News Archives: January, 2025
ICI published its latest weekly "Money Market Fund Assets" report, as well as its monthly "Trends in Mutual Fund Investing" for December 2024 and its monthly "Month-End Portfolio Holdings of Taxable Money Funds" Thursday. The weekly series shows money fund assets falling $30.3 billion to $6.873 trillion, after rising $41.6 billion the week prior and falling $54.9 billion two weeks prior. Money fund assets have risen in 18 of the last 26, and 29 of the last 41, weeks, increasing by $569.3 billion (or 9.0%) since the Fed cut on 9/18/24 and increasing by $895.4 billion (or 15.0%) since 4/24/24. MMF assets are up by $872 billion, or 14.5%, in the past 52 weeks (through 1/29/25), with Institutional MMFs up $462 billion, or 12.7% and Retail MMFs up $409 billion, or 17.4%. Year-to-date, MMF assets are up by $22 billion, or 0.3%, with Institutional MMFs up $1 billion, or 0.0% and Retail MMFs up $22 billion, or 0.8%.
ICI's weekly release says, "Total money market fund assets decreased by $30.34 billion to $6.87 trillion for the week ended Wednesday, January 29, the Investment Company Institute reported.... Among taxable money market funds, government funds decreased by $31.51 billion and prime funds increased by $1.55 billion. Tax-exempt money market funds decreased by $387 million." ICI's stats show Institutional MMFs decreasing $23.7 billion and Retail MMFs decreasing $6.6 billion in the latest week. Total Government MMF assets, including Treasury funds, were $5.636 trillion (82.0% of all money funds), while Total Prime MMFs were $1.103 trillion (16.0%). Tax Exempt MMFs totaled $134.2 billion (2.0%).
It explains, "Assets of retail money market funds decreased by $6.64 billion to $2.76 trillion. Among retail funds, government money market fund assets decreased by $6.34 billion to $1.76 trillion, prime money market fund assets decreased by $184 million to $879.13 billion, and tax-exempt fund assets decreased by $113 million to $122.38 billion." Retail assets account for over a third of total assets, or 40.1%, and Government Retail assets make up 63.7% of all Retail MMFs.
They add, "Assets of institutional money market funds decreased by $23.70 billion to $4.12 trillion. Among institutional funds, government money market fund assets decreased by $25.16 billion to $3.88 trillion, prime money market fund assets increased by $1.73 billion to $223.72 billion, and tax-exempt fund assets decreased by $274 million to $11.78 billion." Institutional assets accounted for 60.0% of all MMF assets, with Government Institutional assets making up 94.3% of all institutional MMF totals.
According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets have risen by $49.7 billion in January through 1/29/25 to $7.224 trillion. (They hit a record high on 1/7 at $7.266 trillion before falling, rebounding and then falling again this week.) Assets rose by $110.9 billion in December, $200.5 trillion in November, $97.5 billion in October, $149.8 billion in September, $109.7 billion in August, $16.6 billion in July, $15.7 billion in June and $91.4 billion in May. They declined by $15.8 billion in April and $68.8 billion in March. They rose $72.1 billion in February and $93.9 billion last January. Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're about $340 billion lower than Crane's asset series.
ICI's monthly Trends shows money fund totals rising $139.3 billion, or 2.1%, in December to $6.853 trillion. MMFs have increased by $933.1 billion, or 15.8%, over the past 12 months (through 12/31/24). Money funds' December asset increase follows an increase of $171.5 billion in November, $117.4 billion in October, $158.6 billion in September, $124.8 billion in August, $46.6 billion in July, $13.0 billion in June, $90.9 billion in May and $4.3 billion in April. They decreased $73.0 billion in March, but increased $55.1 billion in February and $82.4 billion last January. Bond fund assets decreased $54.7 billion to $5.068 trillion, and bond ETF assets decreased to $1.76 trillion.
The monthly release states, "The combined assets of the nation's mutual funds decreased by $601.82 billion, or 2.1 percent, to $28.54 trillion in December, 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.... Bond funds had an inflow of $6.62 billion in December, compared with an inflow of $14.34 billion in November.... Money market funds had an inflow of $126.26 billion in December, compared with an inflow of $156.85 billion in November. In December funds offered primarily to institutions had an inflow of $77.37 billion and funds offered primarily to individuals had an inflow of $48.90 billion."
The Institute's latest statistics show that Taxable MMFs and Tax Exempt MMFs were both higher from last month. Taxable MMFs increased by $139.1 billion in December to $6.717 trillion. Tax-Exempt MMFs increased $0.1 billion to $135.9 billion. Taxable MMF assets increased year-over-year by $920.8 billion (15.9%), and Tax-Exempt funds rose by $12.3 billion over the past year (10.0%). Bond fund assets decreased by $54.7 billion (after increasing by $69.0 billion in November) to $5.068 trillion; they've increased by $324.9 billion (6.8%) over the past year.
Money funds represent 24.0% of all mutual fund assets (up 1.0% from the previous month), while bond funds account for 17.8%, according to ICI. The total number of money market funds was 258, down 1 from the prior month and down from 275 a year ago. Taxable money funds numbered 217 funds, and tax-exempt money funds numbered 41 funds.
ICI's "Month-End Portfolio Holdings" confirms a jump in Repo and a drop in Treasuries last month. Treasury holdings in Taxable money funds remained the largest composition segment last month, they decreased $46.5 billion, or -1.6%, to $2.852 trillion, or 42.5% of holdings. Treasury securities have increased by $714.1 billion, or 33.4%, over the past 12 months. (See our Jan. 13 News, "January Money Fund Portfolio Holdings: Repo Surges, Treasuries Slide.")
Repurchase Agreements were the second largest composition segment this past month, increasing $229.7 billion, or 10.3%, to $2.465 trillion, or 36.7% of holdings. Repo holdings have decreased $51.2 billion, or -2.0%, over the past year. U.S. Government Agency securities were the third largest segment; they increased $32.0 billion, or 4.0%, to $832.2 billion, or 12.4% of holdings. Agency holdings have increased by $179.0 billion, or 27.4%, over the past 12 months.
Commercial Paper moved up to fourth place, down $7.3 billion, or -2.5%, to $280.3 billion (4.2% of assets). CP increased $49.6 billion, or 21.5%, over one year. Certificates of Deposit (CDs) moved down to fifth place; they decreased by $84.3 billion, or -24.4%, to $260.7 billion (3.9% of assets). CDs held by money funds fell by $5.8 billion, or -2.2%, over 12 months. Other holdings increased to $22.8 billion (0.3% of assets), while Notes (including Corporate and Bank) increased to $31.7 billion (0.5% of assets).
The Number of Accounts Outstanding in ICI's series for taxable money funds increased to 75.243 million, while the Number of Funds was up 1 at 217. Over the past 12 months, the number of accounts rose by 10.886 million and the number of funds decreased by 12. The Average Maturity of Portfolios was 37 days, unchanged from November. Over the past 12 months, WAMs of Taxable money are unchanged.
Bloomberg writes "Federated's Cunningham Bets on Longer Bills to Lock in US Yields." The article states, "Federated Hermes Inc. is pushing out maturities in its money market funds close to the maximum limit -- a bet that contrarian calls for US interest-rate hikes are off the mark and there's more easing to come. 'We're in what I would call the 90th percentile of where we're allowed to be,' Deborah Cunningham, Federated's chief investment officer for global liquidity markets, said in an interview. Her team is buying up longer-dated securities to lock in yields, and expects the Federal Reserve -- which is set to hold interest rates on Wednesday -- to cut by another one or two quarter-points this year. Speculation that the central bank will tighten policy in 2025 is too 'extreme,' she added."
It continues, "An illustration of Cunningham's positioning can be seen in the $63 billion Federated Hermes U.S. Treasury Cash Reserves fund, which has almost doubled in size over the last two years, growing at a faster pace than the broader market. Last week, its average maturity hit 50 days for the first time since late 2021, according to data compiled by Bloomberg. Firms are limited by regulations and client mandates in the amount of duration risk they can take on."
The piece tells us, "Federated Hermes is leading a trend across the industry: the weighted average maturity (WAM) of the 100 largest money-market funds has increased to 38 days from 30 days in September, according to Crane Data, a US money-market and mutual-fund information firm. Typically, short-duration strategies such as money-market funds extend the WAM of their investments ahead of expected easing. The risk is that rates rise, leaving funds with bills that take longer to roll over into higher-yielding securities."
Bloomberg adds, "The Fed is expected hold rates steady on Wednesday after a percentage point of reductions since September. Swap markets imply two more rate cuts in 2025, starting around the middle of the year. By contrast, officials at the European Central Bank are expected to lower rates by a quarter point on Thursday amid a more challenging outlook for economic growth. Money markets see a total of four ECB cuts in 2025, which would take its deposit rate to around 2%, though Cunningham's base case is for it settle at 2.25%. 'I feel like they'll get to their target and stick there for a little while and that's probably somewhere in the second half of the year,' she said. 'I don't think it goes below 2%.'"
In other news, Fidelity Investments writes on "The surprising risk of having too much cash." They comment, "Over the past few years, high yields meant your Fidelity account's core position could earn an attractive return without the ups and downs that come with investing in stocks. But since the Federal Reserve began cutting interest rates in September 2024, those yields have come down, even as inflation has persisted. That may make this a good to time to rethink what to do with the cash in your account."
They state, "Cash, stocks, and bonds are the 3 primary building blocks of a diversified portfolio and each has a role to play in helping you achieve your investing goals. That's why it's good to make sure your portfolio holds enough of all 3 of those types of assets to help you make progress toward your goals -- but not too much or too little of any one of them. With that in mind, you may want to consider whether you have more cash than necessary to meet your short-term needs."
Citing inflation, Fidelity explains, "Keeping your money in cash may seem like a great way to avoid losing it in a stock market downturn. However, holding cash raises your risk of losing money in another way. Over time, inflation can gradually eat away at the value of your portfolio unless it's invested in assets that can earn enough to keep up with rising prices. Although inflation is rising more slowly than it did over the past several years, consumer prices are likely to continue to go higher. Fortunately, you have a variety of ways to seek higher returns, depending on your investing goals, how soon you may need access to your money, and how comfortable you are with the up and down movements of financial markets."
They ask, "Do you want to invest for the future but are still in cash because you're worried that this is not a good time to invest in stocks? Fidelity has researched what a hypothetical investment of $5,000 per year would have returned if it was invested under various stock market conditions. The study found that even if the money was invested at the 'worst' possible time each year -- that is, when the market was at its peak -- it would have still significantly outperformed the same amount left in cash over the long run."
On Bonds, Fidelity states, "If you've stayed in cash because you like how your money market fund makes regular interest payments, you may want to learn more about opportunities in bonds. Like money market funds, bonds pay regular interest. Unlike cash, they also give you opportunities for capital appreciation and to lock in interest payments that may be higher than what you could earn on cash in the future."
They write, "To be sure, adding stocks and bonds to your portfolio doesn't mean cash has no role to play in your investment strategy. Over time, stocks, bonds, and cash have all taken turns as the best and—worst performing investments. Because financial markets and the business cycle are always in motion, it's good to make sure your portfolio holds enough of all 3 of those types of assets to help you make progress toward your goals."
Finally, the piece adds, "Fidelity offers a wide variety of research tools to help you reduce the risks posed by staying too long in cash. We also can help you create a plan to manage risk in your portfolio and can even help manage that portfolio by looking at your timeline, goals, and feelings about risk to create a mix of investments that's right for you."
A Prospectus Supplement filing for the $9.7 billion State Street Institutional Liquid Reserves Fund, which includes Bancroft Capital (VTDXX), Administration (SSYXX), Institutional (SSHXX), Investment (SSVXX), Investor (SSZXX), Opportunity (OPIXX) and Premier (SSIXX) share classes, tells us, "The Board of Trustees has approved the conversion of the Fund to qualify as a 'government money market fund' as defined in Rule 2a-7 under the Investment Company Act of 1940, as amended. As a result, the Fund will be renamed the State Street Institutional Liquid Reserves Government Money Market Fund and will seek to achieve its investment objective by investing substantially all of its investable assets in the Street U.S. Government Money Market Portfolio."
It explains, "As a government money market fund, the Fund has not elected to be subject to the liquidity fee provision of Rule 2a‑7 and it will seek to maintain a $1.00 per share net asset value using the amortized cost valuation method, in compliance with the risk limiting conditions of Rule 2a‑7, to value its portfolio instruments. In connection with its transition from using a per share net asset value calculated to four decimal places to one calculated to two decimal places, on the Effective Date the Fund will execute a share split with the goal of establishing a $1.00 per share net asset value."
State Street says, "The Fund expects that these changes will become effective on or about March 7, 2025. As of the Effective Date, all references to the Fund will be updated to reflect its operations as a government money market fund. On the Effective Date, the Fund’s Summary Prospectuses, Prospectuses and SAIs are revised as follows: All references to the State Street Money Market Portfolio will be replaced with the State Street U.S. Government Money Market Portfolio. All references to the State Street Institutional Liquid Reserves Fund will be replaced with the State Street Institutional Liquid Reserves Government Money Market Fund."
For more, see these Crane Data News pieces: "Bloomberg, ignites on Latest MMF Reforms; Prime Inst Shift a Nonevent" (10/3/24), "Sept. MFI: Sticking with Prime Inst; MMFs Hit Record; Sweeps Scrutiny" (9/9/24), "SSGA Sticks w/Prime Inst Money Funds; Discusses Reforms; Benchmarks" (8/29/24), "Prime Inst Exits Take Effect: Allspring, DWS, UBS; NY Fed RRP Updates" (8/27/24), "First American Inst Prime Obligations to Invest Solely in Liquid Assets" (7/23/24), "Schwab, JPM, Meeder Announce Prime Inst Conversions to Government" (7/18/24), "Invesco Files to Liquidate Prime Inst MMFs; UBS MF Converting to Retail" (6/13/24), "BlackRock Liquidates TempFund, LEAF" (6/10/24) and "Federated Hermes Merging Prime Inst Money Funds; Prime Value To POF" (6/6/24).
See also: "Allspring to Merge Heritage MMF Into Govt MMF; UBS Converting Fund" (6/3/24), "DWS Liquidating ESG Liquidity Fund, 7th Prime Inst to Exit" (5/22/24), "Dreyfus Files to Liquidate Cash Management Prime Inst MMF, Tax Exempt" (5/13/24), "Goldman Files to Liquidate Prime Inst MMFs; Barron's: MMFs Tempting" (4/22/24), "Federated Liquidating Money Mkt Trust" (4/1/24), "Vanguard Market Liquidity Fund Files to Go Government, Joins American" (3/20/24) and "American Funds Central Cash to Convert to Govt to Avoid Liquidity Fees" (2/6/24).
In other news, Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics Tuesday, which track a shifting subset of our monthly Portfolio Holdings collection. The most recent cut (with data as of Jan. 24) includes Holdings information from 75 money funds (up 15 from a week ago), or $4.098 trillion (up from $3.587 trillion) of the $7.201 trillion in total money fund assets (or 56.9%) tracked by Crane Data. (Note: Our Weekly MFPH are e-mail only and aren't available on the website. See our latest Monthly Money Fund Portfolio Holdings here and our Jan. 13 News, "January Money Fund Portfolio Holdings: Repo Surges, Treasuries Slide.")
Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Treasuries totaling $1.954 trillion (up from $1.813 trillion a week ago), or 47.7%; Repurchase Agreements (Repo) totaling $1.355 trillion (up from $1.172 trillion a week ago), or 33.1%, and Government Agency securities totaling $355.1 billion (up from $312.2 billion), or 8.7%. Commercial Paper (CP) totaled $169.1 billion (up from a week ago at $118.6 billion), or 4.1%. Certificates of Deposit (CDs) totaled $104.5 billion (up from $62.9 billion a week ago), or 2.5%. The Other category accounted for $108.4 billion or 2.6%, while VRDNs accounted for $51.9 billion, or 1.3%.
