News Archives: February, 2025
ICI published its latest weekly "Money Market Fund Assets" report, as well as its monthly "Trends in Mutual Fund Investing" for January 2025 and its monthly "Month-End Portfolio Holdings of Taxable Money Funds" Thursday. The weekly series shows money fund assets rising $60.5 billion to a record $6.974 trillion, after falling $9.6 billion the week prior and rising $5.5 billion two weeks prior. Money fund assets have risen in 21 of the last 30, and 32 of the last 45 weeks, increasing by $670.7 billion (or 10.6%) since the Fed cut on 9/18/24 and increasing by $996.8 billion (or 16.7%) since 4/24/24. MMF assets are up by $916 billion, or 15.2%, in the past 52 weeks (through 2/26/25), with Institutional MMFs up $475 billion, or 13.0% and Retail MMFs up $441 billion, or 18.6%. Year-to-date, MMF assets are up by $124 billion, or 1.8%, with Institutional MMFs up $49 billion, or 1.2% and Retail MMFs up $75 billion, or 2.7%.
ICI's weekly release says, "Total money market fund assets increased by $60.54 billion to $6.97 trillion for the week ended Wednesday, February 26, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $52.97 billion and prime funds increased by $5.84 billion. Tax-exempt money market funds increased by $1.72 billion." ICI's stats show Institutional MMFs increasing $47.2 billion and Retail MMFs increasing $13.4 billion in the latest week. Total Government MMF assets, including Treasury funds, were $5.720 trillion (82.0% of all money funds), while Total Prime MMFs were $1.119 trillion (16.0%). Tax Exempt MMFs totaled $134.8 billion (2.0%).
It explains, "Assets of retail money market funds increased by $13.36 billion to $2.81 trillion. Among retail funds, government money market fund assets increased by $6.79 billion to $1.79 trillion, prime money market fund assets increased by $5.10 billion to $898.98 billion, and tax-exempt fund assets increased by $1.47 billion to $123.20 billion." Retail assets account for over a third of total assets, or 40.3%, and Government Retail assets make up 63.6% of all Retail MMFs.
They add, "Assets of institutional money market funds increased by $47.17 billion to $4.16 trillion. Among institutional funds, government money market fund assets increased by $46.18 billion to $3.93 trillion, prime money market fund assets increased by $742 million to $220.21 billion, and tax-exempt fund assets increased by $250 million to $11.62 billion." Institutional assets accounted for 59.7% of all MMF assets, with Government Institutional assets making up 94.4% of all institutional MMF totals.
According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets have risen by $88.0 billion in February through 2/26/25 to a record high $7.315 trillion. Assets rose by $52.8 billion in January, $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, $68.8 billion in March but rose $72.1 billion last February. 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 $31.9 billion, or 0.5%, in January to a record $6.884 trillion. MMFs have increased by $882.6 billion, or 14.7%, over the past 12 months (through 1/31/25). Money funds' January asset increase follows an increase of $139.3 billion in December, $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 last February. Bond fund assets increased $39.3 billion to $5.107 trillion, and bond ETF assets increased to $1.81 trillion.
The monthly release states, "The combined assets of the nation's mutual funds increased by $567.95 billion, or 2.0 percent, to $29.11 trillion in January, 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 $8.35 billion in January, compared with an inflow of $6.62 billion in December.... Money market funds had an inflow of $18.80 billion in January, compared with an inflow of $126.26 billion in December. In January funds offered primarily to institutions had an inflow of $6.70 billion and funds offered primarily to individuals had an inflow of $12.09 billion."
The Institute's latest statistics show that Taxable MMFs were higher from last month while Tax Exempt MMFs were lower. Taxable MMFs increased by $34.3 billion in January to $6.751 trillion. Tax-Exempt MMFs decreased $2.4 billion to $133.5 billion. Taxable MMF assets increased year-over-year by $868.1 billion (14.8%), and Tax-Exempt funds rose by $14.4 billion over the past year (12.1%). Bond fund assets increased by $39.3 billion (after decreasing by $54.7 billion in December) to $5.107 trillion; they've increased by $329.1 billion (6.9%) over the past year.
