News Archives: February, 2025

The U.S. Securities and Exchange Commission published its latest monthly "Money Market Fund Statistics" summary earlier this month (the stats were delayed last month), which shows that total money fund assets rose by $113.2 billion in December 2024 to a record $7.238 trillion. Assets jumped $197.8 billion in November, $93.3 billion in October and $166.6 billion in September 2024. The SEC shows Prime MMFs increased $4.0 billion in December to $1.191 trillion, Govt & Treasury funds increased $109.5 billion to $5.907 trillion and Tax Exempt funds decreased $0.3 billion to $141.0 billion. Taxable yields fell again in December after plunging in November. The SEC's Division of Investment Management summarizes monthly Form N-MFP data and includes asset totals and averages for yields, liquidity levels, WAMs, WALs, holdings, and other money market fund trends. We review their latest numbers below. (Our MFI XLS monthly shows money fund assets rising $51.1 billion in January 2025 to a record $7.234 trillion. In February month-to-date through 2/6, total money fund assets have increased by $15.2 billion to $7.242 trillion, according to Crane Data's separate, and slightly smaller, MFI Daily series.)

December's asset jump follows an increase of $197.8 billion in November, $93.3 billion in October, $166.6 billion in September, $97.8 billion in August, $19.5 billion in July, $21.3 billion in June, and $89.7 billion in May. Assets decreased $17.7 billion in April and $68.5 billion in March, but increased $65.9 billion in February, and $87.7 billion last January. Over the 12 months through 12/31/24, total MMF assets have increased by $866.7 billion, or 13.6%, according to the SEC's series.

The SEC's stats show that of the $7.238 trillion in assets, $1.191 trillion was in Prime funds, up $4.0 billion in December. Prime assets were up $12.9 billion in November, $16.4 billion in October, but down $5.6 billion in September and $25.1 billion in August. They fell $11.5 billion in July and $204.6 billion in June, but rose $19.7 billion in May. Assets were down $30.0 billion in April, up $8.1 billion in March and $33.5 billion in February and $52.5 billion in January. Prime funds represented 16.5% of total assets at the end of November. They've decreased by $129.6 billion, or -9.8%, over the past 12 months. (Note that the SEC's series includes a number of internal money funds not tracked by ICI, though Crane Data includes most of these assets in its collections.)

Government & Treasury funds totaled $5.907 trillion, or 81.6% of assets. They increased $109.5 billion in December, $181.5 billion in November, $73.2 billion in October, $171.2 billion in September, $121.9 billion in August, $31.3 billion in July, $229.2 billion in June, $65.5 billion in May and $9.3 billion in April. They decreased $78.8 billion in March, but increased $33.1 billion in February and $39.7 billion in January. Govt & Treasury MMFs are up $986.6 billion over 12 months, or 20.1%. Tax Exempt Funds decreased $0.3 billion to $141.0 billion, or 1.9% of all assets. The number of money funds was 276 in December, up 1 from the previous month and down 15 funds from a year earlier.

Yields for Taxable MMFs were lower while Tax Exempt MMFs were higher in December. The Weighted Average Gross 7-Day Yield for Prime Institutional Funds on Dec. 31 was 4.58%, down 20 bps from the prior month. The Weighted Average Gross 7-Day Yield for Prime Retail MMFs was 4.62%, down 17 bps from the previous month. Gross yields were 4.55% for Government Funds, down 15 bps from last month. Gross yields for Treasury Funds were down 17 bps at 4.52%. Gross Yields for Tax Exempt Institutional MMFs were up 86 basis points to 3.83% in December. Gross Yields for Tax Exempt Retail funds were up 54 bps to 3.58%.

The Weighted Average 7-Day Net Yield for Prime Institutional MMFs was 4.48%, down 19 bps from the previous month and down 97 bps from 12/31/23. The Average Net Yield for Prime Retail Funds was 4.35%, down 17 bps from the previous month, and down 97 bps since 12/31/23. Net yields were 4.32% for Government Funds, down 15 bps from last month. Net yields for Treasury Funds were down 17 bps from the previous month at 4.30%. Net Yields for Tax Exempt Institutional MMFs were up 86 bps from November to 3.71%. Net Yields for Tax Exempt Retail funds were up 53 bps at 3.34% in December. (Note: These averages are asset-weighted.)

WALs and WAMs were mostly down in December. The average Weighted Average Life, or WAL, was 49.3 days (down 1.8 days) for Prime Institutional funds, and 46.2 days for Prime Retail funds (down 4.7 days). Government fund WALs averaged 89.8 days (unchanged) while Treasury fund WALs averaged 89.3 days (up 2.4 days). Tax Exempt Institutional fund WALs were 5.0 days (down 0.2 days), and Tax Exempt Retail MMF WALs averaged 29.2 days (down 2.1 days).

The Weighted Average Maturity, or WAM, was 29.2 days (down 2.1 days from the previous month) for Prime Institutional funds, 26.2 days (down 3.3 days from the previous month) for Prime Retail funds, 34.6 days (down 1.0 days from previous month) for Government funds, and 44.8 days (up 1.4 days from previous month) for Treasury funds. Tax Exempt Inst WAMs were down 0.2 days to 5.0 days, while Tax Exempt Retail WAMs were down 1.9 days from previous month at 28.6 days.

Total Daily Liquid Assets for Prime Institutional funds were 53.4% in December (up 1.3% from the previous month), and DLA for Prime Retail funds was 45.7% (up 3.1% from previous month) as a percent of total assets. The average DLA was 67.2% for Govt MMFs and 94.6% for Treasury MMFs. Total Weekly Liquid Assets was 65.6% (unchanged from the previous month) for Prime Institutional MMFs, and 58.6% (down 0.7% from the previous month) for Prime Retail funds. Average WLA was 78.9% for Govt MMFs and 98.7% for Treasury MMFs.

In the SEC's "Prime Holdings of Bank-Related Securities by Country table for December 2024," the largest entries included: Canada with $190.2 billion, the U.S. with $189.3B, Japan with $139.3 billion, France with $80.6 billion, Aust/NZ with $48.9B, the U.K. with $39.4B, Germany with $16.2B, the Netherlands with $15.3B and Switzerland with $3.4B. The gainers among the "Prime MMF Holdings by Country" included: the U.S. (up $15.5B), Canada (up $6.9B), Aust/NZ (up $2.6B) and Japan (up $0.6B). Decreases were shown by: Netherlands (down $29.3B), Germany (down $18.6B), the U.K. (down $10.1B), France (down $9.4B) and Switzerland (down $0.3B).

The SEC's "Prime Holdings of Bank-Related Securities by Region" table shows The Americas had $379.5 billion (up $22.4B), while Eurozone had $125.9B (down $70.2B). Asia Pacific subset had $212.1B (down $4.5B), while Europe (non-Eurozone) had $75.6B (down $52.1B from last month).