The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.954 trillion (47.7% of total holdings), Fixed Income Clearing Corp with $439.2B (10.7%), the Federal Home Loan Bank with $230.9 billion (5.6%), JP Morgan with $98.4B (2.4%), Citi with $93.2B (2.3%), BNP Paribas with $87.4B (2.1%), Federal Farm Credit Bank with $87.2B (2.1%), RBC with $76.2B (1.9%), Bank of America with $57.6B (1.4%) and Barclays PLC with $51.2B (1.2%).
The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($306.1B), Goldman Sachs FS Govt ($259.0B), JPMorgan 100% US Treas MMkt ($245.0B), Fidelity Inv MM: Govt Port ($221.5B), Morgan Stanley Inst Liq Govt ($184.6B), Federated Hermes Govt ObI ($173.7B), BlackRock Lq FedFund ($168.0B), State Street Inst US Govt ($165.8B), BlackRock Lq Treas Tr ($154.9B) and Fidelity Inv MM: MM Port ($149.9B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary.)
J.P. Morgan Securities' latest "Short-Term Market Outlook & Strategy discusses "RRP's ups and downs" and gives an update on "Low-duration bond funds." Authors Teresa Ho, Pankaj Vohra and Molly Herckis write, "Turning to the money markets, the ON RRP facility has fluctuated over the past couple of weeks, with balances dropping below $100bn on two occasions -- $94bn on January 16 and $96bn on January 21 -- but balances have rebounded somewhat from this years' lows. This volatility at the facility could partly be attributed to the increase in T-bill supply observed recently. Notably, total T-bill supply has risen by nearly $140bn since year-end, with the largest settlement occurring on January 23, amounting to $87bn."
They explain, "In light of this, SOFR ticked higher by 6bp to 4.35% this week on the back of Thursday's settlement. Interestingly, despite this week's large settlements, cash at the RRP, which mainly comes from MMFs, only declined by $13bn to $105bn since last Friday. It's possible that the influx of cash into MMFs might have cushioned the facility slightly. In fact, total AUMs have increased by $55bn to approximately $7.1tn year-to-date, with $46bn added just this past week. Also, as is typical during this time of the month, the money markets have been flush with cash, as GSEs enter the front-end, which can typically lift ON RRP balances slightly."
JPM's piece continues, "In the near term, balances at the ON RRP facility may slightly decline further as GSE cash continue to exit the repo markets and an additional $47bn of T-bill supply is scheduled to settle next week. However, in the medium term, we expect the facility to increase, along with reserves, as the TGA runs down due to the debt limit. For now, we continue to anticipate QT concluding by the end of 1Q25 but acknowledge the risks that this could be delayed."
A segment titled, "Low-duration bond funds experienced a positive year of inflows," tells us, "In 2024, short-duration bond funds experienced a positive year of inflows, with AUMs higher by $37bn to surpass $825bn, marking a 5% year-over-year rise. This was the first year of net inflows since 2021. Among the bond funds we track, growth was primarily driven by short-term multi-asset funds, which added $15.5bn; ultra-short credit funds, which gained $12.1bn; short-term credit funds, which increased by $8.8bn; and ultra-short multi-asset funds which grew by $7.0bn. In contrast, ultra-short government funds remained flat, and short-term government funds saw a decrease of $6.0bn."
It states, "Last year's inflows into short-duration funds closely mirrored bond performance, which partly reflected investors' expectations regarding Fed rate policy. In fact, nearly 90% of the inflows occurred between May and September, a period when monthly returns were at its peak for the year and the front-end curve was at its narrowest levels as 2y Treasury yields declined. Conversely, during months with negative returns -- specifically February, April, and October -- outflows were also observed."
JPM adds, "That said, short-term bond funds still experienced a relatively strong year in terms of performance, with ultra-short funds standing out in particular. Indeed, ultra-short bond funds outperformed prime MMFs by up to 78bp on a 1-year total return basis. In a similar vein, ultrashort credit funds and multi-asset funds surpassed their short-term counterparts over 1- month, 3-month, and 1-year periods."
Finally, they comment, "Looking ahead, markets are anticipating a shallower easing cycle this year, with OIS forwards pricing in just 38bp of reductions to the target range. Despite this, front-end Treasury yields should still trend slightly lower in 2025, which might encourage some investors to extend into longer duration. As a result, we could see some inflows into the short-duration bond space this year, potentially leading to a modest increase in AUMs. That said, we continue to expect MMF AUMs to remain elevated even if there is a slight rotation from MMFs to low-duration bond funds this year."
As a reminder, Crane Data will host its Bond Fund Symposium in 2 months, March 27-28, 2025 at the Hyatt Regency in Newport Beach, Calif. Crane's Bond Fund Symposium offers a concentrated and affordable educational experience, as well as an excellent networking venue, for bond fund and fixed-income professionals. Registrations are still being accepted ($1,000) and sponsorship opportunities are still available. See the latest agenda here and details below.
Portfolio managers, analysts, investors, issuers, service providers, and anyone interested in expanding their knowledge of bond funds and fixed-income investing will benefit from our comprehensive program. A block of rooms has been reserved at the Hyatt Regency. We'd like to thank our sponsors and exhibitors -- Northern Trust, Fitch Ratings, Morgan Stanley, Dreyfus, J.P. Morgan Asset Management, Bloomberg Intelligence, Payden & Rygel, GLMX, UBS, PIMCO and Dechert -- for their support. (We'd also love to get some new ones!) E-mail us for more details.
We're also now making plans for our next "big show," Money Fund Symposium, which will be held June 23-25, 2025, at The Renaissance Boston Seaport in Boston. (Let us know if you'd like details on speaking or sponsoring.) Finally, mark your calendars for our next European Money Fund Symposium, which will be held Sept. 25-26, 2025 in Dublin, Ireland. Watch for details on these shows in coming weeks and months.
Northern Trust released its Q4 2024 Earnings last week (see the Seeking Alpha earnings call transcript here, and the call contained several mentions of money market funds, bank deposits and cash management. CEO Michael O'Grady explains, "NTAM, our asset management business, worked in close partnership with our global family office and asset servicing businesses to develop a money market solution for a client seeking greater tax efficiency for its sizable cash investments. This turned out to be highly-attractive to a number of our clients and we experienced one of the fastest fundraises in NTAM history, raising nearly $3 billion over the course of six months with participation from 18 clients. As we enter 2025, we will further institutionalize these approaches through enterprise-wide initiatives aligning with meeting our clients' greatest needs and key industry trends, such as alternative investment solutions, family office services and liquidity solutions. We will also continue to prioritize growth in wealth and asset management and foster stronger collaboration between both businesses."
He says, "We refreshed our strategy in 2023 following the hiring of Daniel Gomba, our Asset Management President.... We refined our go-to-market partnership with asset servicing, creating more comprehensive solutions for clients and prospects, which resulted in more than 35 new client wins. Leveraging the success, we launched multiple products specifically geared toward the needs of our asset servicing ... and ultra-high net-worth wealth segments. As a result, we realized positive net flows for the year, including 13% growth in liquidity, which surpassed $300 billion in AUM and generated positive long-term flows in the second-half of the year."
O'Grady continues, "We also improved the trajectory of our organic fee growth meaningfully, all while delivering investment performance above our benchmarks. We aim to carry this momentum into 2025 by investing in areas of growth that are both aligned with secular trends in the industry and where we have the right to win. These include expanding our alternatives offerings, capturing growth in custom SMAs and broadening our ETF presence while simultaneously maintaining our focus on core strengths in liquidity solutions, indexing, quant and fixed income."
CFO David Fox comments, "[T]he deposit mix came in modestly better than our expectations. Average deposits were $113 billion, flat with third quarter levels, but non-interest-bearing deposits increased 7% on a linked-quarter basis and increased 100 basis-points as a percentage of the total mix to 15.5%. Second, deposit pricing improved. As part of our focus on client liquidity management, we made certain pricing adjustments to be more aligned with current market conditions. And as expected, we continue to realize a very strong deposit beta on institutional accounts relative to fourth quarter rate cuts."
He states, "Turning to the full year's results ..., trust fees were up 8% in 2024 due to both strong underlying markets and solid new business generation. We generated record NII, up 8% for the year, driven by sharply increasing deposits at the beginning of the year and stability over the remainder of the year.... Turning to NII, for the first-quarter, we expect NII to be approximately $555 million to $575 million. This assumes the current market implied forward curve, a flattish balance sheet on a dollar-adjusted basis with stable deposit levels, a relatively stable deposit mix, stable pricing and modest currency headwinds."
During the Q&A, Fox replies to a question, "I think non-interest-bearing deposits were up over $1 billion. I think that's probably higher than other quarters and my guess would be that there's some seasonality to that number. And certainly, we welcome it, but ultimately, it's not out of step with what we've seen in the past. In terms of the pricing adjustments, and we've talked about this before, we really have put a lot of effort behind our overall liquidity management and balance sheet management as it relates to deposits.... It's really taking a look at all the multiple currencies that we do manage on our deposit base and having a much more fulsome review of everything we're doing and making sure those betas are consistent with what we think they should be."
In response to another question, Fox tells us, "We're still anticipating a certain number of rate cuts at least a couple this year in the U.S. And then globally, there's a lot of other potential rate cuts that are in our numbers as well. `Keep in mind, our deposits aren't all in dollars. So, we obviously did some pricing adjustments, which help on the NII front as well.... We think obviously, if there are less rate cuts, that's better."
In other news, the website Ledgerinsights.com published, "Analysis: BlackRock BUIDL update shows key design options in tokenized money market funds," which says, "Securitize, BlackRock's tokenization partner for its BUIDL tokenized money market fund (MMF), announced some updates to the token behavior.... The changes were pretty simple: the fund can now be redeemed intraday rather than waiting until 3pm. And it pays out interest daily rather than monthly."
They write, "One of the visions is to use tokenized money market funds as collateral. The CFTC market advisory committee aims to get tokenized securities approved to be used as margin for options trading.... German central counterparty Eurex Clearing announced it received the regulator's green light to use digital collateral for margin. The key advantage is the ability to post margin quickly without liquidating assets. In traditional finance (TradFi), Broadridge already tokenizes Treasuries on a permissioned blockchain for intraday repo, transacting $1.5 trillion a month."
Calastone also writes about tokenized money funds in "Navigating rate cuts and the rise of tokenised money market funds in 2025." They state, "[In] 2025, the money market fund (MMF) landscape is set to evolve in response to shifting macroeconomic conditions and advances in digital finance. Central banks around the world are likely to continue adjusting interest rates downward, a trend that could have a significant impact on the MMF sector. At the same time, new technological innovations -- such as tokenisation -- are poised to revolutionise how these funds are used, traded, and managed."
The update says, "While rate cuts and automation will dominate the headlines, another major trend in the MMF space is the rise of tokenisation. Tokenisation refers to the process of converting rights to an asset, such as a money market fund, into a digital token that can be traded on a distributed ledger technology (DLT) network. In the case of MMFs, tokenisation offers significant benefits, particularly in the areas of collateral management and liquidity."
It adds, "The concept of tokenised money market funds is not merely theoretical; real-world use cases are already beginning to emerge. In the UK, the Technology Working Group has endorsed the use of tokenised MMFs as collateral, and several successful pilots have been conducted in other jurisdictions. This growing acceptance of tokenisation points to a future where MMF units are routinely traded on DLT networks, making the investment process more efficient, transparent, and secure.... In 2025, we expect to see tokenisation get much closer to being mainstream feature of the MMF market."
Finally, the WSJ writes, "Coinbase Would Delist Stablecoin Tether if Required by Law, CEO Says," which says, "Coinbase Global would remove stablecoin tether from its U.S. cryptocurrency trading platform if required by new legislation, CEO Brian Armstrong said in an interview at the Journal House in Davos, Switzerland. Tether, which is pegged 1:1 to the dollar, is the world's most traded cryptocurrency, but authorities are scrutinizing its use by a plethora of crime groups, sanctions evaders and terrorist organizations to move money around the globe unhindered."
It comments, "If tether's issuer, also called Tether, couldn't comply with any new U.S. laws, Coinbase would delist it, Armstrong said.... Coinbase delisted tether for its European customers last month in response to new EU regulations for digital currencies that force stablecoin issuers to hold a portion of their reserves in cash at banks. Tether has said it opposes this new requirement because it could create more risk. Tether's smaller rival, U.S.-based Circle, in which Coinbase is a shareholder, says its own USDC stablecoin is already compliant with the EU's Markets in Crypto-Assets Regulation."
As we wrote earlier this month (and reprint here), our January MFI issue recognized the top performing money funds, ranked by total returns, for calendar year 2024, as well as the top funds for the past 5-year and 10-year periods. We present the funds below with our annual Money Fund Intelligence Awards. These are given to the No. 1‐ranked funds based on 1-year, 5-year and 10-year returns, through Dec. 31, 2024, in each of our major fund categories -- Prime Institutional, Government Institutional, Treasury Institutional, Prime Retail, Government Retail, Treasury Retail and Tax‐Exempt. (Let us know if you'd like to see our latest Money Fund Intelligence issue with the MFI Awards article or our latest MFI XLS product with the performance data and rankings behind the awards.)
The Top-Performing Prime Institutional fund (and fund overall) was BlackRock Cash Inst MMF SL (BISXX), which returned 5.43%. Among Prime Retail funds, Schwab Value Adv MF Ultra (SNAXX) had the best return in 2024 (5.36%). (Our Crane 100 Money Fund Index returned 5.08% in 2024.)
The Top‐Performing Govt Institutional funds in 2024 were JPMorgan Sec Lending MM Agency SL (VSLXX) and Dreyfus Inst Pref Govt Plus MF (DRF03), which returned 5.37% and 5.35% respectively. Vanguard Variable Insurance MM Fund (VMRXX) was the Top Government Retail fund with a 5.36% return. JPMorgan US Trs Plus MM IM (MJPXX) and North Capital Treasury MMkt Inst (NCGXX) tied to rank No. 1 in the Treasury Institutional class with returns of 5.33%. Vanguard Treasury Money Market (VUSXX) was No. 1 among Treasury Retail, returning 5.24%.
For the 5‐year period through Dec. 31, 2024, BlackRock Cash Inst MMF SL (BISXX) took top honors for the best performing Prime Institutional money fund with a return of 2.67%. Allspring MMF Premium (WMPXX) ranked No. 1 among Prime Retail with an annualized return of 2.59%.
JPMorgan Sec Lending MM Agency SL (VSLXX) ranked No. 1 among Govt Institutional funds with a return of 2.62%, while Vanguard Variable Insurance MM Fund (VAN03) ranked No. 1 among Govt Retail funds over the past 5 years with a return of 2.55%. BlackRock Cash Treas MMF SL (BRC03) ranked No. 1 in 5-year performance among Treasury Inst funds with a return of 2.44%. Vanguard Treasury Money Market (VUSXX) ranks No. 1 among Treasury Retail funds with a return of 2.43%.
The highest performers of the past 10 years and No. 1 among Prime Inst MMFs was BlackRock Cash Inst MMF SL (BISXX), which returned 1.99%. Morgan Stanley Inst Liq MMP Wealth (MWMXX), which returned 1.89%, was best among Prime Retail. ` JPMorgan Federal MM Institution <b:>`_ (JFMXX) returned 1.86% and ranked No. 1 among Govt Inst funds. Vanguard Cash Reserves Federal MM Adm (VMRXX) ranked No. 1 among Govt Retail funds, returning 1.84%.
BlackRock Cash Treas MMF SL (BRC03) returned the most among Treasury Inst funds over the past 10 years at 1.73%. Vanguard Treasury Money Market (VUSXX) ranked No. 1 among Treasury Retail money market funds at 1.71%.
