" with Jimmie Irby of J.​P. Morgan AM, Keith Lawler of Bank of America Merrill Lynch and Matthew Plomin of DWS; "SMA & Ultra-​Short Update; Bond Fund Regs," with Dave Martucci of JPMAM, Kerry Pope of Fidelity, and Brenden Carroll of Dechert. The day'​s wrap-​up presentation is "Corporate Liquidity & Investor Issues," involving Lance Pan of Capital Advisors, Tom Hunt from AFP and James Gilligan from Evergy/​KCP&​L, (​The Day 2 reception is sponsored by Barclays.)

The third day of the Symposium features the sessions: "Treasury & NY Fed Update; Agency Issuance" with Tom Katzenbach from the U.​S. Dept. of Treasury and Dave Messerly of the FHLBanks - Office of Finance; "European Money Funds After Reforms," with John Aherne of William Fry, Jonathan Curry of HSBC Global A.​M. and Alastair Sewell of Fitch Ratings; and concludes with "Technology, Software & FICC Repo Issues" with Crane, Greg Fortuna of State Street Fund Connect, and Travis Keltner of State Street.

Visit the MF Symposium website at www.​moneyfundsymposium.​com) for more details. Registration is $​750, and hotel reservations are "​find whatever you can!" We hope you'​ll join us in Boston next month! We'​d like to encourage attendees, speakers and sponsors to register asap. E-​mail us at info@​cranedata.​com to request the full brochure, or click here to see the latest.

In other conference news, preparations are also being made for our 7th annual European Money Fund Symposium, which will be held at the The Hilton in Dublin, Ireland Sept. 23-​24, 2019. (​Click here to see the PDF agenda.) European Money Fund Symposium offers "​offshore" money fund portfolio managers, and money market investors, issuers, dealers and service providers a concentrated and affordable educational experience, as well as an excellent and informal networking venue. (​Click here to register for EMFS or make hotel reservations for BFS if you plan on attending!)

Finally, mark your calendars for Crane Data'​s 10th annual "​basic training" event, Money Fund University, and our 4th annual bond fund event, Bond Fund Symposium. MFU will be held Jan. 23-​24, 2020 in Providence, R.​I., while BFS will be held `​March 23-​24, 2020 in Boston, Mass. (Contact us to inquire about sponsoring or speaking.)

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Federated Investors, which announced the acquisition of PNC'​s money market fund assets earlier this month, recently hosted a webinar entitled, "2019: Liquidity Gets Back to Work," which featured Money Market CIO Deborah Cunningham. She discussed recent asset flows and the return to Prime MMFs, ESG issues and acquisitions in the money fund space. Cunningham tells us, "​We'​re still excited [​by] the fact that news articles are being generated around the liquidity space, keeping it front and center with investors.... Certainly from a '​cash is king' perspective, there'​s nothing that'​s really changed there in our opinion. The yields continue to be very, very attractive on our money market products, especially compared to deposit rates in the marketplace. Money funds are quite a compelling story, we think [​this] will likely continue."

She comments, "ESG is something that has been first and foremost in Federated'​s mind since our majority owned acquisition of the Hermes Investment Management Company out of the U.​K., which occurred in July of last year.... What has subsequently been the process, whereby we are methodically and very painstakingly implementing and integrating the various ESG insights that we'​re privy to through that ... acquisition. So integrating that into the credit process for our liquidity portfolios has been at the top of the list."

Cunningham continues, "​So how does it look from a yield perspective? Again, cash is king once again in the context of steadiness and outperformance ... [​vs.] other types of short-​term rates and of inflation. The Fed pause and '​patience' that has caused the yield curve to flatten somewhat, and in some cases to invert, has been certainly a different set of market circumstances to deal with in the first [​and] second quarter of 2019.... Today when you look at the 10-​year it'​s down to 2.​39 and the 2-​year is at a 2.​18. So it'​s quite a compelling story when you look at government money market funds and their gross yields being 2.​45%, prime money market funds with their gross yields being 2.​65%. When you compare those to 10'​s and 2'​s, you'​re not getting anywhere close to that for the much longer duration risk that you'​re taking in longer Treasuries. So this is again a story that continues to be compelling for those in search of a place to put their cash in the current marketplace. Money market funds are the recipients."

She comments, "You'​ve got industry assets for prime portfolios growing 38%, whereby Federated'​s own prime portfolios grew by 49%. So a pretty substantial increase across both Federated, as well as the industry. And it'​s not in a single asset type either -- both our Prime institutional as well as our Prime retail products are growing. From an industry perspective, you see the numbers, Prime Institutional grew by 28% in the first quarter, Prime Retail by 46%. Federated'​s numbers were similarly aligned but higher in order to produce that overall prime increase of 49% for Federated. Industry government assets showed an increase of 1% over the year ending 3/​31, whereas Federated government assets were up by 9%. Finally … industry assets for tax free money market fund assets being up 4% with Federated more than 10 times better that at 38%."

Cunningham says about ESG, "I can definitely say that the Hermes integration is one that is ongoing and probably will continue to be the case as we continue to progress down the path with our liquidity portfolios in 2019 and into 2020. What we are doing is leveraging the expertise that we have purchased with that acquisition; we are not recreating the wheel. We are using the information that we receive through the Hermes ESG engagement process through our credit process. So integrating it through our credit process in order to enhance what the outlook or the outcome of [​our] 1 through 5 credit rating scale that we have internally, might reflect. So normally, if you look at various outside sources of E, S, and G information, Morningstar provides some input. Sustainalytics is another company that we use. There'​s public ESG data sources from corporations themselves FASB, MSCI ... all of those are external sources."

She explains, "​However with the engagement aspect that occurs through the Hermes team, we are able to have a set of statistics and information and qualitative assessments that are proprietary from a Hermes and now a Federated perspective. As I said, we are continuing to integrate that into our credit research process.... We'​re not redoing what they'​re doing. We are using it in the context of our credit research function from a qualitative assessment perspective and then leveraging that into our 1 through 5 credit rating scale."

Cunningham adds, "What effectively though is not a black and white type of picture, is how we use that information. So it may be that we are very comfortable using lower rated issuers, if you will, from an ESG scoring perspective, as long as the directional change for those issuers in positive and the engagement that we'​ve had with them from an analyst perspective is showing progress. That may be a better situation from our perspective than some company that might have ranked higher on the ESG scoring price process initially, but has been trending in a downward direction with what I call more negative comments from an engagement perspective. So it'​s not always necessarily reflective of a raw score, but rather directional change and essentially understanding how the qualitative aspects of the environmental, social, and governance process fits in with the quantitative and managerial assessment processes that we have always conducted through our Federated credit process."

When asked about their Private Prime Liquidity product, Cunningham responds, "​We did pass through an asset threshold or milestone. As of May 6, we were at $​1.​1 billion, and we'​re continuing to grow from a diversification of client perspective. We'​ve had good steady growth across a diverse set of underlying participants, including universities, corporations [​and] broker dealers' cash.... Securitizations [​also] are putting cash into the product on a regular basis and then at a point in time when needed taking it back out."

She adds, "The overall yield for this product stands today on a gross basis about a 2.​55 that this is showing that yields as of May 6 on a 7-​day basis of 2.​53 on a 30-​day basis of 2.​51. It is continuing to be triple-​A rated, very diverse from a standpoint of underlying security selection. We'​re usually about 25 to 35% in asset-​backed commercial paper, similarly situated with regard to repurchase agreements. And then the remaining third or so of the portfolio is generally in some sort of bank instruments.... So what we'​ve produced is a yield that'​s competitive, with other types of liquidity products with a very low risk high quality asset base."

When asked about Brexit, she answers, "From a Brexit perspective, we continue to use U.​K. sovereign as well as U.​K. banks. We have shortened our maturities on some of them, just to be reflective of what we think is a little bit riskier situation. But we continue to use them.... They'​re U.​K.-​domiciled, but these are global banks. We do not feel that any type of a Brexit scenario, whether it'​s a soft Brexit [​or] hard Brexit, will have a detrimental influence on them."

Cunningham adds, "As far as the broader global issuers that we are using, we use ... banks in large domiciles that are double and triple-​A rated for the most part. We continue to explore various ... Asian countries at this point, but ... our highest quality portfolios [​continue] to be invested only in ... a couple of Japanese bank, and a couple of Australian banks. Canadian banks are probably one of our largest exposures. French banks are also quite large from a European perspective. Again, the key theme would be that these are not single country banks, these are large global banks and world banks, and as such and we continue to feel very comfortable that even in a slowing world economy they will continue to perform very well."

Another question on the call asked about the drivers of growth in prime funds. Is it yields spreads, retail vs institutional, NAV stability or the track record? Cunningham replied, "All of the above. That'​s the easiest answer. We are seeing flows into both institutional as well as retail products. Probably more retail in the 2018 timeframe, 2019 has been kind of a 50/​50 split, retail and institutional. But [​there are] definitely strong flows in both aspects of the business."

She tells us, "I go back to pre-​reform of 2016, many of our clients did not have to, for regulatory reasons, leave Prime funds. They chose to leave Prime funds because they didn'​t know what to expect, they didn'​t know how much an NAV would fluctuate, they didn'​t know if there was really a potential for gates and fees. They just didn'​t know what the new product design would look like and that'​s why they chose to leave and they weren'​t alone. Most of their competitors, most of their peers did the same thing. Now that the spread of 20 basis points or so between prime and government has been locked in pretty tightly for the last several quarters, and they have not seen a huge amount of fluctuation from an NAV standpoint, they'​ve not seen anyone get anywhere close to those liquidity gates and fees, I think they'​ve decided that with incremental new cash flow it'​s a good place to try."

Cunningham also comments, "​They'​re now putting all their cashflow in there and really not taking it out of government funds. It'​s coming from new sources, and I'​d say some of those sources are the deposit market ... especially in the retail space [​where] they'​re getting rates of 40 or 50 basis points. They'​d much rather go into a fund that'​s giving them something that'​s north of 2 percent, without any kind of stipulation ... as to when they can withdraw that cash. So, they might not put all of it into the Prime fund, they might put a portion in the Govy'​s as well. But it'​s certainly ... at the forefront of most people'​s minds at this point that the diversification into that sector is a good one."

Finally, she was also asked about the PNC merger. Cunningham says, "​Well, I'​ll just give you a quick recount of Federated'​s activities. We'​ve done over 60 roll ups and acquisitions over the course the last 10 years or so, so it'​s not something that'​s new to us. We'​re always looking at clients that we deal with on a regular basis that necessarily don'​t want to be in this particular business anymore. In this case, our neighbors down the street at PNC Financial, we'​d been working with them for a period of time and [​it] fit the bill. The product that will be coming over from PNC in particular will go into our Government funds, Government Obligations fund, Treasury Obligations Fund, and USTCR [​US Treasury Cash Reserves]. And that acquisition will be completed likely early in the fourth quarter with really no fanfare or no notification or differences that will be seen from an investor or shareholder base."

​

Fitch Ratings published an updated version of its "Money Market Fund Rating Criteria," revised to reflect recent changes in their short-​term securities ratings metrics. They explain, "This report presents Fitch Ratings' criteria for assigning Money Market Fund (​MMF) ratings to regulated money market funds and other liquidity/​cash management products. These ratings are denoted with an '​mmf' subscript to provide clear differentiation from credit ratings assigned to debt instruments. The criteria apply to new and existing ratings, and focus on the key rating considerations in assessing an MMF'​s capacity to meet its investment objective of preserving principal and providing liquidity."

Analysts Greg Fayvilevich, Alastair Sewell and Li Huang write, "The criteria are applicable to constant net asset value (​NAV), variable/​floating NAV, and European low-​volatility NAV (​LVNAV) funds as the focus is on a manager'​s ability to avoid losses through limiting credit, market and liquidity risk rather than on the particular accounting convention used to calculate NAV. The criteria are also applicable to other liquidity/​cash management products such as separately managed accounts, private funds, or other similar vehicles that have comparable investment objectives and operating frameworks to MMFs.... This includes European short-​term MMFs, but not European '​Standard' MMFs."

They explain, "This report focuses mainly on prime MMFs that primarily invest in short-​term debt instruments issued by financial and non-​financial corporations and structured finance entities. The appendices to this report describe the criteria for government and municipal MMFs, as well as National Ratings assigned to certain locally regulated funds denominated in the local currency."