The "Prime MMF Aggregate Product Exposures" chart shows that of the $1.174 trillion in Prime MMF Portfolios as of December 31, $487.6B (41.5%) was in Government & Treasury securities (direct and repo) (up from $$389.8B), $267.7B (22.8%) was in CDs and Time Deposits (down from $354.1B), $196.8B (16.8%) was in Financial Company CP (down from $201.5B), $146.1B (12.4%) was held in Non-Financial CP and Other securities (down from $147.8B), and $76.0B (6.5%) was in ABCP (down from $77.0B).

The SEC's "Government and Treasury Funds Bank Repo Counterparties by Country" table shows the U.S. with $424.0 billion, Canada with $221.7 billion, France with $163.7 billion, the U.K. with $78.2 billion, Germany with $16.9 billion, Japan with $136.1 billion and Other with $37.6 billion. All MMF Repo with the Federal Reserve was up $212.6 billion in December to $382.4 billion.

Finally, a "Percent of Securities with Greater than 179 Days to Maturity" table shows Prime Inst MMFs 8.5%, Prime Retail MMFs with 5.5%, Tax Exempt Inst MMFs with 0.0%, Tax Exempt Retail MMFs with 4.8%, Govt MMFs with 13.9% and Treasury MMFs with 13.2%.

Crane Data's February Money Fund Portfolio Holdings, with data as of Jan. 31, 2025, show that holdings of Treasuries jumped sharply last month while Repo declined. Money market securities held by Taxable U.S. money funds (tracked by Crane Data) increased by $84.1 billion to $7.173 trillion in January, after increasing $88.0 billion in December, $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, increased $92.1 billion in January after decreasing $69.5 billion in December, but increasing $188.3 billion in November. Repo, the second largest portfolio composition segment, decreased by $67.8 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) decreased $67.8 billion (-2.6%) to $2.544 trillion, or 35.5% of holdings, in January, after increasing $211.3 billion in December, but decreasing $26.3 billion in November and $242.8 billion in October. Treasury securities increased $92.1 billion (3.1%) to $3.078 trillion, or 42.9% of holdings, after decreasing $69.5 billion in December, but increasing $188.3 billion in November and $236.2 billion in October. Government Agency Debt was up $7.1 billion, or 0.8%, to $887.0 billion, or 12.4% of holdings. Agencies increased $33.0 billion in December, decreased $2.4 billion in November, and increased $70.3 billion in October. Repo, Treasuries and Agency holdings now total $6.509 trillion, representing a massive 90.7% of all taxable holdings.

Money fund holdings of Other (Time Deposits), CP and CDs all rose in January. Commercial Paper (CP) increased $11.4 billion (4.0%) to $300.5 billion, or 4.2% of holdings. CP holdings decreased $7.3 billion in December, but increased $2.6 billion in November and $12.2 billion in October. Certificates of Deposit (CDs) increased $2.8 billion (1.5%) to $195.4 billion, or 2.7% of taxable assets. CDs increased $4.9 billion in December, $0.5 billion in November and $2.1 billion in October. Other holdings, primarily Time Deposits, increased $38.9 billion (33.8%) to $154.0 billion, or 2.1% of holdings, after decreasing $84.6 billion in December, but increasing $27.6 billion in November and $3.9 billion in October. VRDNs decreased to $14.3 billion, or 0.2% of assets. (Note: This total is VRDNs for taxable funds only. We will post our Tax Exempt MMF holdings separately Wednesday around noon.)

Prime money fund assets tracked by Crane Data increased to $1.209 trillion, or 16.9% of taxable money funds' $7.173 trillion total. Among Prime money funds, CDs represent 16.2% (down from 16.4% a month ago), while Commercial Paper accounted for 24.8% (up from 24.6% a month ago). The CP totals are comprised of: Financial Company CP, which makes up 16.2% of total holdings, Asset-Backed CP, which accounts for 6.6%, and Non-Financial Company CP, which makes up 2.0%. Prime funds also hold 0.4% in US Govt Agency Debt, 3.9% in US Treasury Debt, 22.5% in US Treasury Repo, 1.0% in Other Instruments, 9.2% in Non-Negotiable Time Deposits, 8.3% in Other Repo, 11.4% in US Government Agency Repo and 0.9% in VRDNs.

Government money fund portfolios totaled $3.921 trillion (54.7% of all MMF assets), up from $3.900 trillion in December, while Treasury money fund assets totaled another $2.043 trillion (28.5%), up from $2.014 trillion the prior month. Government money fund portfolios were made up of 22.5% US Govt Agency Debt, 15.3% US Government Agency Repo, 36.7% US Treasury Debt, 24.7% in US Treasury Repo, 0.5% in Other Instruments. Treasury money funds were comprised of 77.4% US Treasury Debt and 22.2% in US Treasury Repo. Government and Treasury funds combined now total $5.964 trillion, or 83.1% of all taxable money fund assets.

European-affiliated holdings (including repo) increased by $189.6 billion in January to $749.7 billion; their share of holdings rose to 10.5% from last month's 7.9%. Eurozone-affiliated holdings increased to $504.0 billion from last month's $393.2 billion; they account for 7.0% of overall taxable money fund holdings. Asia & Pacific related holdings fell to $294.9 billion (4.1% of the total) from last month's $302.1 billion. Americas related holdings fell to $6.120 trillion from last month's $6.223 trillion, and now represent 85.3% of holdings.

The overall taxable fund Repo totals were made up of: US Treasury Repurchase Agreements (down $70.2 billion, or -4.0%, to $1.693 trillion, or 23.6% of assets); US Government Agency Repurchase Agreements (down $0.7 billion, or -0.1%, to $741.4 billion, or 10.3% of total holdings), and Other Repurchase Agreements (up $3.0 billion, or 2.8%, from last month to $109.8 billion, or 1.5% of holdings). The Commercial Paper totals were comprised of Financial Company Commercial Paper (down $0.8 billion to $196.0 billion, or 2.7% of assets), Asset Backed Commercial Paper (up $4.8 billion at $80.3 billion, or 1.1%), and Non-Financial Company Commercial Paper (up $7.4 billion to $24.2 billion, or 0.3%).

The 20 largest Issuers to taxable money market funds as of Jan. 31, 2025, include: the US Treasury ($3.078T, 42.9%), Fixed Income Clearing Corp ($901.7B, 12.6%), Federal Home Loan Bank ($660.3B, 9.2%), JP Morgan ($242.4B, 3.4%), Citi ($164.3B, 2.3%), Federal Farm Credit Bank ($158.5B, 2.2%), the Federal Reserve Bank of New York ($148.1B, or 2.1%), BNP Paribas ($146.2B, 2.0%), RBC ($128.7B, 1.8%), Barclays ($110.0B, 1.5%), Bank of America ($106.9B, 1.5%), Goldman Sachs ($100.2B, 1.4%), Wells Fargo ($72.4B, 1.0%), Mitsubishi UFJ Financial Group ($66.2B, 0.9%), Credit Agricole ($64.8B, 0.9%), Sumitomo Mitsui Banking Corp ($61.2B, 0.9%), Canadian Imperial Bank of Commerce ($58.1B, 0.8%), Toronto-Dominion Bank ($54.4B, 0.8%), Societe Generale ($51.3B, 0.7%), and Bank of Montreal ($42.4B, 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 ($901.7B, 34.4%), JP Morgan ($232.7B, 9.1%), Citi ($151.2B, 5.9%), the Federal Reserve Bank of New York ($148.1B, 5.8%), BNP Paribas ($135.4B, 5.3%), Goldman Sachs ($99.5B, 3.9%), RBC ($96.0B, 3.8%), Barclays PLC ($94.8B, 3.7%), Bank of America ($85.1B, 3.3%) and Wells Fargo ($71.5B, 2.8%).