We're also giving out awards for the best-performing Tax-Exempt MMFs. Federated Hermes Muni Obligs WS (MOFXX) ranked No. 1 among T-E funds over 1-year with a return of 3.53%. Federated Hermes Muni Obligs WS (MOFXX) also ranked No. 1 over 5-years ended Dec. 31, 2024 with a return of 1.75%. Federated Hermes Muni Obligs WS (MOFXX) also ranked No. 1 for the 10-year period with a return of 1.28%.
See the MFI Award Winner listings on page 6 of MFI, and see our latest Money Fund Intelligence XLS for more detailed rankings. The tables on page 6 show the No. 1 ranked money fund for each category based on 1‐year, 5‐year, and 10‐year annualized total returns.
In other news, ICI published its latest "Money Market Fund Assets" report Thursday, which shows money fund assets rebounding to break back above $6.9 trillion for just the second time ever. (The first was two weeks ago.) They rose $41.6 billion to $6.903 trillion, after falling $54.9 billion the week prior. Money fund assets have risen in 18 of the last 25, and 29 of the last 40, weeks, increasing by $599.7 billion (or 9.5%) since the Fed cut on 9/18/24 and increasing by $925.8 billion (or 15.5%) since 4/24/24. MMF assets are up by $944 billion, or 15.8%, in the past 52 weeks (through 1/22/25), with Institutional MMFs up $519 billion, or 14.3% and Retail MMFs up $425 billion, or 18.2%. Year-to-date, MMF assets are up by $53 billion, or 0.8%, with Institutional MMFs up $25 billion, or 0.6% and Retail MMFs up $28 billion, or 1.0%.
ICI's weekly release says, "Total money market fund assets increased by $41.65 billion to $6.90 trillion for the week ended Wednesday, January 22, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $34.90 billion and prime funds increased by $8.17 billion. Tax-exempt money market funds decreased by $1.43 billion." ICI's stats show Institutional MMFs increasing $36.0 billion and Retail MMFs increasing $5.6 billion in the latest week. Total Government MMF assets, including Treasury funds, were $5.667 trillion (82.1% of all money funds), while Total Prime MMFs were $1.101 trillion (16.0%). Tax Exempt MMFs totaled $134.6 billion (1.9%).
It explains, "Assets of retail money market funds increased by $5.60 billion to $2.76 trillion. Among retail funds, government money market fund assets increased by $4.23 billion to $1.76 trillion, prime money market fund assets increased by $3.12 billion to $879.32 billion, and tax-exempt fund assets decreased by $1.75 billion to $122.49 billion." Retail assets account for over a third of total assets, or 40.0%, and Government Retail assets make up 63.7% of all Retail MMFs.
They add, "Assets of institutional money market funds increased by $36.04 billion to $4.14 trillion. Among institutional funds, government money market fund assets increased by $30.67 billion to $3.91 trillion, prime money market fund assets increased by $5.05 billion to $221.98 billion, and tax-exempt fund assets increased by $320 million to $12.05 billion." Institutional assets accounted for 60.0% of all MMF assets, with Government Institutional assets making up 94.3% of all institutional MMF totals.
According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets have risen by $64.5 billion in January through 1/22/25 to $7.238 trillion. (They hit a record high on 1/7 at $7.266 trillion before falling 2 weeks ago and rebounding this week.) Assets rose by $110.9 billion in December, $200.5 trillion in November, $97.5 billion in October, $149.8 billion in September, $109.7 billion in August, $16.6 billion in July, $15.7 billion in June and $91.4 billion in May. They declined by $15.8 billion in April and $68.8 billion in March. They rose $72.1 billion in February and $93.9 billion last January. Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're about $340 billion lower than Crane's asset series.
Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics Wednesday, which track a shifting subset of our monthly Portfolio Holdings collection. The most recent cut (with data as of Jan. 17) includes Holdings information from 60 money funds (down 1 from two weeks ago), or $3.587 trillion (down from $3.651 trillion) of the $7.183 trillion in total money fund assets (or 49.9%) tracked by Crane Data. (Note: Our Weekly MFPH are e-mail only and aren't available on the website. See our latest Monthly Money Fund Portfolio Holdings here and our Jan. 13 News, "January Money Fund Portfolio Holdings: Repo Surges, Treasuries Slide.")
Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Treasuries totaling $1.813 trillion (down from $1.829 trillion two weeks ago), or 50.5%; Repurchase Agreements (Repo) totaling $1.172 trillion (down from $1.224 trillion two weeks ago), or 32.7%, and Government Agency securities totaling $312.2 billion (up from $309.9 billion), or 8.7%. Commercial Paper (CP) totaled $118.6 billion (up from two weeks ago at $112.9 billion), or 3.3%. Certificates of Deposit (CDs) totaled $62.9 billion (down from $63.7 billion two weeks ago), or 1.8%. The Other category accounted for $72.3 billion or 2.0%, while VRDNs accounted for $36.3 billion, or 1.0%.
The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.813 trillion (50.5% of total holdings), Fixed Income Clearing Corp with $357.0B (10.0%), the Federal Home Loan Bank with $201.5 billion (5.6%), JP Morgan with $90.1B (2.5%), Citi with $84.1B (2.3%), BNP Paribas with $77.2B (2.2%), RBC with $77.1B (2.1%), Federal Farm Credit Bank with $76.1B (2.1%), Goldman Sachs with $48.1B (1.3%) and Bank of America with $41.2B (1.1%).
The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($304.2B), Goldman Sachs FS Govt ($267.0B), JPMorgan 100% US Treas MMkt ($246.9B), Fidelity Inv MM: Govt Port ($217.5B), Morgan Stanley Inst Liq Govt ($187.7B), BlackRock Lq FedFund ($166.8B), State Street Inst US Govt ($166.4B), BlackRock Lq Treas Tr ($154.8B), Fidelity Inv MM: MM Port ($148.3B) and Dreyfus Govt Cash Mgmt ($131.5B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary.)
In other news, Fitch Ratings published "Global Money Market Fund Update: 2025" yesterday too, which tells us, "Fitch Ratings believes global credit conditions will remain generally neutral in 2025, driven by a broadly stable macroeconomic base case. Policy rate cuts in major economies will also continue to be measured, with central banks carefully monitoring inflation risks. This underlies our anticipation for balanced money market fund (MMF) industry flows for the year and our 'neutral' sector outlook for 2025."
They write, "Heightened market volatility, stemming from geopolitical tail-risks and the looming global trade war, could lead to outflows in stressed markets. In addition, rapid changes in inflation and rate expectations, driven by policy uncertainties, particularly in the US, may lead to valuation volatility. However, investor flight-to-safety could result in inflows to the MMF sector overall. The 'neutral' outlooks of most of the key banking sectors, together with MMFs typical investment universe in high-quality banks support a generally neutral credit environment for MMFs in 2025."
Fitch comments, "We expect balanced MMF industry flows, benefiting from the duration effect, which delays the impact of policy rate cuts on fund yields. However, material deviations from rate cut forecasts may increase fund flow volatility. We expect fund managers to continue to gradually increase weighted average maturity (WAM) and weighted average life (WAL) to lock in high yields in anticipation of rate cuts.... Fitch expects the Securities Exchange Commission's (SEC) final rule on central clearing will continue to be an area of focus for US MMF managers. However, we expect its impact to be muted until the implementation date approaches. In Europe, Fitch does not expect major money fund-specific regulatory development in 2025."
They write, "Investors' relative value considerations of MMFs versus alternative investment opportunities, as well as market stability, will continue be drivers of AUM in 2025.... Fitch expects tactical WAM and WAL extensions in 2025, which may expose US MMFs to increased risk in the event of market volatility."
Discussing the "Central Clearing Rule," they state, "The SEC central clearing rule, adopted in December 2023, continues to be a focal point for US MMF managers. Fitch expects limited impact in the near to medium term given the tiered implementation for secondary market US Treasury transactions and traditional repurchase agreements at end-2025 and mid-2026, respectively. Fitch views the rule as a generally credit positive, given the reduction of counterparty risk to MMFs. However, the final form of the rule, specifically clearing agency policies, is still an outstanding consideration and remain an industry focus. The 'AAAmmf' diversification limit to the Fixed Income Clearing Corporation is limited to 75% of net asset value."
The update adds, "Fitch does not expect major money fund-specific regulatory development out of Europe in 2025 due to long lead times. Regulatory stances vary in the region. The European Commission's (EC) 2023 review on MMF regulation adequacy did not recommend immediate reform, while ESMA's response to EC consultation on non-bank financial intermediation reiterated its position on the necessity to complete the reform of the MMF Regulation. The UK Financial Conduct Authority plans to issue a policy statement following its regulatory consultation. This includes a proposal to significantly increasing minimum liquid asset requirements for MMFs, although no timeline has been defined. Market discussion regarding international cooperation in policy reforms within Europe persists given the significant cross-border funding and investing activities."
Finally, the piece states, "The economic environment in China remains challenging, with Fitch forecasting further deterioration in the Chinese banking industry in 2025. Chinese MMFs, heavily invested in time deposits and negotiable certificate of deposit, are exposed to the banking sector's credit quality. However, we expect the Chinese MMFs market to be stable due to the short duration of MMFs and their focus on large banks. Fitch maintains a 'neutral' outlook for Chinese money funds sector."
It adds, "Chinese MMF assets continue to increase, reaching a record CNY13.7 trillion (USD1.9 trillion) by end-2024. Fitch anticipates further growth, supported by the government's moderately loose monetary policy. MMF yield remains low at around 1.5% amid a low interest rate environment. Fitch expects yields to stay at this level in the coming year. Despite the record low yields, MMFs have remained attractive to investors seeking safe assets in a volatile capital market.... Regulations permit Chinese MMFs to apply up to 20% leverage. However, leverage levels have been declining among a challenging credit environment. The average leverage across all MMFs had decreased to 3% by end-2024 from 5% a year earlier."
Charles Schwab reported Q4 earnings and hosted its "2025 Winter Business Update" yesterday (see the transcript here). New CEO Rick Wurster tells us, "The one-word summary of our ... quarter is growth. Net new assets growth was strong, up 20% for the year and 51% for the quarter. Total new brokerage accounts in 2024 were up 10% from the prior year. Revenue was up 4% for the year and up 20% over the fourth quarter of 2023. Fourth quarter earnings per share increased nearly 50% on an adjusted basis versus Q4. Clients were active. We had strong levels of trading activity, record engagement with our trading, coaching, and education, and record flows into our managed investing and lending solutions. Client promoter scores reached all-time highs for the firm. I'd also note that client cash grew in the fourth quarter and supplemental borrowing is down to $50 billion."
He explains, "Our award-winning bank was purpose built for investors and helps us stand apart by offering among the lowest lending rates in the industry, FDIC insured cash, access to pledged asset lines in a day, and strong transactional capabilities. In combination with our fixed income and money fund capabilities, there is no better place for liquid assets than here at Schwab."
CFO Mike Verdeschi says, "2024 brought encouraging trends around transactional cash levels. Realignment activity continued to decelerate as we moved towards more business-as-usual client activity. At the same time, we made meaningful progress on reducing the level of bank supplemental funding to approximately $50 billion, down about 50% from peak levels. And our capital ratios increased within our targeted operating range. In summary, our success during 2024 enables us to enter this year with a lot of momentum, and we have a clear plan to drive meaningful business and financial growth in 2025 and beyond."
He continues, "Moving to our balance sheet, we continue to support our clients, with both margin and bank loans to clients up significantly during the year, including 34% growth in margin balances at the broker dealer and low-double-digit bank loan growth.... We saw a continuation of the build in transactional sweep cash during the fourth quarter, including $25 billion of net inflows in December. This strong seasonal inflow during the last month of the year is consistent with the historical trends."
Verdeschi states, "And if history remains a guide, we would anticipate much of this seasonal build to flow back out into the markets during the first couple of months of 2025. The combination of the principal and interest coming off of the securities portfolio plus the cash inflow on the full quarter enabled us to reduce high cost supplemental funding at the banks."
During the Q&A, Schwab was asked about "client cash trends." Verdeschi responds, "Based on everything we've seen over the past couple of quarters, [this suggests] we're entering that more normalized environment for client cash. If you just go back to the previous year, the first half of the year was really that continued normalization of realignment. And of course, the second half of the year, we did see two consecutive quarters of cash growth. And while that December number reflects seasonality, again, more indicative of that normalized environment, I think as you go forward, I think of that deposit level, of course, [is] in part being influenced by new account growth."
He says, "Of course, there will be other macroeconomic variables like the role of central banks as well impacting levels of liquidity in the system, but I do think we are in that more normalized environment at this time.... We've always seen month-to-month, quarter-to-quarter ... you will see impacts of seasonality. But again, I would suggest we are in that more normalized environment.... We're encouraged by the last couple of quarters."
On deposits, Verdeschi comments, "Again, we're encouraged by the trends we're seeing in deposits, two consecutive quarters of growth. And as I highlighted, I think the account growth that we've seen historically really is associated with that new account openings and the portion of assets that come to us that's in the form of cash.... There could be a percentage that's off-balance sheet versus on-balance sheet. But ... we're seeing indicators that the realignment activity has certainly decelerated ..., and we're looking at that new account formation now being the driver of that cash. Keep in mind, it's been a long time since the Fed had hiked rates previously. Of course, the Fed began lowering rates at the back end of the year. So, we think, again, that's represents a lower propensity to realign. So again, encouraging trends.”
Another question asked, "Does the recent positive trajectory on sweep cash balances, lower supplemental funding and the current reinvestment rate levels with yields moving higher make this a more attractive option now than even compared to a quarter ago? And given the progress you've made with the balance sheet already, could you just outline any remaining concerns with potentially executing this in 2025?"
Finally, Verdeschi answers, "As we've talked about in the past with the securities portfolio, we're just very mindful of doing something that creates headlines and disrupts the trust ... that our clients have in us. So, we've been reluctant to do that at this time. That being said, we're keeping a close eye on that portfolio and its performance. Restructuring is not something we're taking off the table. We do evaluate that. But I think you raised an important point, which is, if you think about the proceeds of a portfolio sale, how might you use that?"
He adds, "One of our priorities is to continue to make progress on the reduction of supplemental borrowings. And we are making that progress just after the principal and interest payments, and certainly, alongside cash stabilization. So, that is an important consideration. And of course, we're mindful of the level of rates in the marketplace as well and what the trajectory of that rate market may look like over the course of the year. So, I think at this point, we feel good about the strategy that is unfolding."
State Street Global Advisors (SSGA) recently published a "Q1 2025 Cash Outlook," which is entitled, "Dawn of a New Future." Subtitled, "From the US policy rate path to Fed's tapering of quantitative tightening, and maybe even the dawn of a new future for cash investing in asset tokenization and stablecoins -- 2025 looks poised to be a very happening year for cash investors," the piece tells us, "Looking back, 2024 feels like a whirlwind -- another year that seemed to pass in the blink of an eye. It was marked by persistent questions early in the year about when cash would flow out of money market funds (MMFs) and be redeployed into the economy. My answer then was the same as it is now, as we begin 2025: it depends on the availability of compelling opportunities. Investors need assets of genuine value -- not ones at new highs (equities) or tight spreads (credit). Alternatively, economic pressures such as declining business revenues or personal cash flow constraints may necessitate the drawdown of these funds."
Author William Goldthwait writes, "MMF balances ended 2023 at $5.87 trillion and grew by approximately 15% over 2024, reaching $6.75 trillion as of 18 December 2024 (source: Investment Company Institute [ICI]). This remarkable growth underscores two significant factors: the wealth effect is massive, and people and entities are conservatively sitting on more cash in case of need or opportunity. Over the past five years, MMF balances have surged by an astonishing 87%."