Fitch says of its "Key Ratings Drivers," "These rating criteria are principles-​based, focusing on an MMF'​s overall risk profile and its key risks -- credit, liquidity and market risk. The thresholds outlined in the report for these risks can be adjusted for qualitative considerations, such as the manager'​s resources and track record and the investor base profile, among others."

They comment, "​Fitch analyses credit risk from two perspectives. First, Fitch seeks to understand the manager'​s credit-​selection capabilities and ability to avoid credit events and limit credit driven losses. Second, Fitch analyses the portfolio'​s key credit attributes including the short-​term ratings assigned to portfolio investments, unsecured versus secured exposures, the level of diversification, and counterparty risk."

The Criteria explains, "Liquidity risk is a function of the quality and maturity profile of the assets, as well as the stability and predictability of the investor base, particularly in times of stress. Fitch considers an intrinsically stable or captive investor base a critical countervailing factor in its assessment of a fund’​s liquidity needs.... The primary metrics Fitch uses to gauge interest rate and spread risk, respectively, are weighted average maturity (​WAM) and weighted average life (​WAL)."

Also, they tell us, "The asset manager'​s capabilities, investment platform and infrastructure are important factors in the rating analysis. The asset manager (​with board-​level oversight, where applicable) has responsibility for achieving the investment objectives, maintaining internal controls, and providing the necessary operational support."

Finally, Fitch states, "MMF ratings seek to measure an MMF'​s ability to provide principal preservation and liquidity through limiting credit, market, and liquidity risks. The principles applied in the risk assessment are selected to be applicable to a wide range of liquidity products that have comparable investment objectives and operating frameworks to MMFs. For example, a cash management-​focused separately managed account is likely to have different liquidity requirements from a commingled regulated MMF, while a fund investing solely in US treasury securities is primarily exposed to interest-​rate risk. Fitch considers the characteristics of European '​Standard' MMFs akin to those of short-​term bond funds and, therefore, rates them under the Global Bond Fund Rating Criteria."

In other news, a press release entitled, "TreasuryXpress and FXD Capital Partner to Help Reduce Idle Cash for Corporates," tells us, "TreasuryXpress, the global leader in on-​demand treasury management solutions (​TMS) today announced its partnership with FXD Capital, an innovative money broker and deposit specialist. The partnership aims to empower corporate treasurers and finance directors to achieve comprehensive cash visibility and improve the way they manage their idle cash."

Bobby Jackson, Managing Director and Co-​Founder of FXD says, "​There'​s some degree of inertia for CFOs and treasurers to make their idle cash work harder.... Many have seen this as a time-​consuming and futile task given the historically low rates environment. We broker deposits to generate better returns from their cash, in a way that reduces counterparty risk and ensures sufficient accessibility of funds in line with their cash requirements. TreasuryXpress provides the insight and tools treasurers need to gain a comprehensive view of their liquidity and cash."

The release explains, "FXD provides services that help corporates enhance liquidity, diversify counterparty risk and maximise yield, through a wide range of Term Deposits, Notice Accounts, and MMFs. Through this joint offering, clients of TreasuryXpress will now be able to leverage FXD'​s expertise in providing a proactive deposit rate aggregation solution."

Tom Leitch, COO of TreasuryXpress, adds, "Through our on-​demand TMS, we enable treasurers to analyse their entire cashflow and position, identifying better opportunities to put their cash to work, by leveraging FXD to identify better rates and match our clients with complementary counterparties, we make it easier for clients to achieve a better return on their cash."

​

We'​ve recently seen a handful of "​green" or "​ESG" money market funds enter the market. But we'​re now seeing another kind of "​green" fund, Army green, in the form of the first veteran-​affiliated money market fund. A press release entitled, "Academy Securities and JP Morgan Announce New Money Market Funds," tells us that, "Academy Securities, a registered broker-​dealer, certified Disabled Veteran Business Enterprise (​DVBE), and Minority Business Enterprise (​MBE), today announced the launch of the Academy Share Class of the JP Morgan Prime Money Market Fund (​JPAXX) and JP Morgan U.​S. Government Money Market Fund (​JGAXX)."

It explains, "The product offering delivers the experience, expertise, and performance of the JP Morgan Asset Management team, while serving as a solution to cash management investors who share in the support of Academy Securities' social mission to mentor, train, and hire transitioning veterans. The partnership between JPM and Academy exemplifies the intersection between capabilities and authentic diversity."

Academy Chairman & CEO Chance Mims comments, "We are very excited to launch this new share class initiative with JP Morgan, a best in class asset management platform." President Phil McConkey says, "Academy will keep seeking new ways like this to better serve our clients, while also being focused on helping our nation'​s returning heroes transition to the civilian work force."

The release tells us, "The Academy Share Class of the JP Morgan Money Market Funds are managed by JP Morgan Asset Management. Both funds aim to preserve capital, maintain liquidity and produce a competitive yield."

John Donohue, CEO & CIO of the J.​P. Morgan Asset Management Global Liquidity Business, adds, "We are proud to be working with Academy Securities to launch this share class supporting our joint mission to mentor, train and hire transitioning US Military Veterans."

The press release states, "Academy Securities is a preeminent disabled veteran owned investment bank with strength in capital markets, public finance, fixed income and equity trading. Leadership and staff have had intensive military training prior to entering and gaining in depth financial services experience in global capital markets." (​See our Feb. 5 Link of the Day," "McQuillen, Tarditi Join Academy Secs and the release, "Former General Electric Managing Director Matt McQuillen JoinsAcademy Securities.")

The Form N-​1A Registration Statement for the Academy Class Shares of JPMorgan Prime Money Market Fund and JPMorgan U.​S. Government Money Market Fund shows that both funds' expense ratios will be 0.​18% after a 3bps waiver. It says about the Prime Money Market Fund, "The Fund invests in high quality, short-​term money market instruments which are issued and payable in U.​S. dollars. The Fund principally invests in: High quality commercial paper and other short-​term debt securities, including floating and variable rate demand notes of U.​S. and foreign corporations, Debt securities issued or guaranteed by qualified U.​S. and foreign banks, including certificates of deposit, time deposits and other short-​term securities, Securities issued or guaranteed by the U.​S. government, its agencies or instrumentalities or Government-​Sponsored Enterprises ('​GSEs'), Asset-​backed securities, Repurchase agreements, and Taxable municipal obligations."

JP Morgan explains, "The Fund is a money market fund managed in the following manner: The Fund calculates its net asset value to four decimals (​e.​g., $​1.​0000) using market-​based pricing and operates with a floating net asset value. The dollar-​weighted average maturity of the Fund will be 60 days or less and the dollar-​weighted average life to maturity will be 120 days or less. The Fund will only buy securities that have remaining maturities of 397 days or less or securities otherwise permitted to be purchased because of maturity shortening provisions under applicable regulation. The Fund invests only in U.​S. dollar-​denominated securities [​and] The Fund seeks to invest in securities that present minimal credit risk."

They continue, "​The Fund may invest significantly in securities with floating or variable rates of interest.... [U]​nder normal conditions, the Fund will invest at least 25% of its total assets in securities issued by companies in the banking industry. The Fund may, however, invest less than 25% of its total assets in this industry as a temporary defensive measure. The Fund may trade securities on a when-​issued, delayed settlement or forward commitment basis. The Fund'​s adviser seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities, market sectors and issuers."

Regarding "Liquidity Fees and Redemption Gates," the filing tells us, "The Fund'​s policies and procedures permit the Board to impose liquidity fees on redemptions and/​or redemption gates in the event that the Fund'​s weekly liquid assets were to fall below a designated threshold. If the Fund'​s weekly liquid assets fall below 30% of its total assets, the Board, in its discretion, may impose liquidity fees of up to 2% of the value of the shares redeemed and/​or gates on redemptions. In addition, if the Fund'​s weekly liquid assets fall below 10% of its total assets at the end of any business day, the Fund must impose a 1% liquidity fee on shareholder redemptions unless the Board determines that not doing so is in the best interests of the Fund."

For the "U.​S. Government Money Market Fund'​s Investment Strategies," they write, "Under normal conditions, the Fund invests its assets exclusively in: Debt securities issued or guaranteed by the U.​S. government, or by U.​S. government agencies or instrumentalities or Government-​Sponsored Enterprises ('​GSEs'), and Repurchase agreements fully collateralized by U.​S. Treasury and U.​S. government securities."

The filing adds, "The Fund is a money market fund managed in the following manner: The Fund seeks to maintain a net asset value ('​NAV') of $​1.​00 per share. The dollar-​weighted average maturity of the Fund will be 60 days or less and the dollar-​weighted average life to maturity will be 120 days or less. The Fund will only buy securities that have remaining maturities of 397 days or less or securities otherwise permitted to be purchased because of maturity shortening provisions under applicable regulation. The Fund invests only in U.​S. dollar-​denominated securities. The Fund seeks to invest in securities that present minimal credit risk."

It explains, "​The Fund intends to continue to qualify as a '​government money market fund,' as such term is defined in or interpreted under Rule 2a-​7 under the Investment Company Act of 1940, as amended.... 'Government money market funds' are required to invest at least 99.​5% of their assets in (​i) cash, (​ii) securities issued or guaranteed by the United States or certain U.​S. government agencies or instrumentalities and/​or (​iii) repurchase agreements that are collateralized fully, and are exempt from requirements that permit money market funds to impose a liquidity fee and/​or temporary redemption gates. While the J.​P. Morgan Funds' Board of Trustees ... may elect to subject the Fund to liquidity fee and gate requirements in the future, the Board has not elected to do so at this time."

​

Crane Data'​s latest MFI International shows total assets in "​offshore" money market mutual funds, U.​S.-​style funds domiciled in Ireland or Luxemburg and denominated in USD and Euro down significantly year-​to-​date, though Sterling MMFs are roughly flat. Through 5/​13/​19, overall MFII assets are down $​45.​3 billion to $​800.​6 billion. (​They rose $​15.​2 billion in 2018.) Offshore USD money funds are down $​23.​6 billion YTD (​they rose $​28.​8B last year). Euro funds are still feeling the pain of negative rates and recent European MMF reforms; they'​re down E15.​8 billion YTD (​following 2 flat years). GBP funds are up slightly, however, by L1.​9 billion. U.​S. Dollar (​USD) money funds (​174) account for over half ($​430.​3 billion, or 53.​7%) of this "​European" money fund total, while Euro (​EUR) money funds (​76) total E83.​2 billion (​10.​4%) and Pound Sterling (​GBP) funds (​103) total L211.​3 billion (​26.​4%). We summarize our latest "​offshore" money fund statistics and our Money Fund Intelligence International Portfolio Holdings (​which went out to subscribers Tuesday), below.

Offshore USD MMFs yield 2.​31% (​7-​Day) on average (​as of 5/​13/​19), up from 2.​29% on 12/​31/​18, 1.​19% at the end of 2017 and 0.​56% at the end of 2016. EUR MMFs yield -​0.​50 on average, compared to -​0.​49% at year-​end 2018, -​0.​55% on 12/​29/​17 and -​0.​49% on 12/​30/​16. Meanwhile, GBP MMFs yielded 0.​67%, up from 0.​64% on 12/​31/​18, from 0.​24% at the end of 2017 and 0.​19% at the end of 2016. (​See our latest MFI International for more on the "​offshore" money fund marketplace. Note that these funds are only available to qualified, non-​U.​S. investors.)

Crane'​s MFII Portfolio Holdings, with data (​as of 4/​30/​19), show that European-​domiciled US Dollar MMFs, on average, consist of 27% in Commercial Paper (​CP), 22% in Repurchase Agreements (​Repo), 22% in Certificates of Deposit (​CDs), 14% in Other securities (​primarily Time Deposits), 14% in Treasury securities and 1% in Government Agency securities.

USD funds have on average 37.​6% of their portfolios maturing Overnight, 9.​9% maturing in 2-​7 Days, 17.​7% maturing in 8-​30 Days, 11.​1% maturing in 31-​60 Days, 10.​4% maturing in 61-​90 Days, 10.​6% maturing in 91-​180 Days and 2.​8% maturing beyond 181 Days. USD holdings are affiliated with the following countries: the US (​26.​4%), France (​16.​6%), Canada (​11.​0%), Japan (​10.​4%), the United Kingdom (​6.​6%), Germany (​6.​0%), the Netherlands (​4.​3%), Sweden (​4.​1%), Australia (​2.​8%), Switzerland (​2.​7%), China (​2.​2%), Singapore (​1.​8%), Belgium (​1.​5%) and Norway (​1.​3%).