The largest users of the $148.1 billion in Fed RRP include: Vanguard Federal Money Mkt Fund ($39.8B), Fidelity Cash Central Fund ($20.2B), Vanguard Market Liquidity Fund ($9.2B), Vanguard Cash Reserves Federal MM ($9.0B), Fidelity Sec Lending Cash Central Fund ($7.0B), Schwab Treasury Oblig MF ($6.8B), Columbia Short-Term Cash Fund ($6.1B), Federated Hermes Govt Obl ($5.5B), Goldman Sachs FS Treas Sol ($5.5B) and Schwab Government MF ($4.8B).

The 10 largest issuers of "credit" -- CDs, CP and Other securities (including Time Deposits and Notes) combined -- include: Toronto-Dominion Bank ($35.0B, 6.0%), RBC ($32.7B, 5.6%), Mizuho Corporate Bank Ltd ($27.2B, 4.7%), Fixed Income Clearing Corp ($25.3B, 4.4%), Australia & New Zealand Banking Group Ltd ($24.1B, 4.2%), Mitsubishi UFJ Financial Group Inc ($22.9B, 3.9%), Bank of America ($21.8B, 3.8%), Canadian Imperial Bank of Commerce ($20.4B, 3.5%), ING Bank ($19.5B, 3.4%), and Sumitomo Mitsui Banking Corp ($18.2B, 3.1%).

The 10 largest CD issuers include: Sumitomo Mitsui Banking Corp ($17.0B, 8.7%), Mizuho Corporate Bank Ltd ($16.4B, 8.4%), Mitsubishi UFJ Financial Group Inc ($16.2B, 8.3%), Sumitomo Mitsui Trust Bank ($14.3B, 7.3%), Bank of America ($14.1B, 7.2%), Toronto-Dominion Bank ($12.2B, 6.2%), Credit Agricole ($11.5B, 5.9%), Canadian Imperial Bank of Commerce ($10.0B, 5.1%), Mitsubishi UFJ Trust and Banking Corporation ($8.6B, 4.4%) and Bank of Nova Scotia ($6.2B, 3.2%).

The 10 largest CP issuers (we include affiliated ABCP programs) include: Toronto-Dominion Bank ($21.2B, 7.7%), RBC ($20.7B, 7.5%), Barclays PLC ($12.7B, 4.6%), Bank of Montreal ($11.7B, 4.2%), BPCE SA ($10.8B, 3.9%), JP Morgan ($9.7B, 3.5%), Citi ($9.5B, 3.4%), National Australia Bank Ltd ($9.5B, 3.4%), Northcross Capital Management ($9.2B, 3.3%) and DNB ASA ($8.4B, 3.0%).

The largest increases among Issuers include: US Treasury (up $92.1B to $3.078T), JP Morgan (up $64.3B to $242.4B), Barclays PLC (up $50.1B to $110.0B), Fixed Income Clearing Corp (up $45.9B to $901.7B), BNP Paribas (up $45.7B to $146.2B), Citi (up $25.8B to $164.3B), ING Bank (up $16.8B to $31.8B), Bank of America (up $14.0B to $106.9B), Skandinaviska Enskilda Banken AB (up $9.9B to $18.1B) and Erste Group Bank AG (up $9.6B to $10.9B).

The largest decreases among Issuers of money market securities (including Repo) in January were shown by: Federal Reserve Bank of New York (down $234.0B to $148.1B), RBC (down $71.9B to $128.7B), Goldman Sachs (down $43.7B to $100.2B), Canadian Imperial Bank of Commerce (down $9.2B to $58.1B), Sumitomo Mitsui Banking Corp (down $7.7B to $61.2B), Mitsubishi UFJ Financial Group Inc (down $6.7B to $66.2B), Mizuho Corporate Bank Ltd (down $4.1B to $42.4B), Federal Home Loan Mortgage Corp (down $3.8B to $36.2B), Bank of Nova Scotia (down $3.6B to $27.5B) and Toronto-Dominion Bank (down $3.1B to $54.4B).

The United States remained the largest segment of country-affiliations; it represents 80.8% of holdings, or $5.798 trillion. Canada (4.5%, $322.2B) was in second place, while France (4.3%, $311.5B) was No. 3. Japan (3.7%, $266.0B) occupied fourth place. The United Kingdom (2.6%, $189.0B) remained in fifth place. Australia (0.8%, $59.1B) was in sixth place, followed by Netherlands (0.7%, $52.6B), Germany (0.7%, $49.1B), Sweden (0.5%, $34.4B), and Spain (0.4%, $27.5B). (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 Jan. 31, 2025, Taxable money funds held 44.6% (down from 47.5%) of their assets in securities maturing Overnight, and another 11.8% maturing in 2-7 days (up from 9.4%). Thus, 56.4% in total matures in 1-7 days. Another 11.1% matures in 8-30 days, while 12.4% matures in 31-60 days. Note that over three-quarters, or 79.9% 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 7.6% of taxable securities, while 8.7% matures in 91-180 days, and just 3.9% matures beyond 181 days.

Crane Data's latest monthly Money Fund Portfolio Holdings statistics will be sent out Tuesday, and we'll be writing our regular monthly update on the new January 31 data for Wednesday'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 Monday. (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 January 31, includes holdings information from 983 money funds (down 10 from last month), representing assets of $7.557 trillion (up from $7.250 trillion). Prime MMFs rose to $1.098 trillion (up from $1.065 trillion), or 14.5% 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 $19.4 billion (annualized) in January. (Note: Please join us for our upcoming Bond Fund Symposium, which is March 27-28 in Newport Beach, Calif!)

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 $3.085 trillion (up from $2.993 trillion), or 40.8% of all assets, while Repo holdings fell to $2.550 trillion (down from $2.619 billion), or 33.7% of all holdings. Government Agency securities total $893.3 billion (up from $885.6 billion), or 11.8%. Holdings of Treasuries, Government agencies and Repo (almost all of which is backed by Treasuries and agencies) combined total $6.528 trillion, or a massive 86.4% of all holdings.

The Other category (primarily Time Deposits) totals $388.2 billion (up from $122.1 billion), or 5.1%, and Commercial paper (CP) totals $310.2 billion (up from $298.9 billion), or 4.1% of all holdings. Certificates of Deposit (CDs) total $195.2 billion (up from $192.4 billion), 2.6%, and VRDNs account for $135.7 billion (down from $138.5 billion), or 1.8% of money fund securities.