He explains, "Government MMFs were the primary beneficiaries of these balance increases, with institutional and retail categories growing by 15%. Retail prime MMFs also saw healthy growth, rising by 12% to $1 trillion. Meanwhile, institutional prime MMFs faced substantial challenges, with AuM declining by 18%, though the drop was less severe than some had anticipated. Institutional prime MMFs currently hold ~$218 billion in assets, far above the $122 billion low seen after the 2016 MMF reforms, but below the 2020 peak of $320 billion. New Securities and Exchange Commission (SEC) regulations will likely limit institutional investors returning to this sector and may lead them to seek out similar returns in other offerings, like local government investment pools or ultra-short-term investment funds."
Discussing "Stablecoins and the Tipping Point," SSGA says, "[L]et's focus on one trend that is reshaping the financial system: the evolution of 'cash.' How do individuals and entities move cash efficiently across borders and through the banking system? Traditionally, this process has been expensive, slow and complex. But is that starting to change? Enter stablecoins, such as Tether and USDC, which are gaining traction as transformative tools in global finance. According to CoinMarketCap.com, Tether's market cap has surpassed $138 billion, underpinned by the increasingly robust infrastructure."
They comment, "Some asset management firms are exploring the potential of tokenizing MMFs, hinting at a future where digital assets blend seamlessly with traditional financial products. While this movement is gradual, it prompts the question: When will we reach the tipping point? The history of money market funds (MMFs) offers valuable perspective. Introduced in the early 1970s, MMFs were initially a niche retail product, offering higher interest rates than bank accounts and the convenience of check-writing from mutual fund accounts. Their rise was not without challenges; the SEC implemented Rule 2a-7 in 1983 to address regulatory issues. Growth remained modest through the 1980s, but by the 1990s, MMFs hit their tipping point."
The Outlook states, "At the start of the decade, MMF assets under management stood at just under $400 billion, according to the Investment Company Institute. By the decade's end, that figure had soared to over $1.6 trillion -- more than a fourfold increase. In contrast, commercial bank deposits grew at a slower pace, from ~$2.2 trillion to ~$3.4 trillion over the same period. This explosive growth marked MMFs as a transformative financial tool with widespread benefits."
Finally, it adds, "The stablecoin market is still in its early stages, with significant learning and development required before it integrates fully into the broader financial framework. However, if stablecoins can deliver on their promise of faster, safer and more cost-effective transactions, they may very well catalyze the next tipping point in global finance. The parallels between the rise of MMFs and the potential of stablecoins are striking. History suggests that change often starts slowly, gaining momentum until it reaches a critical mass. Are we on the cusp of a similar revolution? Only time will tell."
In other news, The Wall Street Journal's Jason Zweig tells us, "What You Don't Know Could Sting Your Portfolio." He writes, "Your financial adviser may have a conflict of interest that you would never even think to ask about. Advisers are required by law to act in your best interest. They can sometimes be pushed to do otherwise, though. The latest push comes from an unlit corner of the financial industry, and you need to know about it so you can guard against it."
He explains, "In an email, the Fidelity representative spelled out seven ways Armbruster could make up the shortfall. Several involved what the rep called 'asset shift,' or moves into investments run by Fidelity affiliates -- which would generate more revenue for the giant firm regardless of whether they were the best option for Armbruster's clients."
Zweig continues, "In one asset shift, Armbruster could move about $3 million out of high-yielding money-market funds into Fidelity's FCASH fund, lately yielding 2.19%. It could move roughly $35 million into other money-market funds run by Fidelity. Or it could move about $80 million out of fixed-income index funds run by other managers into a more expensive bond fund actively managed by Fidelity."
He adds, "Each of those moves would make Fidelity a little bit more money, thanks to lower payouts or higher fees. And they would likely make Armbruster's clients a little bit less money. After all my years of writing about investing, I had no idea this sort of thing was going on behind the scenes, and I doubt you did, either."
The SEC published its latest quarterly "Private Funds Statistics" report recently, which summarizes Form PF reporting and includes some data on "Liquidity Funds," or pools which are similar to but not money market funds. The publication shows overall Liquidity fund assets were higher in the latest reported quarter (Q2'24) at $342 billion (up from $331 billion in Q1'24 and up from $319 billion in Q2'23). We also again briefly review the part of the SEC's MMF Reforms which addresses "Amendments to Form PF Reporting Requirements for Large Liquidity Fund Advisers" and which went into effect over the summer, below. (Note: Please join us for our upcoming Bond Fund Symposium, which will be held March 27-28, 2025 in Newport Beach, California!)
The SEC's "Introduction" tells us, "This report provides a summary of recent private fund industry statistics and trends, reflecting data collected through Form PF and Form ADV filings received through December 06, 2024. Form PF information provided in this report is aggregated, rounded, and/or masked to avoid potential disclosure of proprietary information of individual Form PF filers. This report reflects data from Second Calendar Quarter 2022 through Second Calendar Quarter 2024 as reported by Form PF filers." (Note: Crane Data believes the largest portion of these liquidity fund assets are securities lending reinvestment pools.)
The tables in the SEC's "Private Funds Statistics: Second Calendar Quarter 2024," with the most recent data available, show 75 Liquidity Funds (most of which are "Section 3 Liquidity Funds," which are Liquidity Funds from advisers with over $1 billion total in cash), up 2 from last quarter and up 6 from a year ago. (There are 51 Section 3 Liquidity Funds out of the 75 Liquidity Funds.) The SEC receives Form PF reports from 38 Liquidity Fund advisers (21 of which are Section 3 Liquidity Fund advisers), up 1 from last quarter and up 5 from a year ago.
The SEC's table on "Aggregate Private Fund Net Asset Value" shows total Liquidity Fund assets at $342 billion, up $11 billion from Q1'24 and up $23 billion from a year ago (Q2'23). Of this total, $340 billion is in Section 3 (large manager) Liquidity Funds. The SEC's table on "Aggregate Private Fund Gross Asset Value" shows total Liquidity Fund assets at $352 billion, up $13 billion from Q1'24 and up $20 billion from a year ago (Q2'23). Of this total, $349 billion in is Section 3 (large manager) Liquidity Funds.
A table on "Beneficial Ownership for Section 3 Liquidity Funds" shows $70 billion is held by Other (20.7%), $91 billion is held by Unknown Non-U.S. Investors (26.7%), $50 billion is held by Private Funds (14.7%), $14 billion is held by Insurance Companies (4.2%) and $3 billion is held by Non-Profits (0.9%).
The tables also show that 65.3% of Section 3 Liquidity Funds have a liquidation period of one day, $322 billion of these funds may suspend redemptions, and $291 billion of these funds may have gates. WAMs average a short 38.7 days (44.7 days when weighted by assets), WALs are 52.0 days (66.5 days when asset-weighted), and 7-Day Gross Yields average 5.30% (5.20% asset-weighted). Daily Liquid Assets average about 57.3% (49.4% asset-weighted) while Weekly Liquid Assets average about 64.7% (63.8% asset-weighted).
As we've mentioned before, in July 2023, when the SEC's Money Market Fund Reforms were passed, these also included "Amendments to Form PF Reporting Requirements for Large Liquidity Fund Advisers." The release explains, "Separately, the amendments will also modify certain reporting forms that are applicable to money market funds and large private liquidity funds advisers."
The "Fact Sheet" explains, "In addition, the Commission adopted amendments to Form PF, the confidential reporting form for certain SEC-registered investment advisers to private funds, to require additional information regarding the liquidity funds they advise that is generally aligned with the amended reporting for money market funds. These amendments were proposed by the Commission in January 2022."
The full final rules tell us, "The Commission is also amending Form PF, the confidential reporting form for certain SEC-registered investment advisers to private funds to require additional information regarding the liquidity funds they advise. Liquidity funds are private funds that seek to maintain a stable NAV (or minimize fluctuations in their NAVs) and thus can resemble money market funds. The amendments to section 3 of Form PF will provide a more complete picture of the short-term financing markets in which liquidity funds invest and enhance the Commission's and the Financial Stability Oversight Council's ('FSOC') ability to assess short-term financing markets and facilitate our oversight of those markets and their participants. This, in turn, is designed to enhance investor protection efforts and systemic risk assessment. `We have consulted with FSOC to gain input on these amendments to help ensure that Form PF continues to provide FSOC with information it can use to assess systemic risk."
It adds, "In a January 2022 release proposing amendments to Form PF, the Commission proposed changes to section 3 of Form PF that were intended to require large liquidity fund advisers to report substantially the same information that the Commission had proposed money market funds to report on Form N-MFP. The proposed amendments to section 3 of Form PF included requirements for additional and more granular information regarding large liquidity fund operational information and assets, portfolio holdings, financing, and investor information as well as a new item concerning the disposition of portfolio securities. Consistent with the final amendments to Form N-MFP, we are adopting largely as proposed the amendments to section 3 of Form PF, with some modifications to better tailor the reporting to private liquidity funds and remain consistent with the final requirements for money market funds under amended Form N-MFP."
Crane Data's latest Money Fund Intelligence International shows that assets in European or "offshore" money market mutual funds moved higher again over the past 30 days to a record $1.463 trillion, while yields moved lower. Assets for USD, EUR and GBP all rose over the past month. Like U.S. money fund assets, European MMFs have repeatedly hit record highs in 2023, 2024 and early in 2025. These U.S.-style money funds, domiciled in Ireland or Luxembourg and denominated in US Dollars, Pound Sterling and Euros, increased by $27.3 billion over the 30 days through 1/14. The totals are up $30.4 billion (2.1%) year-to-date for 2025, they were up $235.3 billion (19.7%) for 2024 and up $166.9 billion (16.2%) for the year 2023. (Note that currency moves in the U.S. dollar cause Euro and Sterling totals to shift when they're translated back into totals in U.S. dollars. See our latest MFI International for more on the "offshore" money fund marketplace. These funds are only available to qualified, non-U.S. investors and are almost entirely institutional.)
Offshore US Dollar money funds increased $16.7 billion over the last 30 days and are up $16.8 billion YTD to $760.4 billion; they increased $94.1 billion in 2024. Euro funds increased E6.3 billion over the past month. YTD, they're up E0.4 billion to E318.2 billion, for 2024, they increased by E82.9 billion. GBP money funds increased L2.7 million over 30 days, and they're up L9.9 billion YTD at L264.6B, for 2024, they rose L19.3 billion. U.S. Dollar (USD) money funds (260) account for over half (52.0%) of the "European" money fund total, while Euro (EUR) money funds (180) make up 24.0% and Pound Sterling (GBP) funds (171) total 24.0%. We summarize our latest "offshore" money fund statistics and our Money Fund Intelligence International Portfolio Holdings (which went out to subscribers Wednesday), below.
Offshore USD MMFs yield 4.33% (7-Day) on average (as of 1/14/25), down 22 basis points from a month earlier. Yields averaged 4.20% on 12/30/22 and 0.03% on 12/31/21. EUR MMFs, which left negative yield territory in the second half of 2022, yield 2.88% on average, down 20 bps from a month ago and up from 1.48% on 12/30/22 and -0.80% on 12/31/21. Meanwhile, GBP MMFs broke above the 5.0% barrier 17 months ago, but they broke back below 5.0% 6 months ago. They now yield 4.65%, down 3 bps from a month ago, but up from 3.17% on 12/30/22. Sterling yields were 0.01% on 12/31/21.
Crane's December MFI International Portfolio Holdings, with data as of 12/31/24, show that European-domiciled US Dollar MMFs, on average, consist of 28% in Commercial Paper (CP), 16% in Certificates of Deposit (CDs), 21% in Repo, 23% in Treasury securities, 10% in Other securities (primarily Time Deposits) and 2% in Government Agency securities. USD funds have on average 42.3% of their portfolios maturing Overnight, 3.2% maturing in 2-7 Days, 14.3% maturing in 8-30 Days, 10.6% maturing in 31-60 Days, 7.3% maturing in 61-90 Days, 16.1% maturing in 91-180 Days and 6.3% maturing beyond 181 Days. USD holdings are affiliated with the following countries: the US (38.7%), Canada (11.6%), France (10.7%), Japan (10.2%), Australia (5.6%), the U.K. (3.4%), Germany (3.4%), the Netherlands (2.9%), Finland (2.6%) and Sweden (2.2%).
The 10 Largest Issuers to "offshore" USD money funds include: the US Treasury with $173.7 billion (23.2% of total assets), Fixed Income Clearing Corp with $44.4B (5.9%), RBC with $24.5B (3.3%), Mizuho Corporate Bank with $20.5B (2.7%), Toronto-Dominion Bank with $19.9B (2.7%), Australia & New Zealand Banking Group Ltd with $18.4B (2.5%), Credit Agricole with $18.2B (2.4%), Nordea Bank with $18.1B (2.4%), Mitsubishi UFJ Financial Group Inc with $17.9B (2.4%) and Societe Generale with $14.9B (2.0%).
Euro MMFs tracked by Crane Data contain, on average 40% in CP, 25% in CDs, 15% in Other (primarily Time Deposits), 17% in Repo, 3% in Treasuries and 0% in Agency securities. EUR funds have on average 34.1% of their portfolios maturing Overnight, 9.4% maturing in 2-7 Days, 19.0% maturing in 8-30 Days, 15.8% maturing in 31-60 Days, 6.2% maturing in 61-90 Days, 9.4% maturing in 91-180 Days and 6.1% maturing beyond 181 Days. EUR MMF holdings are affiliated with the following countries: France (30.1%), Japan (12.3%), Canada (9.5%), the U.S. (7.1%), Germany (6.8%), the Netherlands (5.9%), the U.K. (4.4%), Australia (3.6%), Austria (3.5%) and Belgium (3.0%).
The 10 Largest Issuers to "offshore" EUR money funds include: Credit Agricole with E18.4B (6.3%), Republic of France with E15.9B (5.5%), BNP Paribas with E15.1B (5.2%), Sumitomo Mitsui Banking Corp with E9.7B (3.4%), Societe Generale with E8.7B (3.0%), Toronto-Dominion Bank with E8.6B (3.0%), Mitsubishi UFJ Financial Group Inc with E8.3B (2.9%), Mizuho Corporate Bank Ltd with E7.8B (2.7%), Bank of Nova Scotia with E7.3B (2.5%) and JP Morgan with E6.6B (2.3%).
The GBP funds tracked by MFI International contain, on average (as of 12/31/24): 38% in CDs, 19% in CP, 22% in Other (Time Deposits), 17% in Repo, 3% in Treasury and 1% in Agency. Sterling funds have on average 34.6% of their portfolios maturing Overnight, 4.0% maturing in 2-7 Days, 16.6% maturing in 8-30 Days, 15.4% maturing in 31-60 Days, 8.3% maturing in 61-90 Days, 13.7% maturing in 91-180 Days and 7.4% maturing beyond 181 Days. GBP MMF holdings are affiliated with the following countries: France (15.5%), Japan (15.2%), Canada (13.1%), the U.K. (12.9%), Australia (10.4%), the U.S. (7.8%), the Netherlands (3.9%), Singapore (3.5%), Finland (2.9%), and Abu Dhabi (2.5%).
The 10 Largest Issuers to "offshore" GBP money funds include: UK Treasury with L16.1B (6.6%), RBC with L11.9B (4.9%), Mizuho Corporate Bank Ltd with L10.4B (4.3%), Sumitomo Mitsui Trust Bank with L10.1B (4.2%), Toronto-Dominion Bank with L9.4B (3.9%), Mitsubishi UFJ Financial Group Inc with L9.3B (3.8%), BNP Paribas with L8.6B (3.6%), National Australia Bank Ltd with L8.3B (3.4%), Commonwealth Bank of Australia with L7.9B (3.3%) and JP Morgan with L6.9B (2.8%).