Money funds represent 23.7% of all mutual fund assets (down 0.3% from the previous month), while bond funds account for 17.5%, according to ICI. The total number of money market funds was 258, unchanged from the prior month and down from 274 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 Treasuries and a drop in Repo last month. Treasury holdings in Taxable money funds remained the largest composition segment last month, they increased $67.7 billion, or 2.4%, to $2.920 trillion, or 43.3% of holdings. Treasury securities have increased by $696.7 billion, or 31.3%, over the past 12 months. (See our Feb. 13 News, "Feb. Money Fund Portfolio Holdings: Treasuries Higher, Fed Repo Plunges.")
Repurchase Agreements were the second largest composition segment this past month, decreasing $80.2 billion, or -3.3%, to $2.385 trillion, or 35.3% of holdings. Repo holdings have increased $15.8 billion, or 0.7%, over the past year. U.S. Government Agency securities were the third largest segment; they increased $11.3 billion, or 1.4%, to $843.6 billion, or 12.5% of holdings. Agency holdings have increased by $139.9 billion, or 19.9%, over the past 12 months.
Certificates of Deposit (CDs) moved up to fourth place, up $39.9 billion, or 15.3%, to $300.6 billion (4.5% of assets). CDs decreased $43.1 billion, or -12.6%, over one year. Commercial Paper moved down to fifth place; they increased by $11.8 billion, or 4.2%, to $292.1 billion (4.3% of assets). CP held by money funds rose by $41.8 billion, or 16.7%, over 12 months. Other holdings decreased to $22.4 billion (0.3% of assets), while Notes (including Corporate and Bank) increased to $37.0 billion (0.5% of assets).
The Number of Accounts Outstanding in ICI's series for taxable money funds increased to 76.461 million, while the Number of Funds was unchanged at 217. Over the past 12 months, the number of accounts rose by 11.235 million and the number of funds decreased by 12. The Average Maturity of Portfolios was 38 days, up 1 day from December. Over the past 12 months, WAMs of Taxable money are up 1 day.
After treading water for much of January and February 2025, money market mutual fund assets have recently surged higher, hitting a record $7.297 trillion on Tuesday, just a few billion away from the $7.3 billion barrier. For February month-to-date through 2/25, total money fund assets have increased by $70.6 billion to $7.297 trillion, according to Crane Data's Money Fund Intelligence Daily series. Our MFI XLS monthly shows money fund assets rising $51.1 billion in January 2025 to a record $7.234 trillion as of 1/31/25, while the SEC's latest monthly "Money Market Fund Statistics" summary shows that total money fund assets rose by $47.9 billion in January 2025 to a record $7.286 trillion.
In other news, Reuters recently published an article titled, "SEC extends key deadlines for US Treasury clearing rule," which explains, "Wall Street's top regulator hit the brakes on a key reform on Tuesday, delaying by a year the rollout of new rules designed to curb systemic risk in the $28.5 trillion U.S. Treasury market by channeling more trades through clearing houses. The U.S. Securities and Exchange Commission said in a statement late on Tuesday it had extended by 12 months compliance dates for the clearing of eligible cash transactions and repo transactions."
It continues, "The rules, which require some cash Treasury and repurchase or 'repo' agreements to be centrally cleared, were originally supposed to be implemented in phases by June 2026, but several Wall Street trade associations last month asked the SEC to extend the process by at least one year for the cash and repo clearing deadlines. 'The U.S. Treasury market is a critical piece of the global financial system. New rules must be implemented properly, and any operational issues must be addressed,' said SEC Acting Chairman Mark Uyeda. 'This one-year extension provides additional time to implement and validate operational changes,' he said in a statement."
They write, "Uyeda is leading the SEC alongside fellow Republican Hester Peirce and Democrat Caroline Crenshaw. They all voted in favor of the postponement. U.S. President Donald Trump's nominee to lead the agency Paul Atkins has yet to be confirmed. The Securities Industry and Financial Markets Association (SIFMA) said on Tuesday the delayed implementation was important to avoid market disruptions."