Broken out into the SEC's more detailed categories, the CP totals were comprised of: $196.0 billion, or 2.6%, in Financial Company Commercial Paper; $80.3 billion or 1.1%, in Asset Backed Commercial Paper; and, $33.9 billion, or 0.4%, in Non-Financial Company Commercial Paper. The Repo totals were made up of: U.S. Treasury Repo ($1.706 trillion, or 22.6%), U.S. Govt Agency Repo ($724.4B, or 9.6%) and Other Repo ($119.3B, or 1.6%).

The N-MFP Holdings summary for the Prime Money Market Funds shows: CP holdings of $270.8 billion (up from $254.8 billion), or 24.7%; Repo holdings of $475.4 billion (down from $513.8 billion), or 43.3%; Treasury holdings of $56.2 billion (up from $36.3 billion), or 5.1%; CD holdings of $169.7 billion (up from $167.0 billion), or 15.4%; Other (primarily Time Deposits) holdings of $110.9 billion (up from $77.7 billion), or 10.1%; Government Agency holdings of $5.1 billion (up from $4.9 billion), or 0.5% and VRDN holdings of $10.2 billion (up from $10.2 billion), or 0.9%.

The SEC's more detailed categories show CP in Prime MMFs made up of: $177.0 billion (up from $176.1 billion), or 16.1%, in Financial Company Commercial Paper; $70.6 billion (up from $63.0 billion), or 6.4%, in Asset Backed Commercial Paper; and $23.2 billion (up from $15.8 billion), or 2.1%, in Non-Financial Company Commercial Paper. The Repo totals include: U.S. Treasury Repo ($252.5 billion, or 23.0%), U.S. Govt Agency Repo ($132.7 billion, or 12.1%), and Other Repo ($90.2 billion, or 8.2%).

In related news, money fund charged expense ratios (Exp%) were mostly flat in January. Our Crane 100 Money Fund Index and Crane Money Fund Average were 0.27% and 0.37%, respectively, as of Jan. 31, 2025. 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 Monday 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 0.37% as of Jan. 31, 2025, down 1 bp from the month prior and slightly below the 0.40% at year-end 2019.

Prime Inst MFs expense ratios (annualized) average 0.23% (up 1 bp from last month), Government Inst MFs expenses average 0.25% (down 1 bp 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 unchanged at 0.40% on average.

Gross 7-day yields were down during the month ended January 31, 2025. The Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 724), shows a 7-day gross yield of 4.45%, down 10 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 9 bps, ending the month at 4.46%.

According to our revised MFI XLS and Crane Index numbers, we now estimate that annualized revenue for all money funds is $19.437 billion (as of 1/31/25), a new record high. Our estimated annualized revenue totals increased from $19.293B last month and $19.105B 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 January, after rising in December, November, October, September, August, July, June and May. Assets fell in March and April. Money market fund assets rose by $47.8 billion, or 0.7%, last month to a record $7.229 trillion. Total MMF assets have increased by $360.8 billion, or 5.3%, over the past 3 months, and they've increased by $820.8 billion, or 12.8%, over the past 12 months. The largest increases among the 25 largest managers last month were seen by JPMorgan, Schwab, American Funds, Dreyfus and Fidelity, which grew assets by $19.0 billion, $14.0B, $12.6B, $9.0B and $8.6B, respectively. Declines in January were seen by BlackRock, Goldman Sachs and Morgan Stanley, which decreased by $17.6 billion, $15.5B and $12.3B, 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 January.

Over the past year through Jan. 31, 2025, Fidelity (up $185.5B, or 14.4%), JPMorgan (up $127.4B, or 19.4%), Schwab (up $118.3B, or 24.0%), BlackRock (up $87.9B, or 17.2%) and Vanguard (up $75.6B, or 13.2%) were the `largest gainers. JPMorgan, Fidelity, Morgan Stanley, Schwab and Vanguard had the largest asset increases over the past 3 months, rising by $78.7B, $60.7B, $36.4B, $35.3B and $31.4B, respectively. The largest declines over 12 months were seen by: American Funds (down $35.7B), RBC (down $2.0B), Columbia (down $1.8B), PGIM (down $1.8B) and Wilmington Trust (down $153M). The largest declines over 3 months included: SSGA (down $8.6B) and American Funds (down $8.4B).

Our latest domestic U.S. Money Fund Family Rankings show that Fidelity Investments remains the largest money fund manager with $1.475 trillion, or 20.4% of all assets. Fidelity was up $8.6B in January, up $60.7 billion over 3 mos., and up $185.5B over 12 months. JPMorgan ranked second with $783.8 billion, or 10.8% market share (up $19.0B, up $78.7B and up $127.4B for the past 1-month, 3-mos. and 12-mos., respectively). Vanguard ranked in third place with $647.9 billion, or 9.0% of assets (up $3.2B, up $31.4B and up $75.6B). Schwab ranked fourth with $610.5 billion, or 8.4% market share (up $14.0B, up $35.3B and up $118.3B), while BlackRock was the fifth largest MMF manager with $597.8 billion, or 8.3% of assets (down $17.6B, up $19.0B and up $87.9B for the past 1-month, 3-mos. and 12-mos.).

Federated Hermes was in sixth place with $483.3 billion, or 6.7% (up $3.1B, up $24.1B and up $39.5B), while Goldman Sachs was in seventh place with $448.2 billion, or 6.2% of assets (down $15.5B, up $18.1B and up $65.6B). Dreyfus ($299.8B, or 4.1%) was in eighth place (up $9.0B, up $11.7B and up $23.1B), followed by Morgan Stanley ($294.8B, or 4.1%; down $12.3B, up $36.4B and up $56.8B). SSGA was in 10th place ($252.9B, or 3.5%; up $1.4B, down $8.6B and up $14.9B).

The 11th through 20th-largest U.S. money fund managers (in order) include: Allspring (formerly Wells Fargo) ($212.1B, or 2.9%), Northern ($183.2B, or 2.5%), First American ($165.1B, or 2.3%), Invesco ($151.5B, or 2.1%), American Funds ($138.7B, or 1.9%), UBS ($114.0B, or 1.6%), T. Rowe Price ($51.2B, or 0.7%), HSBC ($50.2B, or 0.7%), DWS ($39.8B, or 0.6%) and Western ($32.1B, 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, Vanguard moves down to No. 4 and Schwab moves down to the No. 5 spot. Goldman Sachs moves up to the No. 6 spot, while Federated Hermes moves down to the No. 7 spot and Morgan Stanley moves up to the No. 8 spot while Dreyfus fall to the No. 9 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 ($1.495 trillion), JP Morgan ($1.047 trillion), BlackRock ($942.5B), Vanguard ($647.9B) and Schwab ($610.5B). Goldman Sachs ($597.9B) was in sixth, Federated Hermes ($494.5B) was seventh, followed by Morgan Stanley ($394.7B), Dreyfus/BNY Mellon ($324.5B) and SSGA ($300.9B), which round out the top 10. These totals include "offshore" U.S. Dollar money funds, as well as Euro and Pound Sterling (GBP) funds converted into U.S. dollar totals.