The January issue of our Bond Fund Intelligence, which will be sent to subscribers Wednesday morning, features the stories, "Top Stories & Funds of '24: Short-Term & High-Yield," which features the top BFI stories and funds from 2024, and "Worldwide BF Assets Jump to $14.1 Trillion, Led by U.S.," which recaps the latest statistics on bond fund markets outside the U.S. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns fell in December while yields were mixed. We excerpt from the new issue below. (Contact us if you'd like to see our latest Bond Fund Intelligence and BFI XLS spreadsheet, or our Bond Fund Portfolio Holdings data, and join us for our upcoming Bond Fund Symposium, which is March 27-28 in Newport Beach, Calif.)
BFI's "Top Stories" article states, "After a nice start to the year, bond funds saw losses in October and December, and they ended up underperforming money funds in 2024. It was the mirror opposite of 2023, when they had an ugly start but staged a nice comeback in late 2023. (This followed a brutal 2022.) Bond assets were up slightly in 2024 after a flat 2023. They rose by just $128.1 billion, or 4.7%, to $2.626 trillion, according to our BFI XLS. Bond ETFs rose $99.6B (9.2%) to $1.179 trillion.
It continues, "According to ICI's broader fund asset series, bond funds saw assets grow by $379 billion YTD in 2024 through 11/30/24, after seeing outflows of $25.9B for the same period in 2023. ICI's asset series stood at $5.124 trillion as of Nov. 30, 2024, up $515.2 billion, or 11.2%, from a year earlier. Bond ETFs totaled $1.179 trillion on 11/30/24, up $99.6 billion, or 9.2%, over 12 months."
Our "Worldwide" article states, "Bond fund assets worldwide increased in the latest quarter to $14.14 trillion, led higher by the four largest bond fund markets -- the U.S., Luxembourg, Ireland and China. We review the ICI's 'Worldwide Regulated Open-End Fund Assets and Flows, Third Quarter 2024' release and statistics below."
It continues, "ICI's report says, 'Worldwide regulated open-end fund assets increased 6.8% to $74.95 trillion at the end of the third quarter of 2024.... The Investment Company Institute compiles worldwide regulated open-end fund statistics on behalf of the International Investment Funds Association (IIFA).'"
Our first News brief, "Returns Retreat, Yields Mixed in Dec.," explains, "Bond fund returns were lower in December after rise in November. Our BFI Total Index fell 0.83% over 1-month but rose 3.92% over 12 months. (Money funds rose 5.08% over 1-year as measured by our Crane 100 Index.) The BFI 100 decreased 1.05% in Dec. but rose 3.44% over 12 mos. Our BFI Conservative Ultra-Short Index was up 0.32% over 1-month and 5.44% for 1-year; Ultra-Shorts rose 0.39% and 5.87%. Short-Term returned 0.06% and 5.15%, and Intm-Term fell 1.47% in Dec. and rose 2.41%. BFI's Long-Term Index was down 2.09% but up 1.69%. High Yield returned -0.33% in Dec. and 7.37% over 12 mos.
A second News brief, "A Release Says, 'Schwab Asset Management to Launch the Schwab Core Bond ETF.' It says, 'Schwab Asset Management … announced the launch of the Schwab Core Bond ETF (SCCR). It's the business's second actively managed fixed income ETF after the launch in August 2024 of the Schwab Ultra-Short Income ETF (SCUS).'"
Our next News brief, "Morningstar on 'How the Largest Bond Funds Did in 2024.' They write, 'For the most widely held bond funds in 2024, taking on riskier bonds was a winning strategy. Meanwhile, funds focused on longer-term, interest-rate-sensitive securities got hammered. US companies rush to bond market in fundraising flurry.'"
A BFI sidebar, "Vanguard Launches Short ETF," states, "A press release titled, 'Vanguard Expands Fixed Income Lineup with New Actively Managed Bond ETF,' tells us, 'Vanguard ... announced plans to introduce Vanguard Short Duration Bond ETF (VSDB), an active fixed income ETF that will be managed by Vanguard Fixed Income Group. Vanguard intends to launch the ETF in early April of this year.'"
Finally, another sidebar, "Bond Funds Trail Inflation," says, "Morningstar writes, 'Bond Funds Hurt By Rising Yields in Q4 2024.' The article states, 'The fourth quarter of 2024 proved tough going for most bond investors and led to lackluster results for the whole year, made worse when adjusted for inflation. As recently as mid-September, the investment-grade bond market as represented by the Morningstar US Core Bond Index was on pace for a calendar-year return of more than 5% for the second year in a row. But then worries about the stickiness of inflation combined with a more cautious rate-cutting stance from the Federal Reserve led to rising yields and falling prices for intermediate and long-term bonds.'"
The Federal Reserve Bank of Boston asks, "Are retail prime money market fund investors increasingly more sensitive to stress events?" The paper's authors, Kenechukwu Anadu, John Levin, Lina Lu, Antoine Malfroy-Camine, and Nico Oefele, explain, "U.S. prime money market mutual funds (MMFs) experienced large redemptions and bank-like runs in 2008 and 2020. During these episodes, institutional investors in prime MMFs tended to redeem quicker and at much larger magnitudes than retail investors. In this note, we examine how retail investors' redemption sensitivity has evolved between 2008 and 2020, to assess whether they have become relatively more attuned to stress in the MMF sector."
They tell us, "To do this, we estimate the response of prime funds' net flows to periods of stress in the MMF industry. We find that, on average, institutional prime MMFs experienced similar aggregate net outflows in both stress periods. In contrast, the average aggregate net outflows from retail prime MMFs increased from 2008 to 2020. Our findings suggest that redemption dynamics of investors in retail prime MMFs, which are often thought of as slower to react to stress events than institutional investors, may be evolving."
Discussing "Historical MMF Runs and Reforms," the paper says, "MMFs are U.S. Securities and Exchange Commission (SEC)-registered investment vehicles that typically aim to maintain a stable or near stable net asset value (NAV) of $1.00 per share. MMFs are classified as 'prime' funds, which can invest in private short-term debt such as commercial paper (CP) and certificates of deposit (CD); 'government' funds, which invest substantially all their assets in U.S. government and agency securities and repurchase agreements; and 'tax-exempt' funds, which hold municipal securities. Additionally, MMFs are also classified as 'institutional' and 'retail'."
It claims, "MMFs are vulnerable to runs because they engage in liquidity and maturity transformation: that is, they issue money-like liabilities that can be redeemed each day while investing in assets with credit and interest rate risk. Indeed, prime MMFs experienced two significant runs in 2008.... Both runs exacerbated stresses in short-term funding markets, which abated after the Federal Reserve established emergency lending facilities. These facilities were intended to '... assist MMMFs in meeting demands for redemptions ... [and] enhancing overall market functioning."
The Boston Fed paper continues, "Following these runs, the SEC promulgated reforms in 2010, 2014 and 2023 to strengthen MMF resilience. The 2010 reforms introduced new minimum liquid asset and enhanced disclosure requirements. The 2014 reforms had two core elements: a floating NAV requirement for institutional prime and tax-exempt MMFs and new liquidity fee and gating provisions. The floating NAV requirement sought to reduce run incentives associated with institutional prime MMFs that maintain a stable NAV. Prior to the reforms, such funds typically rounded their NAVs to $1.00 if their market-based value was at least $0.995. This created a 'threshold effect' that incentivized investors to redeem if the fund's market-based value approached that threshold."
It tells us, "The latest reforms in 2023 removed the 2014 fees and gates requirement and introduced a dynamic liquidity fee requirement for institutional prime funds, among other changes. These reforms have affected the operation of institutional and retail prime funds differently: institutional prime funds now transact at a floating NAV (under the 2014 reforms) and have dynamic liquidity fee requirements (from the 2023 reforms), whereas retail prime funds continue to transact at a stable NAV and are not subject to liquidity fees. The heightened regulation for institutional prime funds reflects the magnitude of runs in these funds observed in 2008 and 2020."
The piece comments, "Partly because of past runs on prime MMFs and the SEC's reform responses, the composition of the MMF industry has shifted notably. Figure 1, Panel A shows that as the compliance date of the core elements of 2014's reforms approached, in 2016, assets in government funds surged while those in prime funds declined sharply. The share of total prime MMF assets in institutional funds also declined."
Regarding "Motivation," the study says, "Following the run episodes and subsequent SEC reforms, we examine whether retail prime investors' sensitivity to runs has changed. Given that these funds continue to transact at a stable NAV, increased sensitivity could lead to increased redemptions during stress periods, potentially amplifying future strains in short-term funding markets, as observed with institutional prime MMF redemptions in 2008 and 2020."
They explain, "We obtain daily MMF data on size, percent flows, percent of a fund's assets that matures within seven days, a proxy for Weekly Liquid Assets (WLA), and weighted average maturity (WAM), for institutional and retail prime MMFs from iMoneyNet.... Figure 2 shows the cumulative net flows of institutional and retail prime MMFs over a two-week period of heavy net outflows in 2008 and 2020. In 2008, institutional prime funds experienced cumulative outflows of almost 30 percent of net assets, like levels experienced in 2020. In contrast, cumulative outflows from retail prime funds, while significantly less than those from institutional prime MMFs, were larger as a share of funds' assets in 2020 than in 2008. Retail funds' net outflows in 2008 were about four percent of net assets, but 2020's outflows reached nine percent."
The paper concludes, "U.S. prime MMFs experienced large redemptions and runs in 2008 and 2020. During these periods, institutional and retail prime MMFs experienced bouts of shareholder redemptions, with institutional prime MMFs seeing greater outflows than retail prime MMFs. We examined differences in net outflows from retail prime funds, between the 2008 and 2020 runs, to assess if they have, on average, become more sensitive to stress events."
Finally, it adds, "We find that, on average, retail prime funds' outflows were substantially larger in the 2020 stress period than in the 2008 episode. In contrast, net outflows from institutional prime funds, which were substantially larger than those of retail prime funds, remained relatively unchanged, on average, over both periods. One interpretation of these findings is that retail investors have grown more sensitive to portfolio risks and more inclined to redeem shares under market stress. If so, retail prime MMF shareholder behavior may increasingly resemble that of institutional prime MMFs."
Crane Data's January Money Fund Portfolio Holdings, with data as of Dec. 31, 2024, show that Repo holdings jumped sharply last month while Treasuries declined. Money market securities held by Taxable U.S. money funds (tracked by Crane Data) increased by $88.0 billion to $7.089 trillion in December, after increasing $190.8 billion in November, $82.8 billion in October, $233.8 billion in September, $57.2 billion in August and $90.4 billion in July. Taxable holdings decreased by $0.4 billion in June, increased $105.6 billion in May, and decreased $61.4 billion in April. Treasuries, the largest segment, decreased $69.5 billion in December after increasing $188.3 billion in November, $236.2 billion in October and $92.0 billion in September, $85.8 billion in August and $24.3 billion in July. Repo, the second largest portfolio composition segment, increased by $211.3 billion. Agencies were the third largest segment, 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, or contact us to request our latest Portfolio Holdings reports.)
Among taxable money funds, Repurchase Agreements (repo) increased $211.3 billion (8.8%) to $2.612 trillion, or 36.8% of holdings, in December, after decreasing $26.3 billion in November, $242.8 billion in October and increasing $151.7 billion in September. Repo decreased $40.2 billion in August and $21.5 billion in July. Treasury securities decreased $69.5 billion (-2.3%) to $2.985 trillion, or 42.1% of holdings, after increasing $188.3 billion in November, $236.2 billion in October, $92.0 billion in September, $85.8 billion in August and $24.3 billion in July. Government Agency Debt was up $33.0 billion, or 3.9%, to $879.9 billion, or 12.4% of holdings. Agencies decreased $2.4 billion in November, increased $70.3 billion in October, $20.9 billion in September, $11.2 billion in August and $22.9 billion in July. Repo, Treasuries and Agency holdings now total $6.478 trillion, representing a massive 91.4% of all taxable holdings.
Money fund holdings of Other (Time Deposits) and CP fell in December while CDs rose. Commercial Paper (CP) decreased $7.3 billion (-2.5%) to $289.1 billion, or 4.1% of holdings. CP holdings increased $2.6 billion in November, $12.2 billion in October, $0.3 billion in September and $4.5 billion in August. Certificates of Deposit (CDs) increased $0.5 billion (0.3%) to $187.7 billion, or 2.7% of taxable assets. CDs increased $0.5 billion in November, $2.1 billion in October, but decreased $1.7 billion in September and $13.9 billion in August. Other holdings, primarily Time Deposits, decreased $84.6 billion (-42.4%) to $115.0 billion, or 2.9% of holdings, after increasing $27.6 billion in November, $3.9 billion in October, decreasing $29.4 billion in September and increasing $9.3 billion in August. VRDNs increased to $14.7 billion, or 0.2% of assets. (Note: This total is VRDNs for taxable funds only. We will post our Tax Exempt MMF holdings separately Monday around noon.)
Prime money fund assets tracked by Crane Data increased to $1.175 trillion, or 16.6% of taxable money funds' $7.089 trillion total. Among Prime money funds, CDs represent 16.4% (up from 16.0% a month ago), while Commercial Paper accounted for 24.6% (down from 25.3% a month ago). The CP totals are comprised of: Financial Company CP, which makes up 16.8% of total holdings, Asset-Backed CP, which accounts for 6.4%, and Non-Financial Company CP, which makes up 1.4%. Prime funds also hold 0.4% in US Govt Agency Debt, 3.4% in US Treasury Debt, 26.6% in US Treasury Repo, 0.9% in Other Instruments, 6.4% in Non-Negotiable Time Deposits, 8.6% in Other Repo, 11.3% in US Government Agency Repo and 0.9% in VRDNs.
Government money fund portfolios totaled $3.900 trillion (55.0% of all MMF assets), up from $3.862 trillion in November, while Treasury money fund assets totaled another $2.014 trillion (28.4%), up from $1.969 trillion the prior month. Government money fund portfolios were made up of 22.4% US Govt Agency Debt, 15.6% US Government Agency Repo, 35.9% US Treasury Debt, 25.3% in US Treasury Repo, 0.5% in Other Instruments. Treasury money funds were comprised of 76.7% US Treasury Debt and 23.1% in US Treasury Repo. Government and Treasury funds combined now total $5.914 trillion, or 83.4% of all taxable money fund assets.
European-affiliated holdings (including repo) decreased by $203.9 billion in December to $560.1 billion; their share of holdings fell to 7.9% from last month's 10.9%. Eurozone-affiliated holdings decreased to $393.2 billion from last month's $507.4 billion; they account for 5.6% of overall taxable money fund holdings. Asia & Pacific related holdings fell to $302.1 billion (4.3% of the total) from last month's $313.9 billion. Americas related holdings rose to $6.223 trillion from last month's $5.930 trillion, and now represent 87.8% of holdings.
The overall taxable fund Repo totals were made up of: US Treasury Repurchase Agreements (up $220.9 billion, or 14.3%, to $1.763 trillion, or 24.9% of assets); US Government Agency Repurchase Agreements (down $11.8 billion, or -1.6%, to $742.1 billion, or 10.5% of total holdings), and Other Repurchase Agreements (up $2.1 billion, or 2.0%, from last month to $106.8 billion, or 1.5% of holdings). The Commercial Paper totals were comprised of Financial Company Commercial Paper (down $4.7 billion to $196.8 billion, or 2.8% of assets), Asset Backed Commercial Paper (down $1.0 billion at $75.5 billion, or 1.1%), and Non-Financial Company Commercial Paper (down $1.5 billion to $16.8 billion, or 0.2%).