The 10 Largest Issuers to "​offshore" USD money funds include: the US Treasury with $​66.​7 billion (​13.​9% of total assets), BNP Paribas with $​20.​0B (​4.​2%), Credit Agricole with $​16.​4B (​3.​4%), Wells Fargo with $​16.​0B (​3.​3%), Barclays PLC with $​15.​6B (​3.​2%), Mitsubishi UFJ Financial Group Inc with $​15.​3B (​3.​2%), Mizuho Corporate Bank Ltd with $​14.​0B (​2.​9%), Bank of Nova Scotia with $​12.​5B (​2.​6%), Toronto-​Dominion Bank with $​11.​6B (​2.​4%) and RBC with $​10.​6B (​2.​2%).

Euro MMFs tracked by Crane Data contain, on average 46% in CP, 27% in CDs, 19% in Other (​primarily Time Deposits), 7% in Repo, 0% in Agency securities and 1% in Treasuries. EUR funds have on average 3.​5% of their portfolios maturing Overnight, 28.​6% maturing in 2-​7 Days, 14.​5% maturing in 8-​30 Days, 16.​4% maturing in 31-​60 Days, 17.​0% maturing in 61-​90 Days, 17.​5% maturing in 91-​180 Days and 2.​6% maturing beyond 181 Days. EUR MMF holdings are affiliated with the following countries: France (​29.​2%), Japan (​14.​7%), the US (​11.​2%), Germany (​9.​5%), Sweden (​7.​6%), Canada (​4.​3%), the Netherlands (​3.​9%), the U.​K. (​3.​5%), Belgium (​2.​9%), China (​2.​4%), Switzerland (​2.​4%), Finland (​2.​3%) and Australia (​1.​8%).

The 10 Largest Issuers to "​offshore" EUR money funds include: Credit Agricole with E4.​8B (​6.​1%), Mitsubishi UFJ Financial Group with E3.​2B (​4.​1%), BNP Paribas with E3.​1B (​4.​0%), Societe Generale with E2.​7B (​3.​4%), Svenska Handelsbanken with E2.​7B (​3.​4%), Credit Mutuel with E2.​6B (​3.​3%), Citi with E2.​5B (​3.​2%), Procter & Gamble Co. with E2.​5B (​3.​2%), Mizuho Corporate Bank Ltd with E2.​5B (​3.​2%) and ING Bank with E2.​3B (​2.​9%).

The GBP funds tracked by MFI International contain, on average (​as of 4/​30/​19): 33% in CDs, 28% in Other (​Time Deposits), 26% in CP, 11% in Repo, 2% in Treasury and 0% in Agency. Sterling funds have on average 20.​0% of their portfolios maturing Overnight, 14.​8% maturing in 2-​7 Days, 13.​6% maturing in 8-​30 Days, 13.​8% maturing in 31-​60 Days, 18.​1% maturing in 61-​90 Days, 14.​9% maturing in 91-​180 Days and 4.​8% maturing beyond 181 Days. GBP MMF holdings are affiliated with the following countries: France (​19.​6%), Japan (​16.​9%), the United Kingdom (​11.​6%), Canada (​9.​9%), the Netherlands (​5.​7%), Germany (​5.​7%), United States (​5.​6%), Sweden (​5.​6%), Australia (​5.​3%), Singapore (​3.​2%), China (​2.​9%) and Finland (​1.​6%).

The 10 Largest Issuers to "​offshore" GBP money funds include: Mizuho Corporate Bank Ltd with L6.​2B (​4.​7%), BNP Paribas with L6.​0B (​4.​6%), Sumitomo Mitsui Trust Bank with L5.​8B (​4.​4%), BPCE SA with L4.​9B (​3.​7%), Credit Agricole with L4.​7B (​3.​6%), Nordea Bank with L4.​2B (​3.​2%), Mitsubishi UFJ Financial Group with L4.​1B (​3.​1%), Toronto-​Dominion Bank with L3.​7B (​2.​8%), Sumitomo Mitsui Banking Co with L3.​6B (​2.​7%) and Standard Chartered Bank with L3.​6B (​2.​7%).

As a reminder, Crane Data continues to make plans for our 7th annual European Money Fund Symposium, which will be held Sept. 23-​24, 2019, in Dublin, Ireland. (​See the latest agenda here.) Our last "​offshore" money fund event in London attracted a record 140 attendees, sponsors and speakers, and we expect our next Dublin show to once again be the largest money fund event in Europe. Let us know if you'​re interested in any sponsorship or speaking opportunities, or if you have any feedback or questions.

European Money Fund Symposium offers "​offshore" money fund portfolio managers, and money market investors, issuers, dealers and service providers a concentrated and affordable educational experience, as well as an excellent and informal networking venue. Our mission is to deliver the best possible conference content at an affordable price to money market fund professionals. Attendee registration for our 2019 Crane'​s European Money Fund Symposium is $​1,​000 (​USD).

Finally, there'​s just over a month to go until our big show, Crane'​s Money Fund Symposium, which is June 24-​26, 2019, at the Renaissance Boston. If you plan on attending, register asap. (​Hopefully, you'​ve already made hotel reservations because the conference hotel is sold out.) Let us know if you'​d like to learn more about any of our other events!

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The May issue of our Bond Fund Intelligence, which was sent out to subscribers Tuesday morning, features the lead story, "Bond Funds & Bond ETFs Hit $​5 Trillion Level; Still Going," which discusses the strong rebound in BF inflows; as well as the article, "ICI 2019 Fact Book Reviews Bond Fund Trends, Flows," which excerpts from the Investment Company Institute'​s latest annual. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show lower bond fund yields and positive returns in April. We excerpt from the new issue below. (Contact us if you'​d like to see our Bond Fund Intelligence and BFI XLS spreadsheet, or our Bond Fund Portfolio Holdings data.)

Our lead story says, "Bond fund inflows and assets have rebounded sharply in 2019, following a brief downturn in Q4'​18. Total assets of bond mutual funds plus bond ETFs are now over $​5 trillion, according to Crane Data projections on ICI'​s monthly asset collections. While ETFs continue to grow faster than funds, they remain a mere 13.​8% of the total of the two groups."

It continues, "​ICI'​s most recent weekly 'Combined Estimated Long-​Term Fund Flows and ETF Net Issuance' report, with data as of May 1, tells us, 'Bond funds had estimated inflows of $​9.​13 billion for the week, compared to estimated inflows of $​9.​98 billion during the previous week. Taxable bond funds saw estimated inflows of $​6.​99 billion, and municipal bond funds had estimated inflows of $​2.​13 billion.' Over the past 5 weeks through 5/​1/​19, bond funds and bond ETFs have seen inflows of $​47.​0 billion."

The article adds, "​The Investment Company Institute'​s latest monthly 'Trends in Mutual Fund Investing - March 2019' shows bond fund assets increased by $​85.​0 billion to $​4.​270 trillion. Over the past 12 months through 3/​31/​19, bond fund assets have increased by $​176.​8 billion, or 4.​3%. The number of bond funds declined by 12 in March to 2,​159. This was up 16 from a year ago.'"

Our "Fact Book" article says, "The Investment Company Institute recently published its '2019 Investment Company Fact Book,' which contains a review on the bond fund marketplace in 2018 and a wealth of statistics on bond mutual funds. ICI'​s section on 'Bond Mutual Funds' says, 'Bond mutual fund net new cash flows typically are correlated with the performance of US bonds, which, in turn, is largely driven by the US interest rate environment.' Long-​term interest rates fluctuated in 2018, finishing the year about 30 basis points higher than at the beginning of the year. The 10-​year Treasury started 2018 at 2.​40 percent and rose 65 basis points by September 30. Over the same period, the total return on bonds fell below zero." Long-​term interest rates continued to increase through early November of 2018 but fell sharply late in the fourth quarter, finishing the year at 2.​69 percent."

It continues, "During the first three quarters of 2018, even though long-​term interest rates were rising (​meaning bond prices were falling), taxable bond mutual funds received $​109 billion in net inflows.... During the fourth quarter of the year, investors withdrew $​112 billion, on net, from taxable bond mutual funds despite decreasing long-​term interest rates.... This outflow may seem surprising, but investors may have been reacting to the abrupt flattening of the Treasury yield curve during the fourth quarter. The difference in yield between 10-​year Treasury notes and 3-​month Treasury bills was 1% in the early part of October, but the spread fell to 24 basis points by year-​end 2018, its low point of the year."

Our Bond Fund News includes the brief "Yields Lower, Returns Jump in April." It explains, "Bond fund yields were lower for most categories except Ultra-​Short, Intm. and Long-​Term. The BFI Total Index returned 0.​41% for 1-​month and 4.​18% over 12 months. The BFI 100 returned 0.​41% in April and 4.​75% over 1 year. Our BFI Conservative Ultra-​Short Index returned 0.​25% over 1 month and 2.​51% over 1-​year; the BFI Ultra-​Short Index averaged 0.​30% in April and 2.​46% over 12 mos. BFI Short-​Term returned 0.​35% and 3.​31%, and BFI Intm-​Term Index <​b:>`​_returned 0.​22% and 4.​70% for 1-​mo and 1-​year. `​BFI'​s Long-​Term Index returned 0.​20% in April and 5.​39% for 1-​yr; our High Yield Index returned 1.​34% in April and 5.​16% over 1-​yr."

Another News brief, "Federated Buying PNC Bond Funds," explains, "​A press release says, 'Federated Investors ... and The PNC Financial Services Group ... announced that they have reached a definitive agreement for Federated to acquire certain components of [​PNC'​s] investment-​management business. The proposed transaction includes the reorganization of PNC'​s family of liquidity, equity and fixed-​income mutual funds into corresponding Federated mutual funds. PNC Ultra Short Bond will merge into Federated Ultrashort Bond, and PNC Tax Exempt Limited Maturity Bond will merge into PNC Tax Exempt Limited Maturity Bond."

A third News update, "MStar Writes, 'Introducing Two New Morningstar Bond Categories,' which says, "The intermediate-​term bond Morningstar Category long ranked as the largest of the fixed-​income categories, home to funds that invested primarily in investment-​grade fixed-​income debt and had durations (​a measure of interest-​rate sensitivity) that landed in the intermediate-​term range. Effective April 30, 2019, we retired the intermediate-​term bond category and introduced two new categories: intermediate core bond and intermediate core-​plus bond."

A fourth News brief, "IBD Says '​Risk-​On April Makes High-​Yield Funds Among Best Bond Funds As Treasuries Decline,' comments, "​U.​S. Treasuries reversed course in April, giving back a chunk of their March gains, as investors embraced riskier assets with no sign of a recession in sight. High-​yield and loan participation funds were among the best bond funds during the month."

Finally, a sidebar entitled, "Morningstar Fee Study," explains, "An article entitled, '`​2018 Morningstar Fee Study Finds That Fund Prices Continue to Decline,' tells us, '​Investors paid less to own funds in 2018 than ever before. Morningstar'​s annual fee study of U.​S. open-​end mutual funds and exchange-​traded funds found that the asset-​weighted average expense ratio was 0.​48% in 2018, a 6% decline from 2017.... Among passive funds, taxable-​bond funds saw the biggest year-​over-​year cost decline, as the asset-​weighted average fee fell 10% to 0.​12% in 2018."

It explains, "This resulted largely from a spike in flows to very low-​cost short- and ultrashort-​term bond index funds and ETFs, reflecting resurgent investor demand for cash-​like alternatives amid market turbulence. These index funds and ETFs accounted for approximately a third of flows into all funds in 2018."

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Last week, Investment News featured the article, "Fintechs find new focus helping clients with cash management." Subtitled, "Robo-​advisers, lenders and stock trading apps are all launching high-​yield savings accounts," it explains that, "Cash management is suddenly one of the hottest trends in financial technology." (​See our May 9 News, "ICM Launches CMAs.") The IN piece says, "Since Wealthfront launched Federal Deposit Insurance Corp.-​insured high-​yield savings accounts in February, the digital adviser said clients have deposited more than $​1 billion, generating $​2.​5 million in interest. With that success, Wealthfront is increasing interest rates on the cash accounts to 2.​29%." We quote from the article below, and we also excerpt from Wells Fargo and Fidelity'​s latest money fund commentary, below.