Reuters quotes SIFMA, "Market participants have become increasingly concerned that the original implementation dates were overly aggressive and would add unnecessary risk to the nation's and world's most important asset market." They add, "Reuters reported last year that bond market participants were considering a request for a timeline extension, as key details on how mandatory central clearing would work had not been yet defined and many feared the remaining two years might not be sufficient to transition."
The piece also says, "The rules originally said clearing houses would have until March 2025 to comply with provisions on risk management, protection of customer assets and access to clearance and settlement services. Their members had until December 2025 to begin central clearing of cash market Treasury transactions and until June 30, 2026, for repo transactions. The repo market is where banks and funds exchange short-term loans backed by Treasuries. The SEC kept the March 2025 deadline for clearing agencies to implement required access and risk management changes as prescribed by the SEC clearing rules, but it extended to September 30 this year the deadline for clearing houses to enforce those requirements for clearing members."
The SEC's release, "SEC Extends Compliance Dates and Provides Temporary Exemption for Rule Related to Clearing of U.S. Treasury Securities," says, "The Securities and Exchange Commission today extended the compliance dates for Rule 17ad-22(e)(18)(iv)(A) and (B) under the Securities Exchange Act by one year to Dec. 31, 2026, for eligible cash market transactions, and June 30, 2027, for eligible repo market transactions. Under the rule, a covered clearing agency that provides central counterparty services for U.S. Treasury securities must establish, implement, maintain, and enforce written policies and procedures reasonably designed to require that every direct participant of the covered clearing agency submit for clearance and settlement all eligible secondary market transactions in U.S. Treasury securities to which it is a counterparty. The rule also requires a covered clearing agency to identify and monitor its direct participants' submissions of transactions for clearing, including how the covered clearing agency would address a failure to submit transactions."
The SEC says, "The extension will provide additional time for further engagement on compliance, operational, and interpretive questions, and facilitate an orderly implementation of the rules. The temporary exemption allows covered clearing agencies not to enforce policies and procedures established pursuant to Rule 17ad-22(e)(6)(i) against any market participants currently clearing indirect participant activity that are not ready to comply with such policies and procedures, but it does not affect the ability of a covered clearing agency to implement such policies and procedures for those that are prepared to comply. If a direct participant of a U.S. Treasury covered clearing agency determines to offer certain access models or segregated margin accounts, the covered clearing agency would be obligated to enforce those rules regarding such models or accounts against the relevant participant, and the direct participant must comply with those rules."
Finally, see Federated Hermes' "Demand for liquidity remains high in Europe." It says, "Investors are still drawn to liquidity products in the UK and EU despite the rate cuts." Cunningham comments, "I think the demand will remain high, but ultimately there are divergences."
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 Feb. 21) includes Holdings information from 67 money funds (up 5 from a week ago), or $3.856 trillion (up from $3.585 trillion) of the $7.267 trillion in total money fund assets (or 53.1%) 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 Feb. 12 News, "Feb. Money Fund Portfolio Holdings: Treasuries Higher, Fed Repo Plunges.") (Note: Register soon for our upcoming Bond Fund Symposium, which is March 27-28 in Newport Beach. We hope to see you next month in Southern California!)
Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Treasuries totaling $1.825 trillion (up from $1.713 trillion a week ago), or 47.3%; Repurchase Agreements (Repo) totaling $1.283 trillion (up from $1.226 trillion a week ago), or 33.3%, and Government Agency securities totaling $320.3 billion (up from $306.3 billion), or 8.3%. Commercial Paper (CP) totaled $173.8 billion (up from a week ago at $139.4 billion), or 4.5%. Certificates of Deposit (CDs) totaled $95.7 billion (up from $79.5 billion a week ago), or 2.5%. The Other category accounted for $107.7 billion or 2.8%, while VRDNs accounted for $50.4 billion, or 1.3%.
The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.825 trillion (47.3% of total holdings), Fixed Income Clearing Corp with $397.1B (10.3%), the Federal Home Loan Bank with $213.1 billion (5.5%), JP Morgan with $115.1B (3.0%), Citi with $91.3B (2.4%), BNP Paribas with $81.1B (2.1%), Federal Farm Credit Bank with $74.2B (1.9%), RBC with $66.4B (1.7%), Barclays PLC with $58.1B (1.5%) and Bank of America with $53.8B (1.4%).