The 20 largest Issuers to taxable money market funds as of Dec. 31, 2024, include: the US Treasury ($2.985T, 42.1%), Fixed Income Clearing Corp ($855.7B, 12.1%), Federal Home Loan Bank ($650.8B, 9.2%), the Federal Reserve Bank of New York ($382.1B, or 5.4%), RBC ($200.6B, 2.8%), JP Morgan ($178.1B, 2.5%), Federal Farm Credit Bank ($154.7B, 2.2%), Goldman Sachs ($143.9B, 2.0%), Citi ($138.4B, 2.0%), BNP Paribas ($100.6B, 1.4%), Bank of America ($92.9B, 1.3%), Mitsubishi UFJ Financial Group Inc ($72.8B, 1.0%), Wells Fargo ($72.3B, 1.0%), Sumitomo Mitsui Banking Corp ($68.9B, 1.0%), Canadian Imperial Bank of Commerce ($67.3B, 0.9%), Barclays PLC ($59.9B, 0.8%), Credit Agricole ($58.3B, 0.8%), Toronto-Dominion Bank ($57.6B, 0.8%), Mizuho Corporate Bank Ltd ($46.5B, 0.7%), and Bank of Montreal ($45.2B, 0.6%).
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: Fixed Income Clearing Corp ($829.4B, 31.7%), the Federal Reserve Bank of New York ($382.1B, 14.6%), JP Morgan ($169.8B, 6.5%), RBC ($160.5B, 6.1%), Goldman Sachs ($143.1B, 5.5%), Citi ($125.5B, 4.8%), BNP Paribas ($90.0B, 3.4%), Bank of America ($72.0B, 2.8%), Wells Fargo ($71.0B, 2.7%) and Sumitomo Mitsui Banking Corp ($50.5B, 1.9%).
The largest users of the $382.1 billion in Fed RRP include: Vanguard Federal Money Mkt Fund ($47.7B), Fidelity Cash Central Fund ($43.0B), Schwab Value Adv MF ($24.0B), JPMorgan US Govt MM ($22.2B), Fidelity Inv MM: MM Port ($20.6B), Fidelity Sec Lending Cash Central Fund ($19.6B), Goldman Sachs FS Govt ($19.1B), Fidelity Money Market ($17.2B), JPMorgan Liquid Assets ($16.1B) and Vanguard Market Liquidity Fund ($13.7B).
The 10 largest issuers of "credit" -- CDs, CP and Other securities (including Time Deposits and Notes) combined -- include: RBC ($40.1B, 7.4%), Toronto-Dominion Bank ($38.0B, 7.0%), Mizuho Corporate Bank Ltd ($32.1B, 5.9%), Mitsubishi UFJ Financial Group Inc ($29.4B, 5.4%), Canadian Imperial Bank of Commerce ($26.5B, 4.9%), Fixed Income Clearing Corp ($26.3B, 4.9%), Australia & New Zealand Banking Group Ltd ($24.8B, 4.6%), Bank of America ($20.9B, 3.9%), Bank of Montreal ($19.8B, 3.7%), and Sumitomo Mitsui Trust Bank ($19.6B, 3.6%).
The 10 largest CD issuers include: Mitsubishi UFJ Financial Group Inc ($21.7B, 11.3%), Sumitomo Mitsui Banking Corp ($17.3B, 9.0%), Mizuho Corporate Bank Ltd ($16.9B, 8.8%), Sumitomo Mitsui Trust Bank ($15.6B, 8.1%), Bank of America ($12.8B, 6.6%), Toronto-Dominion Bank ($11.8B, 6.1%), Credit Agricole ($10.6B, 5.5%), Canadian Imperial Bank of Commerce ($9.6B, 5.0%), Mitsubishi UFJ Trust and Banking Corporation ($8.3B, 4.3%) and Bank of Nova Scotia ($6.3B, 3.3%).
The 10 largest CP issuers (we include affiliated ABCP programs) include: Toronto-Dominion Bank ($23.1B, 8.5%), RBC ($22.4B, 8.3%), Bank of Montreal ($14.4B, 5.3%), Citi ($10.4B, 3.8%), BPCE SA ($10.2B, 3.8%), National Australia Bank Ltd ($9.6B, 3.6%), Barclays PLC ($9.5B, 3.5%), Australia & New Zealand Banking Group Ltd ($9.5B, 3.5%), DNB ASA ($9.4B, 3.5%) and Canadian Imperial Bank of Commerce ($8.9B, 3.3%).
The largest increases among Issuers include: Federal Reserve Bank of New York (up $212.4B to $382.1B), Fixed Income Clearing Corp (up $77.7B to $855.7B), Goldman Sachs (up $34.8B to $143.9B), RBC (up $33.6B to $200.6B), Federal Home Loan Bank (up $23.2B to $650.8B), JP Morgan (up $12.3B to $178.1B), Sumitomo Mitsui Banking Corp (up $5.4B to $68.9B), Canadian Imperial Bank of Commerce (up $4.6B to $67.3B), Wells Fargo (up $4.6B to $72.3B) and Federal National Mortgage Association (up $4.5B to $30.0B).
The largest decreases among Issuers of money market securities (including Repo) in October were shown by: US Treasury (down $69.5B to $2.985T), BNP Paribas (down $49.7B to $100.6B), Barclays PLC (down $37.9B to $59.9B), ING Bank (down $20.4B to $14.9B), Citi (down $19.2B to $138.4B), DNB ASA (down $16.5B to $9.4B), Skandinaviska Enskilda Banken AB (down $15.1B to $8.2B), Credit Agricole (down $13.7B to $58.3B), Bank of America (down $8.3B to $92.9B) and ABN Amro Bank (down $8.3B to $7.7B).
The United States remained the largest segment of country-affiliations; it represents 82.0% of holdings, or $5.810 trillion. Canada (5.8%, $413.2B) was in second place, while Japan (4.0%, $280.6B) was No. 3. France (3.5%, $247.6B) occupied fourth place. The United Kingdom (1.8%, $128.3B) remained in fifth place. Australia (0.9%, $60.6B) was in sixth place, followed by Germany (0.5%, $32.0B), Netherlands (0.4%, $25.7B), Spain (0.3%, $23.7B), and Sweden (0.3%, $20.0B). (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 Dec. 31, 2024, Taxable money funds held 47.5% (up from 42.8%) of their assets in securities maturing Overnight, and another 9.4% maturing in 2-7 days (down from 12.3%). Thus, 57.0% in total matures in 1-7 days. Another 11.9% matures in 8-30 days, while 10.7% matures in 31-60 days. Note that over three-quarters, or 79.6% of securities, mature in 60 days or less, the dividing line for use of amortized cost accounting under SEC regulations. The next bucket, 61-90 days, holds 6.3% of taxable securities, while 10.6% matures in 91-180 days, and just 3.6% matures beyond 181 days.
Crane Data's latest monthly Money Fund Portfolio Holdings statistics will be sent out Friday, and we'll be writing our regular monthly update on the new December 31 data for Monday's News. But we also already uploaded a separate and broader Portfolio Holdings data set based on the SEC's Form N-MFP filings on Thursday. (We continue to merge the two series, and the N-MFP version is now available via our Portfolio Holdings file listings to Money Fund Wisdom subscribers.) Our new N-MFP summary, with data as of December 31, includes holdings information from 993 money funds (up 7 from last month), representing assets of $7.250 trillion (up from $7.131 trillion). Prime MMFs rose to $1.065 trillion (up from $1.058 trillion), or 14.7% of the total. We review the new N-MFP data, and we also look at our revised MMF expense data, which shows charged expenses were mostly flat and money fund revenues rose to $19.3 billion (annualized) in December.
Our latest Form N-MFP Summary for All Funds (taxable and tax-exempt) shows Treasuries and Repurchase Agreements (Repo) remain the largest types of portfolio holdings in money market funds. Treasury holdings in money market funds now total $2.993 trillion (down from $3.050 trillion), or 41.3% of all assets, while Repo holdings rose to $2.619 trillion (up from $2.390 billion), or 36.1% of all holdings. Government Agency securities total $885.6 billion (up from $852.1 billion), or 12.2%. Holdings of Treasuries, Government agencies and Repo (almost all of which is backed by Treasuries and agencies) combined total $6.498 trillion, or a massive 89.6% of all holdings.
The Other category (primarily Time Deposits) totals $122.1 billion (down from $206.5 billion), or 1.7%, and Commercial paper (CP) totals $298.9 billion (down from $306.7 billion), or 4.1% of all holdings. Certificates of Deposit (CDs) total $192.4 billion (up from $187.6 billion), 2.7%, and VRDNs account for $138.5 billion (up from $138.2 billion), or 1.9% of money fund securities.
Broken out into the SEC's more detailed categories, the CP totals were comprised of: $196.8 billion, or 2.7%, in Financial Company Commercial Paper; $75.5 billion or 1.0%, in Asset Backed Commercial Paper; and, $26.6 billion, or 0.4%, in Non-Financial Company Commercial Paper. The Repo totals were made up of: U.S. Treasury Repo ($1.779 trillion, or 24.5%), U.S. Govt Agency Repo ($731.1B, or 10.1%) and Other Repo ($108.0B, or 1.5%).
The N-MFP Holdings summary for the Prime Money Market Funds shows: CP holdings of $254.8 billion (down from $263.4 billion), or 23.9%; Repo holdings of $513.8 billion (up from $406.6 billion), or 48.3%; Treasury holdings of $36.3 billion (down from $52.8 billion), or 3.4%; CD holdings of $167.0 billion (up from $162.3 billion), or 15.7%; Other (primarily Time Deposits) holdings of $77.7 billion (down from $158.5 billion), or 7.3%; Government Agency holdings of $4.9 billion (up from $4.7 billion), or 0.5% and VRDN holdings of $10.2 billion (up from $9.9 billion), or 1.0%.
The SEC's more detailed categories show CP in Prime MMFs made up of: $176.1 billion (down from $180.2 billion), or 16.5%, in Financial Company Commercial Paper; $63.0 billion (down from $66.2 billion), or 5.9%, in Asset Backed Commercial Paper; and $15.8 billion (down from $17.1 billion), or 1.5%, in Non-Financial Company Commercial Paper. The Repo totals include: U.S. Treasury Repo ($298.7 billion, or 28.1%), U.S. Govt Agency Repo ($126.4 billion, or 11.9%), and Other Repo ($88.7 billion, or 8.3%).
In related news, money fund charged expense ratios (Exp%) were mostly flat in December. Our Crane 100 Money Fund Index and Crane Money Fund Average were 0.27% and 0.38%, respectively, as of Dec. 31, 2024. Crane Data revises its monthly expense data and gross yield information after the SEC updates its latest Form N-MFP data the morning of the 6th business day of the new month. (They posted this info Thursday morning, so we revised our monthly MFI XLS spreadsheet and historical craneindexes.xlsx averages file to reflect the latest expenses, gross yields, portfolio composition and maturity breakout.) Visit our "Content" page for the latest files.
Our Crane 100 Money Fund Index, a simple average of the 100 largest taxable money funds, shows an average charged expense ratio of 0.27%, unchanged from last month's level (also 19 bps higher than 12/31/21's 0.08%). The Crane Money Fund Average, a simple average of all taxable MMFs, showed a charged expense ratio of 0.38% as of Dec. 31, 2024, down 1 bp from the month prior and slightly below the 0.40% at year-end 2019.
Prime Inst MFs expense ratios (annualized) average 0.22% (down 1 bp from last month), Government Inst MFs expenses average 0.26% (down 4 bps from last month), Treasury Inst MFs expenses average 0.29% (unchanged from last month). Treasury Retail MFs expenses currently sit at 0.52%, (unchanged from last month), Government Retail MFs expenses yield 0.55% (unchanged from last month). Prime Retail MF expenses averaged 0.50% (unchanged from last month). Tax-exempt expenses were up 1 bp at 0.40% on average.
Gross 7-day yields were down during the month ended December 31, 2024. The Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 723), shows a 7-day gross yield of 4.55%, down 17 bps from the prior month. The Crane Money Fund Average was 1.72% at the end of 2019, 0.15% at the end of 2020 and 0.09% at the end of 2021. Our Crane 100's 7-day gross yield was also down 16 bps, ending the month at 4.55%.
According to our revised MFI XLS and Crane Index numbers, we now estimate that annualized revenue for all money funds is $19.293 billion (as of 12/31/24), a new record high. Our estimated annualized revenue totals increased from $19.105B last month and $18.473B seen two months ago. Revenue levels are more than six times larger than May's 2021's record-low $2.927B level. Charged expenses and gross yields are driven by a number of variables, but revenues should continue their climb higher as inflows resume to money funds following a pause around April 15.
Crane Data's latest monthly Money Fund Market Share rankings show assets increasing among most of the largest U.S. money fund complexes in December, after rising in November, October, September, August, July, June and May. Assets fell in March and April. Money market fund assets rose by $113.5 billion, or 1.6%, last month to a record $7.182 trillion. Total MMF assets have increased by $408.4 billion, or 6.0%, over the past 3 months, and they've increased by $864.5 billion, or 13.7%, over the past 12 months. The largest increases among the 25 largest managers last month were seen by JPMorgan, Fidelity, Goldman Sachs, Morgan Stanley and Federated Hermes, which grew assets by $28.6 billion, $27.5B, $26.6B, $21.6B and $16.7B, respectively. Declines in December were seen by American Funds, DWS and SSGA, which decreased by $25.4 billion, $6.3B and $5.8B, respectively. 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. We review the latest market share totals, and look at money fund yields, which were lower again in December.
Over the past year through Dec. 31, 2024, Fidelity (up $198.2B, or 15.6%), Schwab (up $120.1B, or 25.2%), JPMorgan (up $120.0B, or 18.6%), BlackRock (up $105.7B, or 20.7%) and Vanguard (up $78.1B, or 13.7%) were the `largest gainers. JPMorgan, Morgan Stanley, Fidelity, Goldman Sachs and BlackRock had the largest asset increases over the past 3 months, rising by $73.8B, $58.7B, $55.4B, $55.2B and $37.8B, respectively. The largest declines over 12 months were seen by: American Funds (down $36.2B), HSBC (down $6.1B), DWS (down $4.9B), PGIM (down $2.9B) and T Rowe Price (down $2.0B). The largest declines over 3 months included: American Funds (down $32.0B) and SSGA (down $8.3B).
Our latest domestic U.S. Money Fund Family Rankings show that Fidelity Investments remains the largest money fund manager with $1.466 trillion, or 20.4% of all assets. Fidelity was up $27.5B in December, up $55.4 billion over 3 mos., and up $198.2B over 12 months. JPMorgan ranked second with $764.8 billion, or 10.6% market share (up $28.6B, up $73.8B and up $120.0B for the past 1-month, 3-mos. and 12-mos., respectively). Vanguard ranked in third place with $647.0 billion, or 9.0% of assets (up $2.9B, up $26.8B and up $78.1B). BlackRock ranked fourth with $615.5 billion, or 8.6% market share (up $3.8B, up $37.8B and up $105.7B), while Schwab was the fifth largest MMF manager with $596.5 billion, or 8.3% of assets (up $10.9B, up $34.5B and up $120.1B for the past 1-month, 3-mos. and 12-mos.).
Federated Hermes was in sixth place with $480.2 billion, or 6.7% (up $16.7B, up $26.0B and up $43.4B), while Goldman Sachs was in seventh place with $463.7 billion, or 6.5% of assets (up $26.6B, up $55.2B and up $70.0B). Morgan Stanley ($307.1B, or 4.3%) was in eighth place (up $21.6B, up $58.7B and up $56.1B), followed by Dreyfus ($290.8B, or 4.0%; up $1.1B, up $8.0B and up $24.6B). SSGA was in 10th place ($251.5B, or 3.5%; down $5.8B, down $8.3B and up $27.1B).
The 11th through 20th-largest U.S. money fund managers (in order) include: Allspring (formerly Wells Fargo) ($218.2B, or 3.0%), Northern ($178.4B, or 2.5%), First American ($164.0B, or 2.3%), Invesco ($147.1B, or 2.0%), American Funds ($125.9B, or 1.8%), UBS ($112.7B, or 1.6%), T. Rowe Price ($48.0B, or 0.7%), HSBC ($41.7B, or 0.6%), DWS ($38.2B, or 0.5%) and Western ($30.6B, or 0.4%). Crane Data currently tracks 61 U.S. MMF managers, unchanged from last month.