It tells us, "Wealthfront is hardly the only fintech interested in providing banking, or at least bank-​like services. Betterment launched Smart Saver in August, a program that sweeps extra cash in a client'​s checking or savings account into a portfolio of low-​risk bonds, projecting a 2.​18% yield after management fees."

Investment News adds, "Robinhood also attempted a checking and savings feature in December that promised 3% returns, but shelved the product following industry backlash and regulatory scrutiny. The stock trading app is now reportedly seeking a bank charter. Social Finance Inc., M1 Finance and Acorns all also have brought to market their own cash management features."

For more of our recent coverage of fin-​tech'​s and cash, see the following Crane Data News and Link of the Day stories: "Wealthfront Cash Brings in $​1 Billion" (​4/​29/​19), "Wealthfront Cash Targets Deposits" (​2/​20/​19), "MarketWatch Has More on Robinhood" (​1/​3/​19), "SIPC Concerns About Robinhood" (​12/​17/​18) and "Robinhood Stealing Millennial'​s Cash" (​12/​14/​18).

In other news, Wells Fargo Money Market Funds writes in its newly redesigned monthly "Overview, strategy, and outlook," "​In spite of stubbornly flat yields, money market fund assets behaved atypically. With tax day falling on April 15, the month is usually one for heavy outflows across all money market fund assets, and industry-​wide assets under management typically bottom out at this time of year. True to form, tax-​related outflows of about $​24 billion hit retail prime and government funds and tax-​exempt money funds. On the other hand, institutional prime and government funds experienced inflows of about $​20 billion in April, with roughly 75% going into prime funds. So far this year, industry assets are at a near year-​to-​date high of $​3.​2 trillion, driven largely by $​80 billion in renewed interest in prime money market funds."

They also comment, "Although T-​bill yields barely budged from the supply fluctuations, the repo market reacted to the supply by doing what the repo market often does, which is the exact opposite of what you might expect. In this case, repo rates in April were consistently higher than they were for most of the first quarter despite the contraction in T-​bill supply.... [​T]​he repo market is noisy, with periodic spikes on reporting dates, Treasury settlement dates, and sometimes just because. Looking through the noise, though, the chart shows that repo yields, which often traded below 2.​40% throughout the first quarter, never traded below that level in April. It'​s quite possible that the flip side of the tax-​seasonality coin."

On the Municipal sector, Wells writes, "Yields in the short end of the municipal money market space spiked during April as tax season ushered in approximately $​4.​5 billion in outflows from municipal money market funds. The Securities Industry and Financial Markets Association (​SIFMA) Municipal Swap Index rose rapidly from 1.​50% (​62% of 1-​week LIBOR) to 2.​30% (​95% of 1-​week LIBOR), a level not seen since the beginning of the financial crisis in 2008."

They continue, "While the tax-​time spike in rates is not unusual for the municipal money market, the abruptness and magnitude of the move caught many participants off guard. The SIFMA Index had remained compressed throughout the first quarter of the year as demand from municipal bond funds remained exceptionally high based on record inflows into those funds. This incremental demand had easily made up for lagging demand from municipal money market funds and had led many to believe that this year’​s tax season bounce would be muted."

Wells adds, "Instead, rates on overnight and weekly variable-​rate demand notes (​VRDNs) and tender option bonds (​TOBs) skyrocketed as dealers were forced to quickly recalibrate offering levels to entice new buyers as demand evaporated in the second half of the month. The municipal yield curve rapidly inverted as rates on overnight and weekly paper exceeded the levels on 15-​year high-​grade paper. Further out on the short-​term curve, yields on high-​grade commercial paper and notes in the one-​month to three-​month space rose in sympathy with VRDNs and TOBs. However, levels in this area of the curve rose much less dramatically than SIFMA, increasing roughly 15 bps to 25 bps."

Finally, Fidelity Investments' latest "Money Markets" commentary says, "Volatility remains a tailwind for money market funds. Money market funds (​MMFs) have seen strong flows as rising interest rates and equity volatility have drawn in more investors. Assets under management in taxable MMFs rose to nearly $​2.​9 trillion as of the end of March, including $​153.​7 billion in the fourth quarter of 2018. Asset growth was driven largely by strong inflows into prime mutual funds. Prime funds delivered a net yield that was 22 basis points higher than government funds as of the end of March."

They add, "Another positive sign for the industry has been dramatic growth in Fixed Income Clearing Corporation (​FICC) sponsored repurchase agreements. The FICC is a registered clearinghouse that allows banks and broker dealers to fund their government securities more efficiently. Year over year, year-​end growth in FICC sponsored repo increased by $​104 billion in 2018, and the number could get much larger as the U.​S. Treasury seeks financing of $​1 trillion over each of the next two years to cover the rising U.​S. deficit. The program'​s evolution and growth will help foster improved conditions in the repo market, an important high-​quality liquid asset for the MMF industry."

​

Crane Data released its May Money Fund Portfolio Holdings Thursday, and our most recent collection of taxable money market securities, with data as of April 30, 2019, shows a big jump in Repo, Agencies and CP, and a big drop in Treasuries. Money market securities held by Taxable U.​S. money funds (​tracked by Crane Data) increased by $​88.​9 billion to $​3.​305 trillion last month, after decreasing by $​8.​2 billion in March, increasing by $​89.​8 billion in February and increasing by $​4.​2 billion in January. (​Note that the figures were inflated by the addition of massive $​108 billion American Funds Central Cash Fund to our collections.) Repo continued to be the largest portfolio segment -- it surged over the $​1.​1 trillion mark -- followed by Treasury securities, then Agencies. CP remained fourth ahead of CDs, Other/​Time Deposits and VRDNs. Below, we review our latest Money Fund Portfolio Holdings statistics. (​Visit our Content center to download the latest files, or contact us to see our latest Portfolio Holdings reports.)

Among taxable money funds, Repurchase Agreements (​repo) rose by $​87.​4 billion (​8.​6%) to $​1.​106 trillion, or 33.​5% of holdings, after decreasing by $​61.​6 billion in March, increasing $​0.​9 billion in February and increasing by $​41.​4 billion in January. Treasury securities plunged by $​111.​0 billion (-​11.​6%) to $​847.​3 billion, or 25.​6% of holdings, after increasing by $​54.​4 billion in March, increasing by $​69.​6 billion in February and decreasing by $​99.​0 billion in January. Government Agency Debt surged higher by $​48.​6 billion (​7.​3%), to $​715.​5 billion, or 21.​6% of holdings, after increasing $​5.​6 billion in March, decreasing $​0.​1 billion in February, increasing $​0.​7 billion in January and rising $​25.​9 billion in Dec. Repo, Treasuries and Agencies totaled $​2.​669 trillion, representing a massive 80.​7% of all taxable holdings.

Money funds' holdings of CP jumped in April, and CDs and Other (​mainly Time Deposits) holdings also rose strongly. Commercial Paper (​CP) increased $​46.​8 billion (​17.​8%) to $​309.​3 billion, or 9.​4% of holdings, after rising $​5.​2 billion in March, rising $​13.​2 billion in February and rising $​17.​7 billion in January. Certificates of Deposit (​CDs) rose by $​10.​9 billion (​4.​9%) to $​233.​4 billion, or 7.​1% of taxable assets, after falling $​5.​9 billion in March, rising $​6.​7 billion in February and rising $​30.​4 billion in January. Other holdings, primarily Time Deposits, increased $​5.​9 billion (​7.​4%) to $​86.​3 billion, or 2.​6% of holdings, after falling $​5.​8 billion in March, falling $​0.​5 billion in February and rising $​13.​1 billion in January. VRDNs moved up to $​8.​1 billion, or 0.​2% of assets. (​Note: This total is VRDNs for taxable funds only. We will publish Tax Exempt MMF holdings separately late Friday.)

Prime money fund assets tracked by Crane Data increased $​140 billion to $​979 billion, or 29.​6% of taxable money funds' $​3.​306 trillion total. Among Prime money funds, CDs represent almost a quarter of holdings at 23.​8% (​down from 26.​5% a month ago), while Commercial Paper accounted for 31.​6% (​up from 31.​3%). The CP totals are comprised of: Financial Company CP, which makes up 18.​6% of total holdings, Asset-​Backed CP, which accounts for 6.​5%, and Non-​Financial Company CP, which makes up 6.​5%. Prime funds also hold 5.​6% in US Govt Agency Debt, 12.​4% in US Treasury Debt, 6.​2% in US Treasury Repo, 1.​1% in Other Instruments, 6.​0% in Non-​Negotiable Time Deposits, 4.​3% in Other Repo, 6.​8% in US Government Agency Repo, and 0.​6% in VRDNs.

Government money fund portfolios totaled $​1.​599 trillion (​48.​4% of all MMF assets), down from $​1.​620 trillion in March, while Treasury money fund assets totaled another $​728 billion (​22.​0%), down from $​759 billion the prior month. Government money fund portfolios were made up of 41.​3% US Govt Agency Debt, 23.​3% US Government Agency Repo, 14.​7% US Treasury debt, and 20.​5% in US Treasury Repo. Treasury money funds were comprised of 67.​4% US Treasury debt, 32.​3% in US Treasury Repo, and 0.​3% in Government agency repo, Other Instrument, and Investment Company shares. Government and Treasury funds combined now total $​2.​327 trillion, or 70.​4% of all taxable money fund assets.

European-​affiliated holdings (​including repo) rose by $​90.​3 billion in April to $​684.​2 billion; their share of holdings rose to 20.​7% from last month'​s 18.​5%. Eurozone-​affiliated holdings fell to $​438.​1 billion from last month'​s $​366.​4 billion; they account for 13.​3% of overall taxable money fund holdings. Asia & Pacific related holdings increased by $​28.​1 billion to $​297.​2 billion (​9.​0% of the total). Americas related holdings fell $​30.​2 billion to $​2.​322 trillion and now represent 70.​3% of holdings.

The overall taxable fund Repo totals were made up of: US Treasury Repurchase Agreements (​up $​28.​0 billion, or 4.​7%, to $​623.​2 billion, or 18.​9% of assets); US Government Agency Repurchase Agreements (​up $​54.​0 billion, or 13.​9%, to $​441.​2 billion, or 13.​3% of total holdings), and Other Repurchase Agreements (​up $​5.​4 billion from last month to $​41.​6 billion, or 1.​3% of holdings). The Commercial Paper totals were comprised of Financial Company Commercial Paper (​up $​17.​9 billion to $​182.​4 billion, or 5.​5% of assets), Asset Backed Commercial Paper (​up $​6.​4 billion to $​63.​3 billion, or 1.​9%), and Non-​Financial Company Commercial Paper (​up $​22.​5 billion to $​63.​6 billion, or 1.​9%).

The 20 largest Issuers to taxable money market funds as of April 30, 2019, include: the US Treasury ($​847.​3 billion, or 25.​6%), Federal Home Loan Bank ($​552.​3B, 16.​7%), BNP Paribas ($​138.​3B, 4.​2%), Fixed Income Clearing Co ($​111.​7B, 3.​4%), RBC ($​106.​9B, 3.​2%), JP Morgan ($​97.​7B, 3.​0%), Federal Farm Credit Bank ($​84.​7B, 2.​6%), Wells Fargo ($​68.​0B, 2.​1%), Barclays ($​66.​2B, 2.​0%), Mitsubishi UFJ Financial Group Inc ($​59.​1B, 1.​8%), Credit Agricole ($​57.​8B, 1.​7%), Federal Home Loan Mortgage Co ($​54.​7B, 1.​7%), Sumitomo Mitsui Banking Co ($​53.​3B, 1.​6%), Societe Generale ($​48.​3B, 1.​5%), Natixis ($​46.​2B, 1.​4%), Mizuho Corporate Bank Ltd ($​43.​8B, 1.​3%), HSBC ($​43.​1B, 1.​3%), Bank of Nova Scotia ($​40.​3B, 1.​2%), Bank of America ($​38.​6B, 1.​2%) and Credit Suisse ($​38.​2B, 1.​2%).

In the repo space, the 10 largest Repo counterparties (​dealers) with the amount of repo outstanding and market share (​among the money funds we track) include: BNP Paribas ($​126.​1B, 11.​4%), Fixed Income Clearing Co ($​111.​7B, 10.​1%), RBC ($​82.​8B, 7.​5%), JP Morgan ($​82.​1B, 7.​4%), Wells Fargo ($​56.​9B, 5.​1%), Barclays PLC ($​55.​5B, 5.​0%), Credit Agricole ($​41.​2B, 3.​7%), Societe Generale ($​39.​8B, 3.​6%), HSBC ($​36.​7B, 3.​3%) and Mitsubishi UFJ Financial Group Inc ($​35.​0B, 3.​2%). Fed Repo positions among MMFs on 4/​30/​19 shrunk to virtually zero with only Western Asset Inst Govt showing just a tiny fractional holding (​0.​0).