The February issue of our Money Fund Intelligence and MFI XLS, with data as of 1/31/25, shows that yields were lower in January across most Crane Money Fund Indexes. The Crane Money Fund Average, which includes all taxable funds covered by Crane Data (currently 724), was 4.09% (down 10 bps) for the 7-Day Yield (annualized, net) Average, the 30-Day Yield was also down 30 bps at 3.95%. The MFA's Gross 7-Day Yield was at 4.46% (down 12 bps), and the Gross 30-Day Yield was down 31 bps at 4.33%. (Gross yields will be revised once we download the SEC's Form N-MFP data for 1/31/25 on Monday.)

Our Crane 100 Money Fund Index shows an average 7-Day (Net) Yield of 4.19% (down 9 bps) and an average 30-Day Yield at 3.76% (down 59 bps). The Crane 100 shows a Gross 7-Day Yield of 4.46% (down 9 bps), and a Gross 30-Day Yield of 4.03% (down 59 bps). Our Prime Institutional MF Index (7-day) yielded 4.31% (down 8 bps) as of Jan. 31. The Crane Govt Inst Index was at 4.19% (down 12 bps) and the Treasury Inst Index was at 4.14% (down 11 bps). Thus, the spread between Prime funds and Treasury funds is 17 basis points, and the spread between Prime funds and Govt funds is 12 basis points. The Crane Prime Retail Index yielded 4.07% (down 8 bps), while the Govt Retail Index was 3.91% (down 11 bps), the Treasury Retail Index was 3.92% (down 9 bps from the month prior). The Crane Tax Exempt MF Index yielded 2.18% (down 103 bps) as of January.

Gross 7-Day Yields for these indexes to end January were: Prime Inst 4.53% (down 8 bps), Govt Inst 4.45% (down 16 bps), Treasury Inst 4.43% (down 10 bps), Prime Retail 4.57% (down 8 bps), Govt Retail 4.46% (down 11 bps) and Treasury Retail 4.44% (down 10 bps). The Crane Tax Exempt Index fell to 2.59% (down 102 bps). The Crane 100 MF Index returned on average 0.36% over 1-month, 1.11% over 3-months, 0.36% YTD, 4.99% over the past 1-year, 3.88% over 3-years annualized), 2.37% over 5-years, and 1.65% over 10-years.

The total number of funds, including taxable and tax-exempt, was down 1 in January at 837. There are currently 724 taxable funds, up 1 from the previous month, and 113 tax-exempt money funds (unchanged from last month). (Contact us if you'd like to see our latest MFI XLS, Crane Indexes or Market Share report.)

The February issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Friday morning, features the articles: "After the Buzzer: State Street Converting Prime ILR to Govt," which discusses State Street's recent fund filing; "Highlights of Q4 Earnings: Federated, Schwab, Northern," which looks at the latest conference calls from asset managers; and, "Boston Fed Paper Examines Prime Retail MMF Investors" which reviews a study on flows during recent turmoil. We also sent out our MFI XLS spreadsheet Friday a.m., and we've updated our Money Fund Wisdom database with 1/31/24 data. Our February Money Fund Portfolio Holdings are scheduled to ship on Tuesday, February 11, and our Feb. Bond Fund Intelligence is scheduled to go out on Friday, February 14.

MFI's "After the Buzzer" article says, "One year ago, American Funds filed to convert its Central Cash Fund from Prime Institutional to Government, starting a slow parade of moves away from Prime Institutional funds ahead of the SEC's latest Money Fund Reforms. (See 'American Funds Central Cash to Convert to Govt to Avoid Liquidity Fees' (2/6/24).) Prime Inst funds decreased from $614.9 billion to $317.5 billion in 2024, while Prime Retail MMFs increased from $691.9 billion to $866.0 billion. Though the October deadline for the new reforms has passed, it appears the conversions aren't quite over yet. SSGA just filed to convert its Prime Inst funds into Govt MMFs."

It continues, "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.'"

We write in our Q4 Earnings article, "Federated Hermes reported Q4'24 earnings and hosted its Q4'24 earnings call late last week. On the call, President & CEO J. Christopher Donahue, comments, 'We ended 2024 with record assets under management of $830 billion, driven by record money market assets of $630 billion.... We reached another record high for money market fund assets at the end of '24, namely $462 billion, and total money market assets of the aforementioned $630 billion. Total money market assets increased by about $37 billion in Q4, as money market funds added $21 billion and money market separate accounts added $16 billion. Market sentiment around short-term interest rates indicates a higher for longer view, which is conducive for growth in money market strategies.'"

It continues, "He tells us, 'Higher rates support a positive view of cash as an asset class. Money market strategies in this environment have attractive yields compared to alternatives like bank deposits and direct investments in T-bills and commercial paper. Our estimate of money market mutual fund market share, which includes our sub-advised funds, was about 7.22% at the end of '24, down slightly from about 7.32% at the end of Q3. Now looking at recent asset totals as of a few days ago, managed assets were approximately $839 billion, including $634 billion in money markets, $83 billion in equities, $100 billion in fixed income, $19 billion in alternative private markets and $3 billion in multi-asset. Money market mutual fund assets were at $455 billion.'"

Our "Boston Fed Paper" piece says, "The Federal Reserve Bank of Boston asks, 'Are retail prime money market fund investors increasingly more sensitive to stress events?' The paper explains, '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.'"

The piece continues, "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.'"

MFI also includes the News brief, "BlackRock Money Mkt ETFs Go Live. A press release says, 'BlackRock [launched the] iShares Money Market ETFs -- iShares Prime Money Market ETF (PMMF) and iShares Government Money Market ETF (GMMF) -- [which] combine the quality and liquidity of regulated money market funds with the transparency and efficiency of the ETF structure..'"

Another News brief, "WSJ: SEC, Brokerage Sweeps Settle," says, "The Wall Street Journal writes, 'Banks Scrimped on Customer Interest. Now They’re Paying for It.' The article explains, 'Wall Street is starting to pay the price for the stingy interest rates it gave some customers for their cash. Wells Fargo <b:>`_ and Bank of America's Merrill Lynch unit agreed to pay a combined $60 million to settle SEC probes into the [cash] accounts for some of their wealth-management clients.'"

A third News brief, "MarketWatch Quotes Crane on MMFs. MarketWatch's brief states, "Why Americans still can't get cheaper.' They tell us, 'Rates for money-market mutual funds are also moving lower, but they’re still giving many banks a run for their money.... The average seven-day yield on the biggest funds is now around 4.19%, down from 5.10% at the start of the Fed cuts, said Peter Crane, president of Crane Data. 'Rates really shouldn’t move much unless and until the Fed moves,' Crane said.' The piece quotes, 'Even if the rates are a full percentage point lower than they were a year ago, the current spot is still high for recent years, he noted. Money-market rates were last around the 4% range nearly two decades ago, Crane said.' It adds, 'It's still not in a bad spot.... I think savers are still happy in general.'"