When European and "offshore" money fund assets -- those domiciled in places like Ireland, Luxembourg and the Cayman Islands -- are included, the top 10 managers are the same as the domestic list, except: BlackRock moves up to the No. 3 spot, and Vanguard moves down to No. 4. Goldman Sachs moves up to the No. 5 spot, while Schwab moves down to the No. 6 spot and Federated Hermes moves down to the No. 7 spot. 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 ($1.485 trillion), JP Morgan ($1.029 trillion), BlackRock ($942.5B), Vanguard ($647.0B) and Goldman Sachs ($611.1B). Schwab ($596.5B) was in sixth, Federated Hermes ($491.6B) was seventh, followed by Morgan Stanley ($409.4B), Dreyfus/BNY Mellon ($318.3B) and SSGA ($301.4B), 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 January issue of our Money Fund Intelligence and MFI XLS, with data as of 12/31/24, shows that yields were lower in December across most Crane Money Fund Indexes. The Crane Money Fund Average, which includes all taxable funds covered by Crane Data (currently 723), was 4.19% (down 14 bps) for the 7-Day Yield (annualized, net) Average, the 30-Day Yield was also down 13 bps at 4.25%. The MFA's Gross 7-Day Yield was at 4.58% (down 14 bps), and the Gross 30-Day Yield was down 13 bps at 4.64%. (Gross yields will be revised once we download the SEC's Form N-MFP data for 12/31/24 on Thursday.)
Our Crane 100 Money Fund Index shows an average 7-Day (Net) Yield of 4.28% (down 16 bps) and an average 30-Day Yield at 4.35% (down 15 bps). The Crane 100 shows a Gross 7-Day Yield of 4.55% (down 16 bps), and a Gross 30-Day Yield of 4.62% (down 15 bps). Our Prime Institutional MF Index (7-day) yielded 4.39% (down 18 bps) as of Dec. 31. The Crane Govt Inst Index was at 4.31% (down 13 bps) and the Treasury Inst Index was at 4.25% (down 16 bps). Thus, the spread between Prime funds and Treasury funds is 14 basis points, and the spread between Prime funds and Govt funds is 8 basis points. The Crane Prime Retail Index yielded 4.15% (down 15 bps), while the Govt Retail Index was 4.02% (down 12 bps), the Treasury Retail Index was 4.01% (down 16 bps from the month prior). The Crane Tax Exempt MF Index yielded 3.21% (up 55 bps) as of December.
Gross 7-Day Yields for these indexes to end December were: Prime Inst 4.61% (down 18 bps), Govt Inst 4.61% (down 13 bps), Treasury Inst 4.53% (down 16 bps), Prime Retail 4.65% (down 15 bps), Govt Retail 4.57% (down 12 bps) and Treasury Retail 4.54% (down 16 bps). The Crane Tax Exempt Index rose to 3.61% (up 56 bps). The Crane 100 MF Index returned on average 0.37% over 1-month, 1.15% over 3-months, 5.08% YTD, 5.08% over the past 1-year, 3.75% over 3-years annualized), 2.32% over 5-years, and 1.61% over 10-years.
The total number of funds, including taxable and tax-exempt, was unchanged in October at 838. There are currently 723 taxable funds, unchanged from the previous month, and 113 tax-exempt money funds (down 2 from last month). (Contact us if you'd like to see our latest MFI XLS, Crane Indexes or Market Share report.)
The January issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Wednesday morning, features the articles: "Yields Bottoming Near 4.20%; Assets Keep Breaking Records," which discusses the move lower and plateauing of yields and jumps in assets; "ICI: Worldwide MMF Assets Rise in Q3'24 to $11.2 Tril.," which looks at the latest MMF statistics outside the U.S.; and, "Top Money Funds of 2024; 16th Annual MFI Awards" which reviews the best performing MMFs of 2024. We also sent out our MFI XLS spreadsheet Wednesday a.m., and we've updated our Money Fund Wisdom database with 12/31/24 data. Our Jan. Money Fund Portfolio Holdings are scheduled to ship on Friday, December 10, and our Jan. Bond Fund Intelligence is scheduled to go out on Wednesday, January 15.
MFI's "Yields Bottoming" article says, "Money fund yields fell by 16 basis points to 4.28% on average during December (down from 5.20% at the start of 2024). Our Crane 100 Money Fund Index continues inching lower, falling to 4.23% as of 1/6/25. Fund yields have now digested most of the Federal Reserve's 25 basis point cut on Dec. 18, though they may inch a lower in coming days. But yields should remain solidly above 4.0% in the near-term, and they may even hold these levels for the entire year as expectations for more rate cuts evaporate."
It continues, "Yields on average have declined by 81 bps since the Fed first cut its Fed funds target rate by 50 bps percent on Sept. 18, and they've declined by 38 bps since the Fed cut rates by 1/4 point on 11/7. Yields were 4.45% on 11/30/24, 4.65% on 10/31, 4.75% on 9/30, 5.10% on 8/31, 5.13% on 7/31 and 6/28, 5.14% on 3/31/24 and 5.20% on 12/31/23."
We write in our Worldwide article, "The Investment Company Institute published, 'Worldwide Regulated Open-Fund Assets and Flows, Third Quarter 2024,' which shows that money fund assets globally rose by $572.9 billion, or 5.4%, in Q3'24 to a record $11.215 trillion. Increases were led by a sharp jump in money funds in U.S., Ireland and China, while Luxembourg and France also rose. Meanwhile, money funds in Mexico and Korea were lower. MMF assets worldwide increased by $1.271 trillion, or 12.8%, in the 12 months through 9/30/24, and MMFs in the U.S. now represent 60.4% of worldwide assets."
It states, "ICI's release says, 'Worldwide regulated open-end fund assets increased 6.8% to $74.95 trillion at the end of the third quarter of 2024, excluding funds of funds. Worldwide net cash inflow to all funds was $913 billion in the third quarter, compared with $819 billion of net inflows in the second quarter of 2024. The Investment Company Institute compiles worldwide regulated open-end fund statistics on behalf of the International Investment Funds Association (IIFA), the organization of national fund associations. The collection for the third quarter of 2024 contains statistics from 44 jurisdictions.'"
Our "Top Money Funds of 2024" piece says, "This issue recognizes the top performing money funds, ranked by total returns, for calendar year 2024, as well as the top funds for the past 5‐year and 10‐year periods. We present the funds below with our annual Money Fund Intelligence Awards. These are given to the No. 1‐ranked funds based on 1‐year, 5‐year and 10‐year returns, through Dec. 31, 2023, in each of our major fund categories -- Prime Institutional, Government Institutional, Treasury Institutional, Prime Retail, Government Retail, Treasury Retail and Tax‐Exempt."
The piece continues, "The Top-Performing Prime Institutional fund (and fund overall) was BlackRock Cash Inst MMF SL (BISXX), which returned 5.43%. Among Prime Retail funds, Schwab Value Adv MF Ultra (SNAXX) had the best return in 2024 (5.36%). (Our Crane 100 Money Fund Index returned 5.08% in 2024.)"
MFI also includes the News brief, "Fed Cuts Rates Another 1/4 to 4.375%. The FOMC's Statement says, 'Inflation has made progress toward the Committee’s 2 percent objective but remains somewhat elevated.... In support of its goals, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4-1/4 to 4-1/2 percent.'"
Another News brief, "J.P. Morgan's 'Mid-Week US Short Duration Update,' features, 'November MMF Holdings Update: Sufficient Supply Meeting MMFs' Demand.' It states, 'Taxable MMFs experienced another strong month of inflows in November, with AUMs increasing by nearly $200bn, bringing total balances to just under $7tn. Despite this significant rise in balances, MMFs successfully found enough supply to meet their demand throughout the month, aided by a rise in T-bill, repo, and time deposit outstandings. As a result, MMFs' use of ON RRP fell to an end-of-month low since May 2021.'"
A third News brief, "SEC Stats: MMF Assets Jump to Record $7.13 Tril. in Nov., Yields Fall," says, "The SEC's 'Money Market Fund Statistics' show that total money fund assets rose by $197.8 billion in November to a record $7.125 trillion. Prime MMFs increased $12.9 billion to $1.187 trillion, Govt & Treasury funds increased $181.5 billion to $5.797 trillion and Tax Exempt funds increased $3.4 billion to $141.3 billion. Taxable yields fell again in November after plunging in October.'"
A sidebar, "WSJ on Why to Cheer MMFs," says, "The Wall Street Journal tells us, 'Why You May Want to Cheer for Money-Market Funds.' Subtitled, 'Money funds remain an attractive place for excess cash and can help keep a lid on short-term borrowing costs,' the article says, 'Cash might be a trash asset to some risk-loving traders. But it's a pretty good thing to have sloshing around the economy. U.S. money-market fund assets have so far through mid-December grown by over $800 billion in 2024, bringing the nearly two-year gain since the end of 2022 to roughly $2 trillion, according to [ICI]. This continuing flow may be a surprise to some. At points in 2024, it often seemed that Fed ... cuts, plus a bullish tilt to equity markets, would push more investors out of cash.'"
Our January MFI XLS, with Dec. 31 data, shows total assets increased $113.0 billion to a record $7.184 trillion, after increasing $196.1 billion in November, $89.9 billion in October, $155.2 billion in September, $105.6 billion in August, $19.7 billion in July, $11.8 billion in June and $79.7 billion in May. They decreased $17.6 billion in April and $66.7 billion in March, but increased $50.0 billion in February and $87.0 billion last January.
Our broad Crane Money Fund Average 7-Day Yield was down 15 bps at 4.19%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was also down 16 bps at 4.28% in December. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 averaged 4.58% and 4.55%. Charged Expenses averaged 0.39% and 0.27% for the Crane MFA and the Crane 100. (We'll revise expenses once we upload the SEC's Form N-MFP data for 12/31/24 on Thursday, 1/9.) The average WAM (weighted average maturity) for the Crane MFA was 37 days (up 1 bp) and the Crane 100 WAM was unchanged from the previous month at 37 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
Money fund yields (7-day, annualized, simple, net) fell by 2 basis point to 4.25% on average during the week ended Friday, Jan. 3 (as measured by our Crane 100 Money Fund Index), after falling 7 bps the week prior and 7 bps two weeks prior. Fund yields have digested the majority of the Federal Reserve's 25 basis point cut from December 18, though they should continue to move lower in coming days. They've declined by 81 bps since the Fed first cut its Fed funds target rate by 50 bps percent on Sept. 18, and they've declined by 38 bps since the Fed cut rates by 1/4 point on 11/7. Yields were 4.45% on 11/30, 4.65% on average on 10/31, 4.75% on 9/30, 5.10% on 8/31, 5.13% on 7/31 and 6/28, 5.14% on 3/31 and 5.20% on 12/31/23.
The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 678), shows a 7-day yield of 4.16%, down 2 bps in the week through Friday. Prime Inst money fund yields were down 2 bps at 4.35% in the latest week. Government Inst MFs were down 2 bps at 4.28%. Treasury Inst MFs were down 4 bps at 4.20%. Treasury Retail MFs currently yield 3.99%, Government Retail MFs yield 3.96%, and Prime Retail MFs yield 4.15%, Tax-exempt MF 7-day yields were down 46 bps to 2.80%.
Assets of money market funds rose by $84.5 billion last week to a new record high of $7.248 trillion, according to Crane Data's Money Fund Intelligence Daily. For the month of January, MMF assets have jumped by $74.0 billion, after increasing by $110.9 billion in December, $200.5 billion in November, $97.5 billion in October and $149.8 billion in September. Weighted average maturities were down 1 day at 37 days for the Crane MFA and down 1 day at 37 days for the Crane 100 Money Fund Index.
According to Monday's Money Fund Intelligence Daily, with data as of Friday (1/3), 87 money funds (out of 790 total) yield under 3.0% with $94.0 billion in assets, or 1.3%; 164 funds yield between 3.00% and 3.99% ($317.5 billion, or 4.4%), 539 funds yield between 4.0% and 4.99% ($6.836 trillion, or 94.3%) and following the recent rate cut there continue to be zero funds yielding 5.0% or more.
Our Brokerage Sweep Intelligence Index, an average of FDIC-insured cash options from major brokerages, was down 1 bp at 0.43%, after dropping 2 basis points two weeks prior. The latest Brokerage Sweep Intelligence, with data as of Jan. 3, shows one change over the past week. RW Baird lowered rates to 1.37% for accounts between $1 and $999K, to 2.17% for accounts of $1M to $1.9M and to 2.83% for accounts of $5M or greater. Three of the 10 major brokerages tracked by our BSI still offer rates of 0.01% for balances of $100K (and lower tiers). These include: E*Trade, Merrill Lynch and Morgan Stanley.
In other news, Federated Hermes' latest monthly insight, titled, "A gorgeous vista for cash managers," is subtitled, "Three things to watch in 2025." Author Deborah Cunnigham states, "After a year of ever-changing clouds, monetary policy looks clearer in 2025. The Federal Reserve seems to finally have realized it miscalculated in September by slashing rates. Inflation had already plateaued and the labor market was weakening, but hardly weak. Faced with a strong economy, officials have wised up to the reality that policy must be restrictive for longer and now project just two quarter-point cuts this year."
She continues, "In retrospect, it's odd that Chair Jerome Powell eagerly supported the easing campaign, as he consistently says he wants to avoid the Fed's mistake of easing too early in the 1970s. He has to be careful. Losing favor with Trump has nothing on losing credibility with investors or his colleagues -- the latter hinted at with recent FOMC dissents. But if this newly cautious Fed makes good on its revised projections, the slower pace is great news for the money markets, as it could mean yields will be even more attractive."
Cunningham says, "It's problematic enough that inflation has been persistent. If it starts to meaningfully rise, look out. But that's the danger of some of the policies Trump has promised to enact. While the post-Covid economy has not followed textbooks, a potential combination of more federal tax cuts, expanded government expenditures, additional tariffs and significant deportations could increase price pressures. While that might not be felt in 2025, the Fed might try to counter fiscal policy by further slowing the pace of cuts. The potential impact on liquidity products? See the previous paragraph's last sentence above, with an emphasis on 'even more.'"
She adds, "Trump's desire to reduce regulations is sure to be disruptive, but might lead to calm at the SEC -- and less market interference. The majority of the five commissioners will flip Republican, and the new administration has a pro-business agenda.... Outgoing Chair Gary Gensler had an adversarial relationship with financial institutions and issued many rules, some we feel were unnecessary, without proper dialogue with market participants. A healthy dynamic between the agency and markets should emerge if Trump's nominee, Paul Atkins, is confirmed. Expect more sensible regulations and attempts to rollback some onerous ones implemented under Gensler."
It appears that most money market mutual funds will be open on Thursday, January 9, though the New York Stock Exchange and stock markets will close for the National Day of Mourning for the death of former President James "Jimmy" Carter. Money funds had previously closed for the President Bush Day of Mourning but many were open for the President Ford Day of Mourning. So far, Fidelity, BlackRock, J.P. Morgan Asset Management and Federated Hermes have announced that they will be open, though some of BlackRock's retail MMFs will close. Given this news, Crane Data will remain open and will publish our Money Fund Intelligence Daily, MFI International and Form N-MFP Holdings on their usual schedule Thursday.
BlackRock says in a message to clients, "Thursday, January 9, 2025, has been designated a National Day of Mourning in the United States to honor the passing of former President James Earl Carter, Jr.. The New York Stock Exchange, Nasdaq Inc.'s U.S. equities and options markets and CME Group Inc's. U.S.-based equity markets will be closed on that day. The Securities Industry and Financial Markets Association has recommended that U.S. bond markets close early at 2 PM ET. Banks, including the Federal Reserve Bank of New York, will remain open on January 9."