The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($292.6B), Goldman Sachs FS Govt ($278.9B), JPMorgan 100% US Treas MMkt ($250.8B), Fidelity Inv MM: Govt Port ($219.7B), Morgan Stanley Inst Liq Govt ($178.3B), Federated Hermes Govt ObI ($173.4B), BlackRock Lq FedFund ($169.8B), State Street Inst US Govt ($161.9B), BlackRock Lq Treas Tr ($151.0B) and Fidelity Inv MM: MM Port ($150.4B). (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, a release titled, "HilltopSecurities Announces Strategic Partnership with Treasury Curve to Offer Money Fund Portal to Clients" says, "Hilltop Securities Inc. is assisting its institutional clients by launching a Money Fund Portal and has selected Treasury Curve, a leading independent provider of automated and intelligent treasury management solutions, as its technology provider. The HilltopSecurities Institutional Money Fund Portal simplifies liquidity management by enabling users to diversify liquidity risk across multiple institutions while managing all accounts within a single, user-friendly platform. Institutional public entities, corporations, and bank clients gain advanced research capabilities, real-time reporting, and compliance analysis -- all designed with security and reliability in mind."
Carl Stimmel, Head of Short-Term Products & SBA Business Development, comments, "At HilltopSecurities, we are constantly striving to meet and exceed the expectations of our clients. Our clients have been asking for a streamlined, secure solution for managing liquidity, and we are excited to deliver through our partnership with Treasury Curve. This new Money Fund Portal reflects our ongoing commitment to providing innovative tools that empower our clients to manage their assets more efficiently while mitigating risk."
Treasury Curve President Chris Kaminski adds, "We are excited to partner with HilltopSecurities and extend the reach of our Money Fund Portal to a broader client base. This partnership further validates Treasury Curve's leadership in treasury automation, and we look forward to helping HilltopSecurities' clients manage their liquidity more efficiently while mitigating risk."
For more on Money Fund Portals, see these Crane Data News pieces, "MUFG Bank White Labels BNY Portal" (11/19/24); "Morgan Stanley Puts Impact Partner Class on Portal; UBS Changes Cutoff" (6/25/24); and "Tradeweb to Acquire ICD Portal" (4/9/24).
Finally, Federated Hermes posted "The slowing pace of Fed cuts," a video with Tara Dougherty and Debbie Cunningham discussing the "many reasons why the Fed is likely to keep rates higher for longer." Dougherty says, "Debbie, thank you so much for joining us here in London. Debbie Cunningham is the CIO for our liquidity franchise here at Federated Hermes, overseeing approximately $600 billion of liquidity assets. I'm very pleased to have her here with us today. So I'll start with new administration in the White House. Volatility seems to be kind of the name of the game. Wanted to maybe get your thoughts on the trajectory of rates in the US market and some potential impacts that we've seen in these first few days of Trump 2.0."
Cunningham responds, "Certainly, from a Trump administration perspective, fast and furious is what we've dealt with so far. I'm not sure if anything though in the context of sticking points is hugely impactful for where we are from a monetary policy standpoint with regard to the Fed. Our expectations at this point are 1 to 2 rate cuts by the end of this year. That's drastically changed from where we were in the September meeting when the Fed cut 50 basis points and even, you know, November and into December, and that's reflective of I think what has been termed as sticky inflation."
She continues, "And a resilient consumer from an employment perspective now from a Trump policy standpoint, I don't know that either one of those things are drastically changed in this environment. The policies that his administration is looking to achieve when you look at immigration, when you look at tariffs, potential regulatory changes, all of those to some degree, at least on an initial blush basis, are more inflationary, so sticky inflation and, and maybe even rising inflation. Which brings the Fed's job from an easing perspective to a much lower threshold.... So ultimately, we're looking at higher rates for a longer period of time."