The 10 largest issuers of "​credit" -- CDs, CP and Other securities (​including Time Deposits and Notes) combined -- include: Toronto-​Dominion Bank ($​26.​1B, 4.​9%), Mitsubishi UFJ Financial Group Inc. ($​24.​1B, 4.​6%), RBC ($​24.​1B, 4.​6%), Credit Suisse ($​22.​0B, 4.​2%), Mizuho Corporate Bank Ltd ($​21.​1B, 4.​0%), Sumitomo Mitsui Banking Co ($​20.​1B, 3.​8%), Bank of Nova Scotia ($​16.​9B, 3.​2%), Credit Agricole ($​16.​6B, 3.​1%), JP Morgan ($​15.​6B, 3.​0%) and Canadian Imperial Bank of Commerce ($​15.​3B, 2.​9%).

The 10 largest CD issuers include: Mitsubishi UFJ Financial Group Inc ($​16.​0B, 6.​9%), Sumitomo Mitsui Banking Co ($​15.​9B, 6.​8%), Mizuho Corporate Bank Ltd ($​13.​0B, 5.​6%), Bank of Montreal ($​12.​8B, 5.​5%), Svenska Handelsbanken ($​12.​0B, 5.​1%), Bank of Nova Scotia ($​10.​9B, 4.​7%), Wells Fargo ($​10.​8B, 4.​6%), Sumitomo Mitsui Trust Bank ($​10.​0B, 4.​3%), Canadian Imperial Bank of Commerce ($​8.​8B, 3.​8%) and Landesbank Baden-​Wurttemberg ($​8.​1B, 3.​5%).

The 10 largest CP issuers (​we include affiliated ABCP programs) include: Toronto-​Dominion Bank ($​16.​7B, 6.​6%), JPMorgan ($​15.​3B, 6.​1%), RBC ($​14.​5B, 5.​8%), Credit Suisse ($​12.​9B, 5.​1%), Mitsubishi UFJ Financial Group Inc ($​8.​0B, 3.​2%), Societe Generale ($​7.​6B, 3.​0%), Credit Agricole ($​7.​3B, 2.​9%), National Australia Bank Ltd ($​7.​0B, 2.​8%), Toyota ($​6.​8B, 2.​7%) and Citi ($​6.​6B, 2.​6%).

The largest increases among Issuers include: Federal Home Loan Bank (​up $​35.​7B to $​552.​3B), Credit Agricole (​up $​34.​3B to $​57.​8B), Natixis (​up $​19.​0B to $​46.​2B), Credit Suisse (​up $​17.​3B to $​38.​2B), Mizuho Corporate Bank Ltd (​up $​16.​2B to $​43.​8B), Sumitomo Mitsui Banking Co (​up $​14.​7B to $​53.​3B), Federal Home Loan Mortgage Co (​up $​11.​3B to $​54.​7B), Goldman Sachs (​up $​9.​2B to $​29.​6B), Societe Generale (​up $​7.​1B to $​48.​3B) and Barclays PLC (​up $​6.​4B to $​66.​2B).

The largest decreases among Issuers of money market securities (​including Repo) in April were shown by: the US Treasury (​down $​111.​0B to $​847.​3B), RBC (​down $​18.​6B to $​106.​9B), Deutsche Bank AG (​down $​5.​8B to $​16.​6B), Nomura (​down $​4.​3B to $​30.​0B), HSBC (​down $​3.​3B to $​43.​1B), Sumitomo Mitsui Trust Bank (​down $​1.​9B to $​16.​7B), Bank of Montreal (​down $​1.​8B to $​37.​0B), DNB ASA (​down $​1.​7B to $​13.​3B), Svenska Handelsbanken (​down $​1.​5B to $​14.​8B) and Australia & New Zealand Banking Group Ltd (​down $​1.​0B to $​8.​8B).

The United States remained the largest segment of country-​affiliations; it represents 62.​0% of holdings, or $​2.​048 trillion. France (​9.​4%, $​310.​7B) moved up to the No. 2 spot, and Canada (​8.​3%, $​273.​7B) was third. Japan (​7.​3%, $​241.​3B) occupied fourth place. The United Kingdom (​4.​3%, $​140.​6B) remained in fifth place. Germany (​1.​9%, $​62.​1B) was in sixth place, followed by The Netherlands (​1.​7%, $​56.​1B), Switzerland (​1.​5%, $​48.​0B), Sweden (​1.​3%, $​44.​1B) and Australia (​1.​1%, $​37.​4B). (​Note: Crane Data attributes Treasury and Government repo to the dealer'​s parent country of origin, though money funds themselves "​look-​through" and consider these U.​S. government securities. All money market securities must be U.​S. dollar-​denominated.)

As of April 30, 2019, Taxable money funds held 34.​5% (​up from 32.​5%) of their assets in securities maturing Overnight, and another 15.​4% maturing in 2-​7 days (​up from 16.​3% last month). Thus, 49.​9% in total matures in 1-​7 days. Another 21.​1% matures in 8-​30 days, while 12.​2% matures in 31-​60 days. Note that over three-​quarters, or 83.​2% of securities, mature in 60 days or less (​up slightly from last month), the dividing line for use of amortized cost accounting under SEC regulations. The next bucket, 61-​90 days, holds 7.​7% of taxable securities, while 7.​3% matures in 91-​180 days, and just 1.​8% matures beyond 181 days.

​

Crane Data'​s latest monthly Money Fund Portfolio Holdings statistics will be published Thursday, May 9, and we'​ll be writing our normal monthly update on the April 30 data for Friday'​s News. But we also generate a separate and broader Portfolio Holdings data set based on the SEC'​s Form N-​MFP filings. (​We continue to merge the two series, and the N-​MFP version is now available via Holdings file listings to Money Fund Wisdom subscribers.) Our summary, with data as of April 30, 2019, includes holdings information from 1,​187 money funds (​three more than last month), representing assets of $​3.​502 trillion (​down from $​3.​526 trillion). We review the latest data, which shows that total money fund assets remained over $​3.​5 trillion in March and that Prime MMF assets broke above the $​1 trillion level, and we also excerpt from a press release announcing Cash Management Accounts from a "​fin-​tech" company named Investor Cash Management.

Our latest Form N-​MFP Summary for All Funds (​taxable and tax-​exempt) shows Repurchase Agreement (​Repo) holdings in money market funds totaling $​1,​120 billion (​up from $​1,​034 billion on March 31), or 32.​0% of all assets. Treasury holdings total $​855.​3 billion (​down from $​1,​010B), or 24.​4%, and Government Agency securities total $​734.​9 billion (​up from $​712.​8 billion), or 21.​0%. Commercial Paper (​CP) totals $​323.​3 billion (​up from $​312.​6 billion), or 9.​2%, and Certificates of Deposit (​CDs) total $​237.​8 billion (​up from $​226.​9 billion), or 6.​8%. The Other category (​primarily Time Deposits) totals $​130.​2 billion (​up from $​123.​7 billion), or 3.​7%, and VRDNs account for $​100.​6 billion (​down from $​105.​6B last month), or 2.​9%.

Broken out into the SEC'​s more detailed categories, the CP totals were comprised of: $​192.​1 billion, or 5.​5%, in Financial Company Commercial Paper; $​58.​5 billion or 1.​7%, in Asset Backed Commercial Paper; and, $​72.​8 billion, or 2.​1%, in Non-​Financial Company Commercial Paper. The Repo totals were made up of: U.​S. Treasury Repo ($​662.​6B, or 18.​9%), U.​S. Govt Agency Repo ($​415.​6B, or 11.​9%), and Other Repo ($​42.​3B, or 1.​2%).

The N-​MFP Holdings summary for the 214 Prime Money Market Funds shows: CP holdings of $​318.​1 billion (​up from $​307.​5 billion), or 31.​8%; CD holdings of $​237.​8 billion (​up from $​226.​9B), or 23.​7%; Repo holdings of $​172.​4 billion (​up from $​138.​7B), or 17.​2%; Other (​primarily Time Deposits) holdings of $​86.​6 billion (​down from $​138.​7B), or 8.​6%; Treasury holdings of $​125.​0 billion (​down from $​160.​1B from last month), or 12.​5%; Government Agency holdings of $​55.​1 billion (​up from $​52.​1B), or 5.​5%; and VRDN holdings of $​6.​6B (​up from $​6.​4B), or 0.​7%.

The SEC'​s more detailed categories show CP in Prime MMFs made up of: $​192.​1 billion (​up from $​186.​9 billion), or 19.​2%, in Financial Company Commercial Paper; $​58.​5 billion, or 5.​8%, in Asset Backed Commercial Paper; and, $​67.​6 billion, or 6.​7%, in Non-​Financial Company Commercial Paper. The Repo totals include: U.​S. Treasury Repo ($​62.​5B, or 6.​2%), U.​S. Govt Agency Repo ($​67.​7B, or 6.​8%), and Other Repo ($​42.​3B, or 4.​2%).

In other news, a press release sent to us yesterday, entitled, "Investor Cash Management Launches Patent-​Pending, White-​Label Cash Management Accounts Powered by DriveWealth," tells us, "Investor Cash Management (​ICM) ... announced the launch of its patent-​pending cash management accounts linked directly to specified SEC-​registered securities such as government money market and ultra-​short bond funds. The company has partnered with DriveWealth, LLC, a leader in global digital trading technology, to provide technology, brokerage and clearing services for the new white-​label accounts."

The release explains, "Unlike conventional bank, high-​yield savings and brokerage sweep accounts, the new ICM accounts provide an unmatched combination of higher rates -- more than 35 times the national bank average of six basis points -- and immediate, unrestricted liquidity. The accounts enable end-​users to transform SEC-​registered securities into digital currencies to make payments via debit card, ATM and online bill pay."

ICM CEO Fred Phillips comments, "Our mission is to support our distribution partners -- including asset managers, advisors and affinity partners -- by providing them with turnkey, customized white-​label cash management accounts. These include a mobile app on Apple and Android, desktop portal, and investment card -- our patent-​pending debit card linked to specified securities. In turn, our distribution partners can offer superior value-​creating accounts to their clients and members."

DriveWealth CEO Robert Cortright adds, "We'​re very excited to partner with ICM and help fuel its new innovative accounts. DriveWealth is all about providing the infrastructure to allow our partners to create digital financial products for their retail customers. Our customizable suite of APIs enables ICM to build its offering right on top of our infrastructure in a way that provides a seamless experience to the end user."

The press release also quotes, Morningstar founder and executive chairman Joe Mansueto, a "​significant investor in and advisor to ICM," "ICM'​s unique technology eliminates friction -- transaction costs, overwhelming choice, lack of liquidity -- to enable our distribution partners to convert savers into investors, and to enable investors to obtain far better returns on their assets."

While we'​re not familiar with ICM, Drivewealth or any of the principals, there have been a series of "​Fin-​tech" launches in the money market space since late last year. See the following Crane Data News and Link of the Day stories for more: "Wealthfront Cash Brings in $​1 Billion" (​4/​29/​19), "Wealthfront Cash Targets Deposits" (​2/​20/​19), "MarketWatch Has More on Robinhood" (​1/​3/​19), "SIPC Concerns About Robinhood" (​12/​17/​18), "Robinhood Stealing Millennial'​s Cash" (​12/​14/​18).

The ICM website shows the current rate at 2.​30%, but it doesn'​t specify which funds are used for the underlying investments. Like other new fin-​tech entrants in the cash space, they seem a little fuzzy on the details of whether the account is a money market mutual fund, money market deposit account or something else entirely.

​

Crane Data'​s latest Money Fund Market Share rankings show assets were mixed for most U.​S. money fund complexes in April, with the exception of American Funds, who saw assets jump $​108 billion with the addition of the new American Funds Central Cash Fund. Money fund assets increased by $​105.​7 billion, or 3.​1%, last month to $​3.​411 trillion. Assets have climbed by $​164.​9 billion, or 5.​1%, over the past 3 months, and they have increased by $​406.​9 billion, or 13.​5%, over the past 12 months through April 30, 2019. The biggest increases among the 25 largest managers last month were seen by American Funds, JP Morgan, Dreyfus, SSGA and Wells Fargo, which increased assets by $​108.​1 billion, $​15.​4B, $​3.​7B, $​2.​8B and $​2.​7B, respectively. We review the latest market share totals below, and we also look at money fund yields in April.