A sidebar, "FT: Bond Wobble, Cash Allure," says, "The Financial Times wrote, 'Bond wobble underscores allure of cash.' The opinion piece says, 'In one corner of markets at least, it looks like the amateurs are out- smarting the professionals again. A good majority of the big asset managers and banks had a clear view for this year that bonds are back. If that rings a bell then yes, we have heard this before. No, it didn't really work out, due to the persistence of bonds' mortal enemy: inflation. But for 2025, the message was clear: central banks are cutting rates and you won't see yields like this again. Get out of cash, buy the bonds and lock those rates in.... [I]t was bad enough that the huge ascent in bond prices that many big asset managers and investment banks had predicted for 2024 failed to materialise, and so far, as one professional bond investor put it to me, 2025 has been 'annoying'.'"

Our February MFI XLS, with Jan. 31 data, shows total assets increased $47.9 billion to a record $7.231 trillion, after increasing $113.0 billion in December, $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 MMFs increased $50.0 billion last February.

Our broad Crane Money Fund Average 7-Day Yield was down 9 bps at 4.09%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was also down 9 bps at 4.19% in January. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 averaged 4.47% and 4.46%. Charged Expenses averaged 0.38% 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 1/31/25 on Monday, 2/10.) The average WAM (weighted average maturity) for the Crane MFA was 37 days (unchanged) and the Crane 100 WAM was up 1 day from the previous month at 38 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)

A press release, "BlackRock Expands Access to Cash Management Strategies with Launch of Active Money Market ETFs," which is subtitled, "Funds combine the stability of money market funds with the simplicity and convenience of the ETF wrapper," says, "BlackRock expanded the way investors can manage their cash with the launch of two money market ETFs, including the industry's first prime money market ETF. The iShares Money Market ETFs -- the iShares Prime Money Market ETF (PMMF) and the iShares Government Money Market ETF (GMMF) -- combine the quality and liquidity of regulated money market funds with the transparency and efficiency of the ETF structure."

Global Head of Product and Platform for BlackRock's Cash Management Business Jon Steel, comments, "Cash is a fundamental building block of investor portfolios, providing stability and liquidity. In 2024, U.S. money market funds surpassed $6 trillion [note: Crane Data shows the total at over $7 trillion] in assets, fueled by the appeal of short-term interest rates. As investors seek smarter ways to manage their cash, iShares Money Market ETFs provide a convenient and transparent solution."

The release explains, "The iShares Money Market ETFs adhere to the strict guidelines of money market fund regulation under Rule 2a-7 under the Investment Company Act of 1940 and enable investors to diversify their cash holdings beyond traditional deposit accounts. Actively managed by BlackRock's Cash Management Group, the ETFs combine BlackRock's leading cash management expertise with the firm's expansive capabilities in ETFs."

Josh Penzner, Managing Director, iShares Fixed Income at BlackRock adds, "Investors are continuously turning to iShares in their search for new solutions and opportunities to meet their financial goals. iShares Money Market ETFs unlock access to professional grade cash management strategies in the convenience of the ETF wrapper, providing additional choice and flexibility for investors to dynamically manage their cash needs and quickly adapt to shifting market conditions." The release also states, "BlackRock's Cash Management Group oversees nearly $1 trillion in cash strategies for a diverse range of investors, including corporations, banks, foundations, insurance companies and public funds."

The website for the new iShares Prime Money Market ETF asks, "Why PMMF?" It explains, "1. Money market investment: Allows investors to diversify their cash beyond traditional deposit accounts, while adhering to the strict SEC money market rules under Rule 2a-7. 2. Choice: As one of the industry's first money market ETFs, PMMF provides similar exposure as traditional money market funds, offering investors choice and flexibility in how they manage their cash. 3. Combined expertise: Leverage BlackRock's ETF expertise, backed with decades of cash management experience.... The iShares Prime Money Market ETF seeks as high a level of current income as is consistent with liquidity and stability of principal."

For more see these Crane Data News pieces, "VettaFi Discusses Money Market ETFs" (12/11/24), "Dec. MFI: Assets Break $7.0 Tril; Top 10 of 2024; BlackRock MM ETFs" (12/6/24), "BlackRock Debuts First Euro MM ETF" (12/5/24), "FT on BlackRock Money Market ETFs" (11/18/24), "November BFI: Bond Funds Hit by Election; ETF Trends MM Substitutes" (11/15/24), "BlackRock Files for Money Market ETFs" (11/12/24) and "Texas Capital Launches Govt MM ETF" (9/26/24).

In other news, website Ledger Insights asks, "Has Ondo cracked the code on 24/7 tokenized money market fund redemptions?" They write, "Tokenization startup Ondo Finance has launched a novel way to enable the 24/7 redemption of third party money market funds (MMF). It has collaborated with Franklin Templeton, WisdomTree, Wellington Management (Sg) and FundBridge Capital to include their tokenized money market funds (MMF) as collateral for its own MMF, OUSG. As part of its new Ondo Nexus offering, if someone wants to redeem the Franklin Templeton FOBXX, they essentially sell it to Ondo which is happy to hold it in the short term, given it can be used as collateral for OUSG."

The piece explains, "Until now OUSG was primarily backed by BlackRock's tokenized MMF BUIDL. This looks like a win-win for both Ondo and the asset managers. It solidifies Ondo as an innovator, and we would be shocked if money wasn't passing its way for providing the service to the asset managers, even if it means the asset managers wave some of the fees they might otherwise charge Ondo."

It says, "Take Franklin Templeton. Its terms say the FOBXX MMF can only be redeemed during working hours and the money can take up to seven days to reach your account. If users favored other funds because they could be redeemed faster, not any more. This was FOBXX's biggest drawback. It is more highly regulated than other tokenized funds, so theoretically should be safer. FOBXX also doesn't have BlackRock's BUIDL massive $5 million minimum investment and is accessible by retail investors. Plus, it's available on far more blockchains."

Nathan Allman, CEO of Ondo Finance comments, "We are excited to further strengthen our relationships with Franklin Templeton, WisdomTree, Wellington Management and Fundbridge Capital, while driving the convergence between traditional finance and DeFi. By diversifying our eligible collateral, we are building modular infrastructure that enables shared redeemability of tokenized Treasuries to stablecoins across products and supports a wide range of future tokenized financial offerings."

The article adds, "Ondo is quite lightly regulated for a company with almost $640 million in assets under management. OUSG, the token that's part of today’s announcement, has assets of $253 million. While the fund is U.S. based, it relies on regulatory exemptions so is only available to accredited investors. Its other token, USDY, is also an exempt fund and as a result is only available to non-U.S. investors. USDY LLC is registered with FinCEN."

S&P Global Ratings published "U.S. Domestic 'AAAm' Money Market Fund Trends (Fourth-Quarter 2024)" earlier this week, which tells us, "Similar to the prior quarter, rated MMF assets grew by roughly 7% in Q4 2024, driven by flows into government funds. Rated MMF assets grew 15% overall for 2024, with most of the growth occurring during the second half of the year. We observed a modest reduction in the level of institutional prime fund assets, largely following the latest SEC rule 2a-7 reforms going into effect. Despite numerous fund sponsors consolidating or eliminating their institutional prime offerings, rated prime fund assets only declined 2% year over year. Certain investors moved to government strategies, but others routed assets into the remaining existing prime funds, demonstrating a continued desire for a variety of liquidity tools."