Dougherty then asks, "OK, there's some talk about potential for a hike maybe down the road, are we in that camp at all?" Cunningham responds, "We are not in that camp at all. That is something that, there's a broad array of outlooks and it goes from those that think maybe one or two hikes by the end of the year. To those who are still contemplating lowering of interest rates before the end of the year, we think both of those are extreme positions and ultimately where we stand from a yield curve perspective, which is reflective of 1 to 2 rate cuts the remaining portion of this year is where we're also standing at this point, which is good because we're actually seeing value in the marketplace based on that."
The U.S. Securities and Exchange Commission published its latest monthly "Money Market Fund Statistics" summary, which shows that total money fund assets rose by $47.9 billion in January 2025 to a record $7.286 trillion. Assets jumped $113.2 billion in December, $197.8 billion in November, $93.3 billion in October and $166.6 billion in September 2024. The SEC shows Prime MMFs increased $27.4 billion in January to $1.218 trillion, Govt & Treasury funds increased $23.1 billion to $5.930 trillion and Tax Exempt funds decreased $2.6 billion to $138.4 billion. Taxable yields inched lower in January after plunging in December. 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 2/21, total money fund assets have increased by $40.1 billion to $7.267 trillion, according to Crane Data's separate, and slightly smaller, MFI Daily series.)
January's asset jump follows an increase of $113.2 billion in December, $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 they increased $65.9 billion last February. Over the 12 months through 1/31/25, total MMF assets have increased by $827.0 billion, or 12.8%, according to the SEC's series.
The SEC's stats show that of the $7.286 trillion in assets, $1.218 trillion was in Prime funds, up $27.4 billion in January. Prime assets were up $4.0 billion in December, $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 assets rose $19.7 billion in May. Assets were down $30.0 billion in April, up $8.1 billion in March and $33.5 billion last February. Prime funds represented 16.7% of total assets at the end of January. They've decreased by $154.6 billion, or -11.3%, 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 $5.930 trillion, or 81.4% of assets. They increased $23.1 billion in January, $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 last February. Govt & Treasury MMFs are up $970.0 billion over 12 months, or 19.6%. Tax Exempt Funds decreased $2.6 billion to $138.4 billion, or 1.9% of all assets. The number of money funds was 275 in January, down 1 from the previous month and down 15 funds from a year earlier.
Yields for both Taxable and Tax Exempt MMFs were lower in January. The Weighted Average Gross 7-Day Yield for Prime Institutional Funds on Jan. 31 was 4.53%, down 5 bps from the prior month. The Weighted Average Gross 7-Day Yield for Prime Retail MMFs was 4.55%, down 7 bps from the previous month. Gross yields were 4.44% for Government Funds, down 11 bps from last month. Gross yields for Treasury Funds were down 11 bps at 4.41%. Gross Yields for Tax Exempt Institutional MMFs were down 161 basis points to 2.22% in January. Gross Yields for Tax Exempt Retail funds were down 100 bps to 2.58%.
The Weighted Average 7-Day Net Yield for Prime Institutional MMFs was 4.43%, down 5 bps from the previous month and down 100 bps from 1/31/24. The Average Net Yield for Prime Retail Funds was 4.28%, down 7 bps from the previous month, and down 101 bps since 1/31/24. Net yields were 4.22% for Government Funds, down 10 bps from last month. Net yields for Treasury Funds were down 10 bps from the previous month at 4.20%. Net Yields for Tax Exempt Institutional MMFs were down 161 bps from December to 2.10%. Net Yields for Tax Exempt Retail funds were down 100 bps at 2.34% in January. (Note: These averages are asset-weighted.)
WALs and WAMs were mixed in January. The average Weighted Average Life, or WAL, was 49.9 days (up 0.6 days) for Prime Institutional funds, and 45.8 days for Prime Retail funds (down 0.4 days). Government fund WALs averaged 91.6 days (up 1.8 days) while Treasury fund WALs averaged 90.9 days (up 1.6 days). Tax Exempt Institutional fund WALs were 5.1 days (up 0.1 days), and Tax Exempt Retail MMF WALs averaged 28.1 days (down 1.1 days).