The most noticeable declines in assets among the largest complexes in April were seen by Goldman Sachs, whose MMF assets dropped by $​8.​0 billion, or -​4.​0%, Fidelity, which fell $​6.​5 billion, or -​1.​0%, BlackRock, which decreased $​5.​9 billion, or -​2.​1%, and Northern, which declined $​4.​7 billion, or -​4.​0%. Our domestic U.​S. "Family" rankings are available in our MFI XLS product, our global rankings are available in our MFI International product. The combined "​Family & Global Rankings" are available to Money Fund Wisdom subscribers.

Over the past year through April 30, 2019, American Funds (​up $​109.​1B, or 662.​1%), Fidelity (​up $​83.​9B, or 14.​4%), Vanguard (​up $​61.​9B, or 19.​9%), Federated (​up $​53.​4B, or 27.​9%), JP Morgan (​up $​52.​6B, or 20.​4%) Northern (​up $​18.​3B, or 19.​0%) and Goldman Sachs (​up $​18.​2B, or 10.​5%) were the largest gainers. These complexes were followed by Schwab (​up $​17.​2B, or 12.​4%), UBS (​up $​13.​6B, or 30.​0%), First American (​up $​10.​3B, or 19.​9%) and Wells Fargo (​up $​10.​1B, or 10.​0%).

American Funds, Vanguard, JP Morgan, Federated and SSgA had the largest money fund asset increases over the past 3 months, rising by $​107.​6B, $​20.​7B, $​18.​9B, $​12.​8B, and $​4.​4B, respectively. The biggest decliners over 3 months include: Goldman Sachs (​down $​5.​1B, or -​2.​6%), Northern (​down $​3.​7B, or -​3.​1%), Wells Fargo (​down $​2.​7B, or -​2.​3%), DWS (​down $​2.​6B, or -​11.​1%) and Dreyfus (​down $​1.​7B, or -​1.​1%).

Our latest domestic U.​S. Money Fund Family Rankings show that Fidelity Investments remains the largest money fund manager with $​664.​8 billion, or 19.​5% of all assets. That was down $​6.​5 billion in March, up $​1.​9 billion over 3 mos., and up $​83.​9B over 12 months. Vanguard ranked second with $​372.​2 billion, or 10.​9% market share (​down $​164M, up $​20.​7B, and up $​61.​9B for the past 1-​month, 3-​mos. and 12-​mos., respectively). JPMorgan was third with $​310.​9 billion, or 9.​1% market share (​up $​15.​4B, up $​18.​9B, and up $​52.​6B). BlackRock ranked fourth with $​276.​9 billion, or 8.​1% of assets (​down $​5.​9B, up $​429M, and down $​20.​4B for the past 1-​month, 3-​mos. and 12-​mos.), while Federated remained in fifth with $​244.​5 billion, or 7.​2% of assets (​up $​618M, up $​12.​8B, and up $​53.​4B).

Goldman Sachs remained in sixth place with $​192.​2 billion, or 5.​6% of assets (​down $​8.​0 billion, down $​5.​2B, and up $​18.​2B), while Dreyfus moved up to seventh place with $​160.​7 billion, or 4.​7% (​up $​3.​7B, down $​1.​7B and down $​6.​9B). Schwab ($​156.​1B, or 4.​6%) was in eighth place (​down $​1.​8B, down $​1.​2B and up $​17.​2B), followed by American Funds, which jumped up to ninth place with the launch of a massive new internal money fund ($​125.​6B, or 3.​7%, up $​108.​1B, up $​107.​6B, and up $​109.​1B). Northern was in 10th place ($​14.​5B, or 3.​4%, down $​4.​7B, down $​3.​7B, and up $​18.​3B).

The 11th through 20th-​largest U.​S. money fund managers (​in order) include: Morgan Stanley ($​113.​4B, or 3.​5%), Wells Fargo ($​111.​5B, or 3.​3%), SSgA ($​88.​9B, or 2.​6%), First American ($​61.​7B, or 1.​8%), Invesco ($​60.​2B, or 1.​8%), UBS ($​59.​0B, or 1.​7%), T Rowe Price ($​35.​8B, or 1.​1%), Franklin ($​24.​2B, or 0.​7%), DFA ($​22.​7B, or 0.​7%), and DWS ($​20.​8B, or 0.​6%). Crane Data currently tracks 68 U.​S. MMF managers.

When European and "​offshore" money fund assets -- those domiciled in places like Ireland, Luxembourg, and the Cayman Islands -- are included, the top 10 managers match the U.​S. list, except JPMorgan and BlackRock move ahead of Vanguard, Goldman moves ahead of Federated, and Dreyfus/​BNY Mellon moves ahead of Schwab. Our Global Money Fund Manager Rankings include the combined market share assets of our MFI XLS (​domestic U.​S.) and our MFI International ("​offshore") products.

The largest Global money market fund families include: Fidelity ($​673.​4 billion), J.​P. Morgan ($​465.​9B), BlackRock ($​419.​8B), Vanguard ($​372.​2B) and Goldman Sachs ($​295.​9B). Federated ($​254.​1B) was sixth, Dreyfus/​BNY Mellon ($​179.​0B) was in seventh, followed by Schwab ($​156.​1B), Morgan Stanley ($​144.​3B), and Northern ($​137.​9B) which round out the top 10. These totals include "​offshore" U.​S. Dollar money funds, as well as Euro and Pound Sterling (​GBP) funds converted into U.​S. dollar totals.

The May issue of our Money Fund Intelligence and MFI XLS, with data as of 4/​30/​19, shows little changes in yield in April across most of our taxable Crane Money Fund Indexes. The Crane Money Fund Average, which includes all taxable funds covered by Crane Data (​currently 747), remained at 2.​10% for the 7-​Day Yield (​annualized, net) Average, and the 30-​Day Yield increased by one to 2.​09%. The MFA'​s Gross 7-​Day Yield decreased to 2.​52%, while the Gross 30-​Day Yield inched up one bp to 2.​52%.

Our Crane 100 Money Fund Index shows an average 7-​Day (​Net) Yield of 2.​26% (​down one bp) and an average 30-​Day Yield that increased to 2.​26%. The Crane 100 shows a Gross 7-​Day Yield of 2.​53% (​down 1), and a Gross 30-​Day Yield of 2.​52%. For the 1-​year return through 4/​30/​19, our Crane MF Average returned 1.​81% and our Crane 100 returned 1.​99%. The total number of funds, including taxable and tax-​exempt, decreased by 14 to 932. There are currently 747 taxable, down by 8, and 185 tax-​exempt money funds, down by 6.

Our Prime Institutional MF Index (​7-​day) yielded 2.​31% (​up by 5) as of April 30 while the Crane Govt Inst Index was 2.​19% (​unchanged) and the Treasury Inst Index was down by 2 at 2.​15%. Thus, the spread between Prime funds and Treasury funds is 16 basis points, while the spread between Prime funds and Govt funds is 12 basis points. The Crane Prime Retail Index yielded 2.​15% (​up 2 basis point), while the Govt Retail Index remained unchanged at 1.​86% and the Treasury Retail Index was 1.​91% (​down 1 bp). The Crane Tax Exempt MF Index yield had a big jump in April to 1.​72% (​up 63 bps).

Gross 7-​Day Yields for these indexes in April were: Prime Inst 2.​65% (​unchanged), Govt Inst 2.​48% (​down 1 bp), Treasury Inst 2.​46% (​down 2 bps), Prime Retail 2.​64% (​up 1 bp), Govt Retail 2.​46% (​up 2 bps), and Treasury Retail 2.​47% (​down 1 bp). The Crane Tax Exempt Index increased 19 basis points to 1.​83%. The Crane 100 MF Index returned on average 0.​19% over 1-​month, 0.​55% over 3-​months, 0.​74% YTD, 1.​99% over the past 1-​year, 1.​10% over 3-​years (​annualized), 0.​68% over 5-​years, and 0.​37% over 10-​years. (Contact us if you'​d like to see our latest MFI XLS, Crane Indexes or Market Share report.)

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The May issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Tuesday morning, features the articles: "Prime Comeback Strengthens; Crane Data Hits Lucky 13 Yrs," which reviews the explosive recent growth in the Prime and particularly Prime Retail sector; "ICI'​s 2019 Fact Book Goes Global w/​MMF Commentary," which excerpts from the Investment Company Institute'​s annual compilation; and, "More Green MMFs: SSGA Files for ESG Money Fund," which reviews the filing for the industry'​s third environmentally-​correct money fund. We'​ve also updated our Money Fund Wisdom database with April 30 statistics, and sent out our MFI XLS spreadsheet Tuesday a.​m. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our May Money Fund Portfolio Holdings are scheduled to ship on Thursday, May 9, and our May Bond Fund Intelligence is scheduled to go out Tuesday, May 12.

MFI'​s "Prime Comeback," article says, "While talk of a recovery in Prime money funds was mostly wishful thinking in the first year and a half following 2016'​s Money Fund Reforms, that'​s no longer the case. Prime is back, bigtime. Prime MMFs have grown by $​119.​7 billion, or 16.​4%, YTD, and $​190.​1 billion, or 28.​9%, over 12 months (​through 4/​30/​19). (​Note: This is after we removed the addition of the new $​108 billion American Funds Central Cash Fund.)"

It continues, "Prime Retail MMFs led the charge last year, but Prime Inst MMFs have since joined in. Prime Retail assets have increased by $​41.​9 billion (​12.​3%) YTD to $​382.​6 billion, and they'​ve exploded by $​125.​6 billion (​48.​9%) over the past 12 months. Prime Inst have gained $​77.​8 billion year-​to-​date (​or 20.​1%) to $​573.​7 billion. (​The total includes the new American fund but the gain figures do not.)"

Our ICI Fact Book piece reads, "​The Investment Company Institute released its '2019 Investment Company Fact Book,' an annual compilation of statistics and commentary on the mutual fund industry. Subtitled, 'A Review of Trends and Activities in the Investment Company Industry,' the latest edition reports that equity funds again saw outflows, bond fund inflows slowed, and money market funds had their strongest inflows in almost 10 years in 2018 ($​159 billion). Overall, money funds assets were $​3.​037 trillion at year-​end 2018, making up 17% of the $​17.​7 trillion in overall mutual fund assets. Retail investors held $​1.​187 trillion, while institutional investors held $​1.​850 trillion. We excerpt from the latest '​Fact Book' below."

ICI writes, "Worldwide net sales of money market funds totaled $​78 billion in 2018, a decrease from the $​598 billion in net sales in 2017, driven mostly by a sharp decrease in net sales in the Asia-​Pacific region. Money market funds in the Asia Pacific region had net outflows of $​99 billion in 2018 after experiencing $​404 billion in net inflows in 2017." (​See pages 18-​21 in the PDF Fact Book.)

They explain, "Investor demand for Chinese money market funds accounts for much of the net sales of money market funds in the Asia-​Pacific region. Eighty percent of Asia-​Pacific'​s total net assets in money market funds were held in funds domiciled in China at year-​end 2018. Demand for money market funds in China weakened substantially in 2018 as the spread between money market fund yields and those on bank savings deposits narrowed from 3.​1 percent at year-​end 2017 to 1.​9 percent at year-​end 2018. In 2018, money market funds in the Asia-​Pacific region saw net outflows of $​99 billion compared with net inflows of $​404 billion in 2017."

Our "SSGA ESG" update says, "As we reported via our CraneData.​com Daily News recently, State Street Global Advisors (​SSGA) has filed to launch State Street ESG Liquid Reserves Fund, which will soon become the third environmental or '​green' money market fund in the marketplace. This follows the conversion of a DWS MMF into DWS ESG Liquidity Fund late last year and the launch of BlackRock Liquid Environmentally Aware Fund (​LEAF) earlier this year. (​Note: We just added LEAF to MFI this month.) The pending Prime Institutional SSGA fund will have the following share classes: Institutional Class ($​25M minimum), Administration Class ($​1K), Investment Class ($​25M), Investor Class ($​10M), Premier Class ($​250M)."