They write, "Seven-day net yields decreased for rated government and prime MMFs following two 25 basis points (bps) rate cuts by the Federal Reserve during the fourth quarter.... Seven-day net yields for rated government and prime MMFs dropped 70 bps and 49 bps, respectively. Rated prime fund yields declined at a slower pace, increasing the spread between government and prime funds. By the end of the fourth quarter, the spread was 0.33% for seven-day net yields and 0.35% for 30-day net yields."

S&P says, "The decrease in average repurchase agreement (repo) exposure in rated government MMFs was more pronounced relative to the previous quarter. Average repo allocation declined from 41% to 35%. Managers reallocated into treasury bills, where there was higher supply. Within agency exposure, which moved minimally, there was a continued preference for floating-rate paper over fixed."

They comment, "Managers of rated prime funds purchased fewer corporate floaters and bank deposits during the quarter. Average exposure decreased from 4% to 2% for corporate floaters and from 20% to 13% for bank deposits. These positions were reallocated fairly evenly between commercial paper and repurchase agreements. Some funds utilized the Federal Reserve's Reverse Repo Program but generally only at quarter-end, when dealer repo supply tends to be more limited. Managers also picked up a small amount of additional treasury bill exposure."

The piece adds, "Managers of rated government and prime MMFs were expected to extend maturity profiles at some point in 2024 based on the trajectory of rates and normalization of the yield curve. The shift into longer-dated securities eventually occurred in the fourth quarter. Average weighted-average maturities (WAMs) increased by roughly seven days for rated government funds and four days for rated prime funds."

S&P also published, "European 'AAAm' Money Market Fund Trends (Fourth Quarter 2024)." It states, "Europe-domiciled MMFs concluded 2024 on a strong note, with significant asset growth. By December 2024, euro-denominated funds reached a record €262 billion, while U.S. dollar-denominated funds hit $680 billion. Sterling-denominated funds ended the year at £239 billion, just below the November peak of £243 billion. Over the past year, net assets increased across all three currencies: euro funds rose 31%, sterling funds 9%, and U.S. dollar funds 11%."

They write, "Following [rate] cuts, seven-day yields fell by 53 basis points (bps) for euro MMFs, 24 bps for sterling MMFs, and 49 bps for U.S. dollar MMFs.... The decline in seven-day net yields prompted U.S. dollar MMFs to extend their weighted average maturity (WAM) profiles during the fourth quarter, while euro and sterling MMFs remained stable.... However, any WAM extension must be considered against ongoing geopolitical and economic uncertainties."

Finally, S&P also posted, "'AAAm' Local Government Investment Pool Trends (Fourth-Quarter 2024)," which summarizes, "LGIPs concluded 2024 with record-high asset levels. The noteworthy growth is driven by various factors, such as attractive yields, increased tax proceeds, and residual federal stimulus balances post COVID-19, which continue to elevate pool assets. Throughout 2024, LGIPs generally maintained competitive yields compared with alternative short-term liquidity options as they outpaced bank deposits and, at times, institutional money market funds."

The ratings agency's report says, "Rated pools received inflows throughout the fourth quarter, particularly in the prime sector. Overall rated LGIP assets climbed to $390 billion. Government LGIPs increased to $99 billion (up 3.6% from prior quarter) and prime LGIPs increased to $291 billion (up 4.3% from prior quarter). Prime LGIPs are those that have the ability to invest in corporate and bank credit securities--similar to prime money market funds."

It explains, "LGIPs generally see an asset influx approaching year-end due to seasonal trends related to tax revenue. We anticipate additional inflows throughout the first quarter of 2025, in line with historical trends. Following the Federal Reserve's 25 basis point (bps) December rate cut, government and prime yields fell to 4.41% (58-bps decline) and 4.58% (50-bps decline), respectively.... Like institutional money market funds, average prime LGIP yields decreased at a slower rate than government pools, resulting in a marginally expanded spread."

S&P adds, "The NAV per share averaged 1.000151 in fourth-quarter 2024. Fourth-quarter NAV ranges were tighter than past quarters, likely due to seasonal inflows and an increased allocation to U.S. Treasuries. In our view, the NAV resiliency in rated LGIPs demonstrated pool managers emphasizing liquidity and high-quality investments, even while seeking opportunities to extend average maturities."

Money fund yields (7-day, annualized, simple, net) were up 1 bp at 4.19% on average during the week ended Friday, Jan. 31 (as measured by our Crane 100 Money Fund Index), after going unchanged the week prior and falling 1 bp two weeks prior. Fund yields have digested almost all of the Federal Reserve's 25 basis point cut from December 18, though they may inch down a basis point or 2 lower in coming days. They've declined by 87 bps since the Fed first cut its Fed funds target rate by 50 bps percent on Sept. 18, and they've declined by 44 bps since the Fed cut rates by 1/4 point on 11/7. Yields were 4.28% on average on 12/31/24, 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 and 5.20% on 12/31/23.

The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 679), shows a 7-day yield of 4.09%, unchanged in the week through Friday. Prime Inst money fund yields were up 1 bp at 4.30% in the latest week. Government Inst MFs were up 1 bp at 4.20%. Treasury Inst MFs were unchanged at 4.13%. Treasury Retail MFs currently yield 3.92%, Government Retail MFs yield 3.90%, and Prime Retail MFs yield 4.10%, Tax-exempt MF 7-day yields were up 1 bps at 2.19%.

Assets of money market funds rose by $25.8 billion last week to $7.227 trillion, according to Crane Data's Money Fund Intelligence Daily. For the month of January, MMF assets have jumped by $52.8 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 unchanged at 38 days for the Crane MFA and down 1 day at 38 days the Crane 100 Money Fund Index.

According to Monday's Money Fund Intelligence Daily, with data as of Friday (1/31), 115 money funds (out of 791 total) yield under 3.0% with $138.5 billion in assets, or 1.9%; 180 funds yield between 3.00% and 3.99% ($413.6 billion, or 5.7%), 496 funds yield between 4.0% and 4.99% ($6.675 trillion, or 92.4%) 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 unchanged at 0.41%, after rising 1 bp two weeks prior. The latest Brokerage Sweep Intelligence, with data as of Jan. 31, shows no changes over the past week. 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, J.P. Morgan features a "Bank CP/CD funding update" in their latest "Short-Term Market Outlook & Strategy." They write, "There was plenty of cash to deploy into the money markets to start the year, as reflected in bank FRN spreads where 6-month and 1-year maturities narrowed by an average of 5bp and 6bp MTD to 21bp and 30bp, respectively. This dynamic follows a similar seasonal pattern that we tend to see at the start of each year, persisting through February albeit to a lesser degree.... It also follows the tightening that began late last year such that 6m and 1y spreads have declined by 5bp and 9bp, respectively, from their local peaks.... This sharp tightening, particularly in the longer-end, has now resulted in a relatively flat 6m/1y FRN curve of 8-9bp, the narrowest the curve has been since early 2023."