The Weighted Average Maturity, or WAM, was 27.7 days (down 1.5 days from the previous month) for Prime Institutional funds, 28.4 days (up 2.2 days from the previous month) for Prime Retail funds, 36.4 days (up 1.8 days from previous month) for Government funds, and 44.9 days (up 0.1 days from previous month) for Treasury funds. Tax Exempt Inst WAMs were up 0.1 days to 5.1 days, while Tax Exempt Retail WAMs were down 1.0 days from previous month at 27.6 days.
Total Daily Liquid Assets for Prime Institutional funds were 53.8% in January (up 0.4% from the previous month), and DLA for Prime Retail funds was 45.5% (down 0.2% from previous month) as a percent of total assets. The average DLA was 65.8% for Govt MMFs and 93.8% for Treasury MMFs. Total Weekly Liquid Assets was 66.7% (up 1.1% from the previous month) for Prime Institutional MMFs, and 60.4% (up 1.8% from the previous month) for Prime Retail funds. Average WLA was 78.4% for Govt MMFs and 98.9% for Treasury MMFs.
In the SEC's "Prime Holdings of Bank-Related Securities by Country table for January 2025," the largest entries included: the U.S. with $201.3B, Canada with $161.2 billion, Japan with $129.7 billion, France with $98.7 billion, the U.K. with $63.0B, Aust/NZ with $47.2B, the Netherlands with $40.3B, Germany with $24.3B and Switzerland with $3.4B. The gainers among the "Prime MMF Holdings by Country" included: Netherlands (up $25.0B), the U.K. (up $23.6B), France (up $18.1B), the U.S. (up $12.0B), Germany (up $8.1B), and Switzerland (up $0.0B). Decreases were shown by: Canada (down $29.0B), Japan (down $9.6B) and Aust/NZ (down $1.7B).
The SEC's "Prime Holdings of Bank-Related Securities by Region" table shows The Americas had $362.5 billion (down $17.0B), while Eurozone had $186.7B (up $60.8B). Asia Pacific subset had $202.7B (down $9.4B), while Europe (non-Eurozone) had $118.4B (up $42.8B from last month).
The "Prime MMF Aggregate Product Exposures" chart shows that of the $1.209 trillion in Prime MMF Portfolios as of January 31, $468.8B (38.8%) was in Government & Treasury securities (direct and repo) (down from $487.6B), $306.8B (25.4%) was in CDs and Time Deposits (up from $267.7B), $196.0B (16.2%) was in Financial Company CP (down from $196.8B), $156.5B (13.0%) was held in Non-Financial CP and Other securities (up from $146.1B), and $80.7B (6.7%) was in ABCP (up from $76.0B).
The SEC's "Government and Treasury Funds Bank Repo Counterparties by Country" table shows the U.S. with $481.0 billion, Canada with $156.4 billion, France with $206.1 billion, the U.K. with $111.3 billion, Germany with $26.7 billion, Japan with $131.1 billion and Other with $43.4 billion. All MMF Repo with the Federal Reserve was down $234.3 billion in January to $148.1 billion.
Finally, a "Percent of Securities with Greater than 179 Days to Maturity" table shows Prime Inst MMFs 9.2%, Prime Retail MMFs with 5.7%, Tax Exempt Inst MMFs with 0.0%, Tax Exempt Retail MMFs with 3.9%, Govt MMFs with 14.8% and Treasury MMFs with 14.2%.
Website RIABiz.com writes on BlackRock's new Money Market ETFs in "BlackRock rattles giant saber at Schwab and Fidelity by launching high-yield 'money market' funds that 'circumvent' shelf-space controls and pay big." They tell us, "BlackRock on Feb. 4, launched iShares Prime MMF (PMMF) and the iShares Government MMF (GMMF). The money market ETFs reported $104.2 million and $26 million in net assets, respectively, in just the first 17 days since launch." (See our Feb. 6 News, "BlackRock Money Market ETFs Go Live; Ondo Finance on Tokenized MMFs.") (Note: Register soon for our upcoming Bond Fund Symposium, which is March 27-28 in Newport Beach. We hope to see you next month in Southern California!)