The latest MFI also includes the sidebar, "SEI N-​CR Filing Minor," which says, "The first '​Form N-​CR' filing of 2019 was recently disclosed for the SEI Daily Income Trust Treasury Fund, which received a '​Capital Contribution' from adviser SEI Investments Management Corporation. The March 2019 filing is in the nominal amount of $​56,​455, and explains the reason as, 'The support, in the form of a capital contribution, related to the Treasury Fund'​s historical losses. While the amount of the losses did not increase recently, more recent redemptions in the Treasury Fund have caused the historical losses to become more material to the net asset value than when the Fund had greater assets."

Our April MFI XLS, with April 30, 2019, data, shows total assets rose by $​105.​7 billion in April to $​3.​412 trillion (​this includes the addition of a new $​108 billion fund, American Funds Central Cash), after falling $​10.​2 billion in March, gaining $​56.​4 billion in February, and gaining $​14.​4 billion in January. Our broad Crane Money Fund Average 7-​Day Yield rose to 2.​10% during the month, while our Crane 100 Money Fund Index (​the 100 largest taxable funds) was down 1 basis points to 2.​26%.

On a Gross Yield Basis (​7-​Day) (​before expenses are taken out), the Crane MFA fell 1 basis point to 2.​52% and the Crane 100 fell to 2.​53%. Charged Expenses averaged 0.​43% (​unchanged) and 0.​27% (​unchanged), respectively for the Crane MFA and Crane 100. The average WAM (​weighted average maturity) for the Crane MFA and Crane 100 was 29 and 31 days, respectively (​down 1 and 2 bps, respectively). (​See our Crane Index or craneindexes.​xlsx history file for more on our averages.)

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Though the Federal Reserve continues to refrain from moving short-​term interest rates higher (​or lower), there does appear to be a slight uptick in interest about cash rates from the financial press. Following a brief drought of stories on money market rates, a pair of new articles appeared over the weekend. Kiplinger'​s Personal Finance writes on "33 Ways to Get Higher Yields" while Barron'​s writes on "Where to Stash Your Cash Now That Rates Have Moved Up."

Kiplinger'​s John Waggoner comments, "For more than a decade, income investors have been plagued by paucity wrapped in misery.... Although the Federal Reserve has nudged its target interest rate range to 2.​25% to 2.​50%, it has signaled that it'​s done raising rates for now.... Locking your money up for longer periods is rarely worth the negligible increase in yield. What could increase your yield these days? Being a little more adventurous when it comes to credit quality. When you'​re a bond investor, you'​re also a lender, and borrowers with questionable credit must pay higher yields."

He explains, "​Despite such caveats, income investing is not as bad as it was in 2015, when it was hard to milk even a penny’​s interest out of a money market. Now you can get 3.​3% or more from no-​risk certificates of deposit at a bank.... Short-​term interest rates largely follow the Fed'​s interest rate policy. Most observers in 2018 thought that would mean higher rates in 2019. But slowing economic growth in the fourth quarter of 2018 and the near-​death experience of the bull market in stocks changed that. The Fed'​s rate-​hiking campaign is likely on hold for 2019."

The Kiplinger'​s piece continues, "Still, money markets are good bets for money you can'​t stand to lose. Money market funds are mutual funds that invest in very-​short-​term, interest-​bearing securities. They pay out what they earn, less expenses. A bank money market account'​s yield depends on the Fed'​s benchmark rate and the bank'​s need for deposits."

It tells us, "Money market mutual funds aren'​t insured, but they have a solid track record. The funds are designed to maintain a $​1 share value; only two have allowed their shares to slip below $​1 since 1994. The biggest risk with a bank money market deposit account is that your bank won'​t raise rates quickly when market interest rates rise but will be quick on the draw when rates fall. MMDAs are insured up to $​250,​000 by the federal government."

The article adds, "The best MMDA yields are from online banks, which don'​t have to pay to maintain brick-​and-​mortar branches. Currently, a top-​yielding MMDA is from Investors eAccess, which is run by Investors Bank in New Jersey. The account has no minimum, has an annual percentage yield of 2.​5% and allows six withdrawals per month. You'​ll get a bump from a short-​term CD, provided you can keep your money locked up for a year."

This weekend'​s Barron'​s comments, "​It was tough to be a saver in the 10 years after the financial crisis, with ultralow interest rates making traditional cash parking places, including short-​term Treasuries, about as lucrative as your sock drawer. But the Federal Reserve has raised short-​term interest rates seven times since the start of 2017, from 0.​75% to the current 2.​5%, effectively ending the yield drought." They quote Morgan Stanley advisor Scott Siegel, "For the first time in a long time, cash or cash equivalents are paying you something.

The article continues, "​It'​s about time. Low interest rates -- engineered by the Fed in the wake of the financial crisis -- cost savers as much as $​600 billion over the years, figures Mike Mayo, a banking stock analyst. Those looking to park cash for relatively short periods -- say three to 18 months -- can now choose from a number of options yielding more than 2%, while maintaining ready access to their money. Short-​term U.​S. Treasury bills, Treasury floating-​rate notes, or FRNs, and short-​term government money markets are worth considering, advisors say."

After discussing Treasuries and Floating-​Rate Notes, Barron'​s adds, "Also worth a look: short-​term government money funds, which invest in government securities, such as Treasuries and debt from federal agencies. They may yield less than traditional taxable money funds, but as long as they invest solely in government securities, all of their income is exempt from state and local taxes. Check out Vanguard Federal Money Market (​VMFXX), currently yielding about 2.​4%. The leading discount brokerages all offer screening tools to find the best government money-​market funds."

Finally, they write, "We'​d be remiss to leave out bank savings accounts, which also sport improved yields. CIT Bank, for instance, recently offered an annual percentage yield of 2.​45%. The catch with bank savings accounts: Rates can change at any time without notice, and the interest is taxable."

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As we mentioned earlier this week, the Investment Company Institute recently published its "2019 Investment Company Fact Book," an annual compilation of statistics and commentary on the mutual fund industry. (​See our May 1 News, "ICI'​​s 2019 Fact Book Reviews Money Funds Globally, MMFs vs. Deposits.") We reviewed the update on worldwide and U.​S. domestic money funds in our last piece, but today we focus on the numerous "Data Tables" involving "Money Market Mutual Funds, which start on page 226. ICI lists annual statistics on shareholder accounts, the number of funds, net assets, net new cash flows, paid and reinvested dividends, composition of prime and government funds, and net assets of institutional investors by type of institution.

ICI'​s annual statistics show that there'​s been a steady decline in the number of money market mutual funds over the last 15 years. (​See Table 35 on page 226.) In 2018, according to the Fact Book, there were a total of 368 money funds, down from 382 in 2017, 802 in 2007, and down from 1,​015 in 2001. The number of share classes stood at 1,​128 in 2018, down from 1,​177 in 2017 and 1,​998 in 2008.

Table 36 on page 227, "Money Market Funds: Total Net Assets by Type of Fund," shows that total net assets in taxable U.​S. money market funds increased $​189.​7 billion to $​3.​037 trillion in 2018. At year-​end 2018, $​1.​850 trillion (​61.​0%) was in institutional money market funds, while $​1.​187 trillion (​39.​1%) was in retail money market funds. Breaking the numbers down by fund type, $​564.​4 billion (​18.​6%) was in prime funds, $​2.​326 trillion (​76.​6%) was in government money market funds, and $​145.​3 billion (​4.​8%) was in tax-​exempt accounts.

Also, Table 37 on page 228, "Money Market Funds: Net New Cash Flow by Type of Fund," shows that there was $​158.​8 billion in net new cash flow into money market funds last year. A closer look at the data shows $​6.​4 billion in net new cash flow out of institutional funds and a $​165.​2 billion cash inflow into retail funds. There were also $​342.​9 billion in net inflows into Government funds, versus $​103.​3 billion in net outflows from Prime funds.

Table 39 (​page 230), "Money Market Funds: Paid and Reinvested Dividends by Type of Fund," shows dividends paid by money funds reached their highest level in 10 years, $​42.​3 billion, $​23.​1 billion of which was reinvested (​57.​8%). Dividends have been as high as $​127.​9 billion in 2007 (​when rates were over 5%), and as low as $​5.​2 billion in 2011 (​when rates were 0.​05%). Reinvestment rates were 64.​4% in 2007 and 62.​3% in 2011, so they'​ve remained relatively stable over the past decade.

ICI'​s Tables 40 and 41 on pages 231 and 232, "Taxable Government Money Market Funds: Asset Composition as a Percentage of Total Net Assets" and "Taxable Prime Money Market Funds: Asset Composition," show that of the $​2.​326 trillion in taxable government money market funds, 27.​4% were in U.​S. government agency issues, 38.​6% were in Repurchase agreements, 23.​6% were in U.​S. Treasury bills, 12.​0% were in Other Treasury securities, and -​1.​7% was in "​Other" assets. The average maturity was 31 days, down 2 days from the end of 2017.

The second table shows that of the $​565.​4 billion in Prime funds at year-​end 2018, 33.​7% was in Certificates of deposit, 33.​4% was in Commercial paper, 21.​5% was in Repurchase agreements, 1.​0% was in US government agency issues, 0.​3% was in Other Treasury securities, 0.​8% was in Corporate notes, 0.​5% percent was in Bank notes, 7.​2% was in US Treasury bills, 0.​3% was in Eurodollar CDs, and 1.​2% was in Other assets (​which includes Banker'​s acceptances, municipal securities and cash reserves).

Table 60 on page 251, "Total Net Assets of Mutual Funds Held in Individual and Institutional Accounts," shows that there was $​1.​102 trillion of assets in money funds with Institutional investors and $​1.​935 in MMF assets in Individual accounts in 2018.

Finally, Table 62, "Total Net Assets of Institutional Investors in Taxable Money Market Funds by Type of Institution and Type of Fund," shows of the total of $​1.​097 trillion in Total Institutional assets ($​1.​005 trillion in Institutional funds and another $​91.​6 billion in Retail funds), $​465.​5 billion were held by business corporations (​42.​4%), $​468.​4 billion were held by financial institutions (​42.​7%), $​95.​7 billion were held by nonprofit organizations (​8.​7%), and $​67.​3 billion were held by Other (​6.​1%).

In other news, the ICI'​s latest weekly "Money Market Fund Assets" shows that assets rose for the second week in a row, after falling three weeks ago on tax payments.

They write, "Total money market fund assets increased by $​21.​72 billion to $​3.​07 trillion for the week ended Wednesday, May 1, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $​17.​49 billion and prime funds increased by $​2.​37 billion. Tax-​exempt money market funds increased by $​1.​86 billion." ICI'​s weekly series shows Institutional MMFs rising $​18.​7 billion while Retail MMFs rose by $​3.​0 billion. Total Government MMF assets, including Treasury funds, stood at $​2.​292 trillion (​74.​6% of all money funds), while Total Prime MMFs rose to $​645.​5 billion (​21.​1%). Tax Exempt MMFs totaled $​134.​5 billion, or 4.​4%.

ICI states, "Assets of retail money market funds increased by $​3.​02 billion to $​1.​20 trillion. Among retail funds, government money market fund assets decreased by $​504 million to $​689.​68 billion, prime money market fund assets increased by $​1.​92 billion to $​387.​09 billion, and tax-​exempt fund assets increased by $​1.​60 billion to $​124.​91 billion." Retail assets account for over a third of total assets, or 39.​1%, and Government Retail assets make up 57.​4% of all Retail MMFs.

The release adds, "Assets of institutional money market funds increased by $​18.​70 billion to $​1.​87 trillion. Among institutional funds, government money market fund assets increased by $​17.​99 billion to $​1.​60 trillion, prime money market fund assets increased by $​450 million to $​258.​43 billion, and tax-​exempt fund assets increased by $​259 million to $​9.​61 billion." Institutional assets accounted for 60.​9% of all MMF assets, with Government Institutional assets making up 85.​7% of all Institutional MMF totals.

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Earlier this week, S&​P Global Ratings released a paper entitled, "How Has The Change In EU Regulation Affected Rated Money Market Funds?" It says, "Most EU-​domiciled rated short-​term MMFs have converted into short-​term low volatility variable net asset value (​LVNAV) funds; by contrast, in the U.​S., most converted into government debt MMFs, which offer constant net asset values and enable investors to avoid fees and gates. During the past year, net assets have not significantly changed, indicating that although complying with the regulation was challenging, the industry has adapted well."