The piece says, "To be sure, the demand was met with supply. Liquidity investors absorbed nearly $50bn in net bank CP/CD supply so far this month, slightly above the January average of $42bn and above the monthly average of $11bn. Japanese banks have been the primary contributors to this increase, adding $20bn compared to just $3bn in 2024. Meanwhile, French banks have boosted their supply by $11bn, and Swedish banks by $10bn."

It continues, "However, as we make our way into 1Q, net bank CP/CD supply tends to decline. Based on data from 2018 to 2024 (ex 2020), net supply decreases by an average of $27bn in February and nearly $10bn in March.... If this trend continues, spreads are likely to maintain a slight tightening bias in the near term."

Discussing "Equity markets and MMF flows," JPM says, "The recent sharp US equity market sell-off has prompted some questions about its potential impact on MMF flows, particularly if the downturn is sustained over an extended period. Broadly speaking, cash from equity sales could find its way into MMFs as retail investors convert their equity holdings into cash, which can then be swept into MMFs or bank deposits."

They comment, "[H]ere is a greater tendency for inflows than outflows into MMFs during equity market sell-offs. However, we find that it usually takes a significant equity market correction (e.g., >10% in a given week) to see meaningful flows into MMFs. On average, during an equity market correction of 10% or more in a given week, inflows into retail MMFs reach nearly $20bn, while smaller declines in the equity markets have resulted in comparatively smaller inflows."

JPM adds, "We also took a look at the correlation between GC/EFFR spreads with changes in the S&P 500 index, and not surprisingly, there is not a strong correlation. Taken together, we're not anticipating the recent equity market sell-off to have any meaningful impact on MMF flows or spreads in the money markets."

Finally, they state, "Instead, flows into retail MMFs will continue to be driven by the interest rate environment. Indeed, with MMF yields hovering around 5% for the better part of last year while bank deposits continue to yield significantly lower, retail MMFs grew by $435bn, accounting for over 50% of the total growth in taxable MMFs.... With a Fed that has signaled its intent to remain on hold at current levels, this dynamic should continue."

Federated Hermes reported Q4'24 earnings and hosted its Q4'24 earnings call late last week. On the call, President & CEO J. Christopher Donahue, comments, "We ended 2024 with record assets under management of $830 billion, driven by record money market assets of $630 billion.... We reached another record high for money market fund assets at the end of '24, namely $462 billion, and total money market assets of the aforementioned $630 billion. Total money market assets increased by about $37 billion in Q4, as money market funds added $21 billion and money market separate accounts added $16 billion. Market sentiment around short-term interest rates indicates a higher for longer view, which is conducive for growth in money market strategies."

He tells us, "Higher rates support a positive view of cash as an asset class. Money market strategies in this environment have attractive yields compared to alternatives like bank deposits and direct investments in T-bills and commercial paper. Our estimate of money market mutual fund market share, which includes our sub-advised funds, was about 7.22% at the end of '24, down slightly from about 7.32% at the end of Q3. Now looking at recent asset totals as of a few days ago, managed assets were approximately $839 billion, including $634 billion in money markets, $83 billion in equities, $100 billion in fixed income, $19 billion in alternative private markets and $3 billion in multi-asset. Money market mutual fund assets were at $455 billion."

During the Q&A Session, Patrick Davitt from Autonomous Research, asks, "It feels like the SMAs are kind of making up what looks like a little bit of market share loss on the fund side. Could you speak to maybe any trends that are going on that would kind of explain why some of the other large money fund complexes, say, at the banks or even other large asset managers like BlackRock are seeing so much higher fund flows, mutual fund flows than you guys? I appreciate that the SMAs are making up for that, but I'm just curious what dynamics you are seeing there and maybe we can't see from our position?"

Donahue responds, "The first thing is I went back and looked over our market share data for the last three years that we’ve been giving you every quarter. And you average all those numbers, and it turns out to be between 7.33% and 7.32%. So looking at it over one quarter where we were at 10th of a percent less, okay, yes, you can say that’s loss of market share. We don’t lose any clients in the process, and you see the ebb-and-flow of big amounts of money from clients. So I don’t have any worries about losing market share. I'll let Debbie give you a better pulse of the marketplace response."

Money Market CIO Deborah Cunningham comments, "I agree 100% with everything that Chris just said. The market share loss is not a loss in the context of clients. It may just be some large flows at year-end, which is one of our most volatile times of the year. What I would say ... is that, generally speaking, the first quarter of every year on a cyclical basis tends to be the worst from a mutual fund flow basis, and we are not seeing that this year. Now maybe that will change. We are only one month into the first quarter. But ultimately, we think that's a very positive trend."

Michael Cahill of J.P. Morgan then asks, "I just wanted to follow up on the money market discussion. You called out the change in rate backdrop in your opening remarks, higher for longer rates.... Do you envision flows strengthening from here for your money fund business? I think that you called out the start of the year seems to be strong on the mutual fund side. So I guess I’m just trying to understand, or better appreciate how you envision the money fund business here and the higher for longer backdrop, as well as maybe some of your Ultrashort products as well, which seem to make up a considerable portion of the business?"

Chris Donahue answers, "When you have rates as they are and going down and having a better relationship to the deposit rates, we believe the retail trade continues to be a very, very good trade. The institutional trade is available for institutions that are doing things ... for getting the extra basis point. So to us, that means we still have a positive attitude about the money fund business. To an owner operator, even though the rates didn't drop so fast that you created a big push for institutional business ... this is still a great time for money funds because they are a great advantage in the marketplace. And that’s why I said it gives a lot of credence to cash as an asset class."

He says, "And remember, and I've said this before, if you have a five handle, it's total Nirvana. If you have a four handle, it's delightful on a money fund. At a three handle the clients are still quite sanguine about being there. But the war is still between the adviser who's worried about missing out, and trying to convince the customer to maybe move up. Then you have in the marketplace, a lot of people recognizing that cash deserves more than a 10 or 20 or 100 basis point-type return. And that comes from a lot of factors, competitive, legal, regulatory, etc. So that sets a good stage for our business."

Cunningham adds, "I wholeheartedly agree. I think maybe a couple of things to add with regard to that. When you look at the expected terminal rate in the current environment versus where it was six months ago in the second, in the latter half of 2024, it's 50 basis points higher, it's substantially higher. And the expectations with what might happen from an inflationary standpoint, the stickiness of it, from a growth standpoint with the new administration's policies, I think again, it allows us to be very comfortable that the Nirvana maybe doesn't start to happen again."

Finally, she states, "I'm not a believer of a tightening later in the year, although there are some in the market that are. But the delightful aspect of it, I think is still there. And ultimately, when you have additional users that have come into the market over the course of the last two-plus years, they are not leaving. More than likely, they’re going to increase their balances because their own cash is increasing from a standpoint of their balance sheet and what they're receiving with a good economic backdrop to have invested in this asset class. So our outlook continues to be maybe not percentage growth that exceeds what we saw in 2023 and '24, but certainly continued substantial growth in the sector."

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