They explain, "Accordingly, the following funds will be open on January 9 and calculate both a NAV and 1-day distribution rate: BlackRock Liquidity Funds: FedFund, MuniCash, T-Fund and TempCash; BlackRock Cash Funds: Inst and Treas; BlackRock Institutional Cash Series plc: ICS US Dollar Liquidity Fund, ICS US Treasury Fund, ICS US Dollar LEAF and ICS US Dollar Ultra Short Bond Fund. The following funds will be open ... but will close at 2:00 PM ET: BlackRock Liquidity Funds: Treasury Trust Fund and Liquid Federal Trust Fund. The below funds will be closed on January 9: BlackRock Wealth Liquid Environmentally Aware Fund, BlackRock Government Money Market Portfolio, BlackRock Government Money Market V.I. Fund, Summit Cash Reserves Fund, Circle Reserve Fund and BlackRock Short Obligations Fund."
A message from Federated Hermes states, "All Federated Hermes' money market funds and liquidity products will be open for business as usual on January 9, 2025. In addition to Federated Hermes money market funds, certain advisory products and accounts, the Federated Hermes Prime Cash Collective Investment Fund, and the Federated Hermes Prime Private Liquidity Fund will be open for trading."
In other news, a "US Regulatory Intelligence" update from law firm Norton Rose Fulbright titled "SEC Mandates Broker-Dealers Calculate Cash Custody Daily," explains, "The SEC adopted amendments to Exchange Act Rule 15c3-3 ('Customer protection-reserves and custody of securities'). The amendments require broker-dealers that carry over $500 million in customer credit to perform daily cash reserve account calculations." They tell us, "The amendments: require certain broker-dealers to increase the frequency of the computations of the net cash they owe to customers and other broker-dealers from weekly to daily under Rule 15c3-3" and "permit certain broker-dealers that perform a daily customer reserve computation to decrease the required 3 percent 'buffer' in the customer reserve bank account by reducing the customer-related receivables charge (i.e. aggregate debit items charge) from 3 percent to 2 percent in the computation under Rules 15c3-3 and 15c3-1—the broker-dealer net capital rule."
The brief says, "SEC Chair Gary Gensler highlighted that 'nine of the largest broker-dealers already make these calculations on a daily basis.' He stated that '[the] amendments are intended to reduce the likelihood of any mismatch between the amount of segregated funds and the net cash owed to customers and other broker-dealers,' and that 'lowering the likelihood of mismatches will help to protect the Securities Investor Protection Corporation (SIPC) Fund.'
Author Steven Lofchie continues, "SEC Commissioner Hester M. Peirce said that, while the final amendments 'are not perfect,' they are 'net beneficial to investors.' She highlighted that '[the amendments] increase costs and operational challenges for 40 of the estimated 49 broker-dealers subject to the daily computation requirement,' but concluded that 'the final amendments do incorporate an increased threshold for triggering the requirement that mitigates some of the costs. In addition, it allows carrying broker-dealers that use the alternative method for net capital and perform a daily customer reserve computation to reduce their aggregate debit items by 2% (instead of the 3% that is currently required)."
The piece adds, "In dissent, SEC Commissioner Mark T. Uyeda argued that the Commission overlooked 'many suggestions from commentators that might potentially lower cost while still reducing risk.' He said that the adoption was rushed in an 'apparent attempt' to finalize the amendments prior to the end of the current administration. Mr. Uyeda said that the SEC should have taken additional time to consider comments and data as well as interact with the public. He argued that the SEC 'may end up leaving yet another mess for its successors to clean up.'"
The publication FinanceFeeds also comments on the new rule in, "SEC enhances customer protection rules for broker-dealers." They write, "The Securities and Exchange Commission (SEC) has adopted amendments to its customer protection rule, Rule 15c3-3. The amendments require certain broker-dealers to change the frequency of their net cash computations from weekly to daily. The change aims to safeguard better customer and PAB (broker-dealer's proprietary accounts) cash."
Their article continues, "SEC Chair Gary Gensler endorsed amendments requiring large broker-dealers to compute and segregate customer balances daily, rather than weekly. He noted that these changes reflect the evolution of markets since 1972, when the Customer Protection Rule first took effect. He explained that daily calculations help reduce mismatches between segregated funds and cash owed to customers. Gensler also noted a reduction of the reserve 'buffer' from 3 percent to 2 percent for broker-dealers performing daily computations."
They quote Gensler, "The Customer Protection Rule requires broker-dealers that custody customers' cash and securities to maintain a special reserve bank account that contains the net cash a broker-dealer owes to its customers. The rule, which we're updating, currently requires broker-dealers to calculate and deposit the appropriate balance for that account on a weekly basis. Today's amendments would change this requirement for the largest broker-dealers to daily computation rather than weekly."
Finally, the piece also quotes SEC Commissioner Hester Peirce, "I hope that broker-dealers will take the Commission up on its invitation to engage with the staff on potential issues in dealing with what one commenter called 'cash in motion.' I also look forward to receiving feedback on any operational challenges that arise as broker-dealers implement these requirements, particularly with respect to exigent circumstances and potential challenges with resources around holidays and days when the markets close early."
ICI's latest "Money Market Fund Assets" report shows money fund assets surging $42.1 billion in the last week of the year to a record $6.848 trillion, after jumping $54.7 billion the previous week. Money fund assets have risen in 16 of the last 22, and 27 of the last 37, weeks, increasing by $544.2 billion (or 8.6%) since the Fed cut on 9/18 and increasing by $870.3 billion (or 14.6%) since April 24. MMF assets are up by $961 billion, or 16.3%, in 2024 (through 12/31/24), with Institutional MMFs up $519 billion, or 14.4% and Retail MMFs up $443 billion, or 19.3%. (Note: Thanks to our subscribers and readers for all your support in 2024 and best of luck in 2025. Happy New Year!)
ICI's weekly release says, "Total money market fund assets increased by $42.05 billion to $6.85 trillion for the week ended Tuesday, December 31, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $41.28 billion and prime funds decreased by $751 million. Tax-exempt money market funds increased by $1.52 billion." ICI's stats show Institutional MMFs increasing $23.4 billion and Retail MMFs increasing $18.8 billion in the latest week. Total Government MMF assets, including Treasury funds, were $5.633 trillion (82.3% of all money funds), while Total Prime MMFs were $1.079 trillion (15.8%). Tax Exempt MMFs totaled $135.7 billion (2.0%).
It explains, "Assets of retail money market funds increased by $18.78 billion to $2.73 trillion. Among retail funds, government money market fund assets increased by $12.07 billion to $1.74 trillion, prime money market fund assets increased by $5.22 billion to $864.65 billion, and tax-exempt fund assets increased by $1.49 billion to $124.51 billion." Retail assets account for over a third of total assets, or 39.9%, and Government Retail assets make up 63.8% of all Retail MMFs.
They add, "Assets of institutional money market funds increased by $23.26 billion to $4.12 trillion. Among institutional funds, government money market fund assets increased by $29.21 billion to $3.89 trillion, prime money market fund assets decreased by $5.98 billion to $214.02 billion, and tax-exempt fund assets increased by $28 million to $11.21 billion." Institutional assets accounted for 60.1% of all MMF assets, with Government Institutional assets making up 94.5% of all institutional MMF totals.
According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets rose by $110.9 billion in December through 12/31 to a record $7.174 trillion. Assets rose by $200.5 trillion in November, $97.5 billion in October, $149.8 billion in September, $109.7 billion in August, $16.6 billion in July, $15.7 billion in June and $91.4 billion in May. They declined by $15.8 billion in April and $68.8 billion in March. They rose $72.1 billion in February, $93.9 billion in January and $32.7 billion last December. Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're about $340 billion lower than Crane's asset series.
TheStreet.com writes on "Money Market ETFs: Yes, they’re a Thing Now, But Read this First Before Buying. They comment, "Managing cash has never been easier, thanks to the rise of ETFs. If your goal is to keep your principal safe while earning a little on the side, you've already had solid options like Treasury bill ETFs or ultra-short-term bond ETFs. Both come with low credit risk, monthly distributions, and yields tied to prevailing short-term interest rates."
The brief continues, "Now, there's a new player on the block: money market ETFs. The Texas Capital Government Money Market ETF (MMKT) debuted on September 24, 2024, and brings the simplicity of money market investing into an ETF structure. As of December 19, it boasts a 4.49% seven-day SEC yield with a reasonable 0.2% expense ratio."
It explains, "But before you invest, it's important to understand that money market ETFs don't function quite the same way as the money market mutual funds you might already know. The ETF structure adds some quirks that could catch you off guard. Here's what you need to know before making the leap.... MMKT ... is a different story. As an ETF, it doesn't have a fixed NAV of $1 and trades throughout the day on an exchange. That distinction introduces some nuances you won't experience with a money market mutual fund."
The piece adds, "This means you could, in theory, experience an unrealized loss with MMKT. For example, if you buy shares just before the ex-distribution date -- when the NAV is at its peak -- you'll see a drop in value that might take time to recoup, depending on when you sell. Additionally, there's the matter of the bid-ask spread."
For more see our Nov. 18 Link of the Day, "FT on BlackRock Money Market ETFs," our Nov. 12 Link of the Day, "BlackRock Files for Money Market ETFs," and our Sept. 26 Link of the Day, "Texas Capital Launches Govt MM ETF."
Finally, a release titled, "SIFMA Recommends Early Market Close on January 9, 2025, for the National Day of Mourning in Honor of Former President Carter" explains, "SIFMA joins the nation in expressing its condolences on the passing of former President Jimmy Carter.... SIFMA today recommended an early market close at 2:00 pm EST on January 9, 2025, for all fixed-income cash markets in recognition of the National Day of Mourning in honor of the 39th President of the United States. This is in keeping with SIFMA's policy on unscheduled changes in trading hours. This recommendation applies to trading of U.S. dollar-denominated government securities, mortgage- and asset-backed securities, over-the-counter investment-grade and high-yield corporate bonds, municipal bonds and secondary money market trading in bankers' acceptances, commercial paper and Yankee and Euro certificates of deposit. SIFMA's recommended early and full market closes are recommendations only; each member firm should decide for itself whether its fixed income departments remain open for trading. All SIFMA recommendations are subject to change due to market conditions." (Note: We'll see and we'll keep you posted, but `Crane Data expects most money market funds to close for the Jan. 9 Day of Mourning.)
Over the past decade, we've been recapping money market fund lineup changes driven primarily by regulatory reforms in a series of "Roll with the Changes" news items. (Our thanks and apologies to the REO Speedwagon.) At the start of the New Year in many of these years, we'd review the major shifts and changes fund managers made ahead of and around the major rounds of reforms in 2016 and in 2023-24. While 2023 didn't see many exits from Prime MMFs or other shifts in preparation of the latest round of Money Fund Reforms (the year was eventful due to record assets and 5% yields though), 2024 did see a number of shifts and exits. Looking back, a year ago, we wrote "Rolling w/Reform Changes V: Little Change in '23 Ahead of MMF Reforms" (1/5/24), and 3 years ago, we wrote "Rolling w/Reform Changes IV: Recap of '21 Exits & Entries, ESG & News" (1/4/22).
Four years ago, we wrote "Rolling w/Reform Changes III: Recap of '20 Prime Exits, News & Moves" (1/7/21), which explained, "In January 2016, money market mutual funds were in the midst of a series of dramatic changes ahead of October 2016's Money Fund Reforms, the biggest changes to money fund regulations since their introduction in October 1970. Nine years ago, we ran the story, "Rolling w/Reform Changes II: Recap of '15 Announcements, '16 Plans" (1/6/16) which reviewed a number of major changes among the largest managers that took place during 2015. (We wrote the original "Managers Rolling with Reform Changes; Recap of Announcements So Far" on July 22, 2015.)
As with many of these past years, exits from Prime MMFs and fund repositioning were notable trends in 2024, as dozens of Prime Inst funds and over $400 billion in assets converted to Government or liquidated." Below, we review these changes and lineup shifts over the past year, as money funds implemented the latest (and perhaps final) round of regulatory changes. (See also our "Dec. 4, 2024 News, "Top 10 Stories of 2024: Assets Break $7 Trillion, Yields Heading Lower. Note: Readers may also review "Crane Data's News," "Link of the Day" and "Money Fund Intelligence Archives" for more stories from the past year, 5 years and decade-plus.)
We saw a steady stream of liquidations and lineup changes in 2024 ahead of the October deadline for Prime Inst MMFs' new emergency liquidity fee regime. In August, we wrote: "SSGA Sticks w/Prime Inst Money Funds; Discusses Reforms; Benchmarks" (8/29/24), "Prime Inst Exits Take Effect: Allspring, DWS, UBS; NY Fed RRP Updates" (8/27/24), "Aug. MFI: Prime Inst Conversions; Q2 Earnings on Sweeps; More Deposits" (8/7/24) and "J.P. Morgan's Donohue Makes Case for Prime Institutional Money Funds (8/1/24).
In July, June and May, we posted, "First American Inst Prime Obligations to Invest Solely in Liquid Assets" (7/23/24), "Schwab, JPM, Meeder Announce Prime Inst Conversions to Government" (7/18/24) "BoardIQ Writes on Prime Inst Exodus" (6/21/24), "Invesco Files to Liquidate Prime Inst MMFs; UBS MF Converting to Retail" (6/13/24), "June MFI: Latest Prime Inst MF Exits; ICI's 2024 Fact Book; Treasury Bills" (6/7/24) and "Federated Hermes Merging Prime Inst Money Funds; Prime Value To POF" (6/6/24) and "ICI's Pan, SEC's Gensler Discuss Liquidity Fees, Prime Inst Money Funds" (5/28/24).
While minor, we also wrote about fund liquidations, moves and changes, particularly in the Tax-Exempt or Municipal MMF space, in these updates: "ICI: Money Fund Assets Break Over $6.5 Trillion; BNY Liquidates Muni MF" (10/25/24), "UBS Files to Liquidate Tax-Free Fund" (10/15/24), "Alight Money Fund Liquidates; Bloomberg Law on Brokerage Sweep Suits" (9/19/24), "Dreyfus NY Muni MMF Liquidating" (8/14/24) and "Empower Govt MMF Liquidates" (6/24/24).
In addition to the sporadic exits and shifts, we saw continued launches in the D&I and Social space (and exits in the ESG fund space). We wrote: "Morgan Stanley Puts Impact Partner Class on Portal; UBS Changes Cutoff" (6/25/24), "Ramirez Govt MMF Partners w/Hispanic Fund; JPM: T-Bills to Go Bigger" (6/4/24), "DWS Liquidating ESG Liquidity Fund, 7th Prime Inst to Exit; MM Basics" (5/22/24) and "Ramirez Asset Management Launches Government MMF; Federated on 24" (1/3/24).
Finally, a number of articles discussed the final implementation of U.S. MMFs Reforms, including: "Federated Hermes' Earnings Call Discusses MMF Surge, Reforms, Direct" (10/28/24), "Bloomberg, ignites on Latest MMF Reforms; Prime Inst Shift a Nonevent" (10/23/24), "SSGA Sticks w/Prime Inst Money Funds; Discusses Reforms; Benchmarks" (8/29/24), "SEC's Money Fund Reforms One Year Later: Disclosures Latest to Go Live" (7/12/24), "Citi's Williams on Impact from MMF Reforms: No Big Deal; Assets Higher" (5/21/24), "JPM Sees Minor Impact on CP/CDs from Shift; Cunningham on Reforms" (5/26/24), "April MFI: Reforms Trigger Prime Shift; Bond Fund Event; ICI Worldwide" (4/5/24), "Fed Blog Shows Declines in Deposits Offset; Wells Fargo on MMF Reforms" (3/28/24) and "FSB's Thematic Review on Money Fund Reforms Reviews Global Markets" (2/28/24).
Happy New Year from Crane Data and Money Fund Intelligence! We'll be sure to keep you posted on product developments and any news impacting money market funds in 2025. So best wishes and thanks for your continued support!