Authors Emelyne Uchiyama, Andrew Paranthoiene and Francoise Nichols write, "​The journey to implementation for the EU'​s money market fund (​MMF) regulation started over a decade ago, following the global financial crisis, when regulators reassessed the systemic risk that MMFs had on the wider financial system. Given that the industry has demonstrated good retention of assets under management, the response from investors suggests that the actual transition has been relatively low-​key. The next hurdle is in July 2022, when the European Commission (​EC) is scheduled to publish a review of two of the three short-​term MMF categories introduced in the legislation."

They continue, "​Following the 2007 disruptions and failures of short-​term fixed income funds, some labelled as '​dynamic' MMFs, the EU decided to remedy its lack of common legislation for MMFs. It drafted regulations aimed at increasing transparency and harmonization, enhancing liquidity, and protecting MMF investors, while curtailing the potential for troubled funds to trigger systemic risk. CESR introduced two common definitions in 2010 with many investment guidelines very similar to those of S&​P Global Ratings, for example, weighted-​average maturity and final maturity limits, minimum level of credit quality, stress testing, and diversification."

S&​P comments, "​The EU published its MMF regulation in June 2017, with an effective date of Jan. 21, 2019 applicable to most existing EU-​domiciled funds. Regulatory compliance with the new rule was later extended to March 21, 2019 for a few euro-​denominated MMFs. Implementing the new regulation had no rating impact on rated MMFs."

They add, "We assign our fund ratings to approximately 600 funds globally under our principal stability fund rating (​PSFR) and fund credit quality (​FCQ) and fund volatility ratings (​FVR) methodology. These criteria are used for funds in the three short-​term MMF categories and the standard MMF category. Metrics considered include the minimum standards of credit quality, diversification, net asset value (​NAV) deviation, weighted-​average life, and cure periods. Our MMF criteria guidelines are mostly within those of the regulation and we apply monthly stress tests."

The S&​P piece states, "​Before the reform, 4% of the EU-​domiciled MMFs we rated were standard MMFs -- the rest were short-​term MMFs. By March 31, 2019, this had changed, so that: 70% of our rated MMFs were low volatility NAV (​LVNAV); 15% were short-​term VNAV (​STVNAV); 11% were public debt constant NAV (​CNAV); and 4% were standard VNAV. While some asset managers have launched new MMFs to complete their product ranges, others have split their core funds. We have rated 18 new MMFs since the EU published its MMF regulations in June 2017. Most of these newly rated funds were STVNAV funds, followed by public debt CNAV and LVNAV MMFs in equal numbers."

They write, "We attribute the popularity of STVNAV funds, in part, to the '​sunset' clause in the EU MMF reform regulation. This clause requires the EC to review the safety and adequacy of the public debt CNAV and LVNAV fund categories by July 21, 2022. These fund types use amortized cost accounting valuations. If the review views them unfavorably, the EC could decide to withdraw these fund types. Therefore, some fund sponsors have elected to launch STVNAV funds instead, as a pre-​emptive tactic and to develop the fund'​s track record, because STVNAV funds will not be part of the review."

S&​P goes on, "The LVNAV fund category in Europe is a hybrid between a traditional CNAV (​which offers a constant NAV, for example, $​1.​00, £​1.​00, or €​1.​00 per share or unit) and a VNAV fund. A VNAV fund uses a full mark-​to-​market approach to the valuation of securities. In the past, short-​term MMFs used amortized cost accounting to value securities that had maturities of up to three months and for many CNAV MMFs, the entire portfolio was valued using amortized cost. LVNAV funds take a more-​conservative approach; securities in an LVNAV fund can only be valued using amortized cost accounting if they mature in 75 days or less. The LVNAV fund is thus a hybrid that uses a more conservative pricing method."

They tell us, "​Over the past five years, we have seen a mixed picture among the three major currencies -- euro, sterling, and U.​S. dollars. While net assets held in rated short-​term MMFs denominated in sterling and U.​S. dollars have trended higher, net assets in euro-​denominated MMFs came under pressure as a result of negative yields and were therefore typically flat. We also saw a sharp increase in the number of U.​S. dollar-​and euro-​denominated short-​term MMFs, causing the average fund size to shrink. Meanwhile, the number of sterling-​denominated short-​term MMFs has been relatively stable, but it saw an increase in net assets due to organic growth and market appreciation."

S&​P states, "The large increase in the number of rated short-​term MMFs denominated in euros suggests that investors' interest in investing in a pooled structure and diversified investment product has not waned. In our view, investor demand for short-​term MMFs may also have been supported by banks seeking to avoid holding large amounts of short-​term cash on their balance sheet, as such liabilities may incur a costly capital charge."

Finally, they conclude, "​The new regulation is not yet finalized. The EC is expected to undertake a review of the EU MMF regulation by July 21, 2022. It will present a report on the feasibility of establishing an 80% EU public debt quota for public debt CNAV MMFs. The report will also include the EC'​s assessment of whether the LVNAV MMF model has become an appropriate alternative to non-​EU public debt CNAV MMFs. Given how many historical CNAV and STVNAV MMF investors have moved into the public debt CNAV and the LVNAV fund categories, it will be difficult to eliminate any of these fund categories. We will have to see if the three years before the review provide sufficient data for a full and detailed analysis."

For more Crane Data News on European Money Fund Reforms, see: "Fitch Update on European Money Funds After Reforms; Morgan Stanley" (​4/​1/​19), "Aberdeen, Fido Make European Reform Changes; Oppenheimer Merging" (​3/​1/​19), "Little Movement in European Money Funds; Offshore, ICI MMF Holdings" (​2/​15/​19), "Not Done Yet: European Money Funds Continue Adjusting to Reforms" (​2/​6/​19) and "European MMF Reforms Going Live, or Not? Economist Swipes at RDM Kill" (​1/​22/​19).

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The Investment Company Institute released its "2019 Investment Company Fact Book," an annual compilation of statistics and commentary on the mutual fund industry. Subtitled, "A Review of Trends and Activities in the Investment Company Industry," the latest edition reports that equity funds again saw outflows, bond fund inflows slowed, and money market funds had their strongest inflows in almost 10 years in 2018 ($​159 billion). Overall, money funds assets were $​3.​037 trillion at year-​end 2018, making up 17% of the $​17.​7 trillion in overall mutual fund assets. Retail investors held $​1.​187 trillion, while institutional investors held $​1.​850 trillion. We excerpt from the latest "Fact Book" below. (​Note: The ICI also kicks off its annual General Membership Meeting in Washington on Wednesday, which runs May 1-​3.)

ICI writes, "Worldwide net sales of money market funds totaled $​78 billion in 2018, a decrease from the $​598 billion in net sales in 2017, driven mostly by a sharp decrease in net sales in the Asia-​Pacific region. Money market funds in the Asia Pacific region had net outflows of $​99 billion in 2018 after experiencing $​404 billion in net inflows in 2017."

They explain, "Investor demand for Chinese money market funds accounts for much of the net sales of money market funds in the Asia-​Pacific region. Eighty percent of Asia-​Pacific'​s total net assets in money market funds were held in funds domiciled in China at year-​end 2018. Demand for money market funds in China weakened substantially in 2018 as the spread between money market fund yields and those on bank savings deposits narrowed from 3.​1 percent at year-​end 2017 to 1.​9 percent at year-​end 2018. In 2018, money market funds in the Asia-​Pacific region saw net outflows of $​99 billion compared with net inflows of $​404 billion in 2017."

The Fact Book continues, "In Europe, money market funds saw outflows of $​23 billion in 2018 after three consecutive years of inflows.... Europe, like the United States, has adopted reforms intended to increase the resilience of money market funds to financial shocks. US reforms, which were implemented in October 2016, had significant effects on the composition of net new cash flow to US money market funds in 2016. Although EU reforms for money market funds were adopted in 2017, existing funds are required to be in full compliance by March 2019. The deadline to comply with the 2017 regulatory changes may have caused net sales to fall significantly in France, Ireland, and Luxembourg -- the three largest money market fund domiciles in Europe."

It says, "In the United States, money market funds had net sales of $​182 billion in 2018, up from $​117 billion in 2017.... Recently, as the Federal Reserve has tightened monetary policy, US money market funds have become more attractive relative to other cash management investments. In particular, the spread between money market fund yields and those on money market deposit accounts has widened by more than 170 basis points since year-​end 2016.... In addition, `​the flattening of the US Treasury yield curve in 2018 may have spurred investors to use money market funds and short-​term bond funds in an effort to minimize their interest rate risk. Prior to 2017, US money market funds were negatively affected by near-​zero US short-​term interest rates."

A sidebar on "China'​s Money Market Fund Industry," tells us, "​The Chinese regulated fund industry is at a relatively early stage of its development. Prior to the 1980s, Chinese household assets consisted mainly of bank deposits, as most assets were owned by the state. China'​s financial market reforms started in the 1980s with the reintroduction of the government bond market and reopening of the stock market in the early 1990s. Despite being a relative newcomer, China'​s money market fund industry, with total net assets of $​1.​1 trillion at year-​end 2018, is the third largest in the world, behind the United States and Europe. Net assets in Chinese money market funds have increased 800 percent in the past five years, and their share of all Chinese regulated fund net assets has increased to 60 percent at year-​end 2018 from 26 percent at year-​end 2013."

It explains, "​The rapid growth in Chinese money market assets is remarkable considering their relatively recent introduction as an investment product. The first money market fund in China was offered in 2004 after the China Securities Regulatory Commission (​CSRC) published its first guidelines for money market funds. In 2015, the CSRC announced additional regulations that aimed to more closely align with the blueprint in more developed markets. Nevertheless, there were significant differences between money market funds domiciled in China and money market funds domiciled in other jurisdictions.... In 2017 and 2018, to address some of these differences, the CSRC announced tighter regulations limiting leverage and daily redemptions, as well as limiting credit risk by reducing money market funds' ability to invest in lower-​quality debt instruments. These changes narrowed the differences between Chinese money market funds and those offered in more-​developed markets."

ICI adds, "Money market funds offer Chinese households a lower-​risk, income-​oriented investment that can compete with bank deposits. Retail investors, who hold more than 55 percent of Chinese money market fund assets, have found that money market funds are an attractive substitute for bank deposits. Until April 2018, bank deposit rates in China were effectively capped, and the yield on money market funds was considerably higher than the maximum rate set by the People'​s Bank of China (​PBOC). Much like in the United States, net sales of money market funds increase as the yield spread between money market funds and bank deposits widens.... Between 2014 and 2017, the yield spread was as wide as 320 basis points, helping net assets of Chinese money market funds grow by $​678 billion over this period. Although the PBOC relaxed guidance for bank deposit rates in 2018, deposit rates did not rise rapidly, as the PBOC eased monetary conditions at the same time. As a result, money market fund yields fell due to looser monetary policy and the yield spread of money market funds to deposit rates narrowed considerably. This likely led to reduced net sales of money market funds in 2018."

The Fact Book also tells us, "​Businesses and other institutional investors also rely on funds. For instance, institutions can use money market funds to manage some of their cash and other short-​term assets. At year-​end 2018, nonfinancial businesses held $​616 billion (​18 percent) of their short-​term assets in money market funds." (​This is up from 16 percent in 2017 but down from 22 percent in 2013 and down from the peak of 40 percent in 2008.)

It comments, "Historically, mutual funds have been one of the largest investors in the US commercial paper market -- an important source of short-​term funding for major corporations around the world. Mutual fund demand for commercial paper arose primarily from prime money market funds. In 2016, however, assets of prime money market funds fell 70 percent (​nearly $​900 billion) as these funds adapted to the 2014 SEC rule amendments that required the money market fund industry to make substantial changes by October 2016. Consequently, prime money market funds sharply reduced their holdings of commercial paper. From year-​end 2015 to year-​end 2016, mutual funds' share of the commercial paper market fell from 40 percent to 19 percent. By year-​end 2017, mutual funds had increased their share of the commercial paper market to 25 percent, and their share was little changed (​24 percent) at year-​end 2018."

Finally, they write in a short section on "Money Market Funds," "In 2018, money market funds received $​159 billion in net new cash flows, up from $​107 billion in 2017. Prime money market funds received the bulk of the inflows ($​103 billion), followed by government money market funds with $​43 billion in inflows. The increased demand for money market funds likely stems from the Federal Reserve'​s decision to raise the federal funds target rate four times in 2018, which increased the attractiveness of money market funds as an investment for excess cash. Yields on prime and government money market funds ratcheted up in 2018 and far exceeded the stated rate on money market deposit accounts (​MMDAs)."

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