The article says, "For the first time, BlackRock takes direct aim at a discount brokerage and RIA custody cash cow -- cash management money market funds (MMF). (And indirect aim at high-yield FDIC cash accounts.) BlackRock declined a request for comment, including, specifically, whether avoiding shelf-space fees influenced its decision to launch a MMF ETFs, making it the second firm ever to do so. Until now, laws, economics, fee structures, and even unwritten channel-conflict red lines have kept BlackRock from selling money market funds to investors, directly or through their RIAs and brokers."
It explains, "Using ETFs – in a zero-commission world – may disrupt that paradigm. Employing an ETF wrapper gets 'around the need to be 'approved' as a money fund option on the clearing firm platforms, and/or the need to pay a fee to be on a fund supermarket,' says Frank Bonanno, managing director and head of marketing at cash management shop StoneCastle.... 'It's a pretty smart way to circumvent restrictions most large firms are placing on MMFs, as they'd likely prefer cash stay in sweep. [This] makes it easy to find a likely higher-yielding alternative, without having to use a proprietary fund, or be forced to settle for one that's on platform,' he explains."
The RIABiz piece states, "Yet, analysts and industry insiders are split over precisely who BlackRock's new ETFs will serve. 'I'm not quite sure I 'get it,' says Jeff DeMaso, founder and editor of the Independent Vanguard Advisor, via email. 'The pitch here is that this is a 'money market' for ETF investors, or maybe, a money market with better liquidity. 'If you're going to get money market returns without the stable price, why not just buy an actual money market fund with a stable price?' he asks."
They also quote "Peter Crane, president [of] Crane Data, also expresses puzzlement. 'I'm still not sure of the attraction either, other than to offer advisors the ETF format that they evidently prefer,' he says, via email. 'We'll see if it flies ... [but] given how hot ETFs are, coupled with how hot money market funds are, it's worth a shot.' he adds."
The article continues, "BlackRock's entry into RIA and retail cash accounts via ETFs comes at a time of tension between investors, financial advisors, custodians, and asset managers. At issue are fees, spreads, yields, who gets them -- and transparency. Schwab and Fidelity not only guide cash largely to their own funds but are also determined to sweep cash to funds where they collect fatter margins."
It states, "The new BlackRock ETFs take advantage of both the 2014 Floating NAV Rule change, and 2023 SEC updates to Rule 2a-7 of the '40 Act, which, together, opened the door to money market ETFs. 'Money market ETFs did not evolve until recently, primarily because ETFs typically have a fluctuating NAV, whereas money market funds historically ... had a stable NAV,' says Ari Sonneberg, partner at Wagner Law Group. Now the SEC 'is satisfied' that current regulations address the risk MMFs 'might collapse,' and asset managers are confident MMF regulations have stabilized, he explains."
See also VettaFi's "Managing Cash With Money Market Funds vs. ETFs," which says, "Money market mutual funds have long been a popular cash management tool for investors looking to park cash short-term, while preserving capital and picking up some return and yield. Now, there are money market ETFs for that, too. Earlier this month, my colleague, Kirsten Chang, highlighted the arrival and appeal of money market ETFs. Texas Capital ... pioneered the category, with the launch of the Texas Capital Government Money Market ETF (MMKT) last year. BlackRock followed with two competing ETFs, the iShares Government Money Market ETF (GMMF) and the iShares Prime Money Market ETF (PMMF)."
In other news, a press release titled, "Figure Markets Launched Industry First Yield-Bearing Stablecoin" tells us, "Figure Markets, a leader in decentralized finance, has launched the first interest-bearing stablecoin native to a public blockchain, registered with the Securities and Exchange Commission. YLDS, a public security offered through Figure Markets's wholly owned subsidiary, Figure Certificate Company, is a fixed price, daily accrual public security native to the Provenance Blockchain. YLDS can be transferred peer-to-peer and is backed by the same securities that prime money market funds hold."
It explains, "YLDS marks a transformative shift in financial applications built on public blockchain, offering holders the ability to earn interest, transfer securities peer-to-peer, and transact 24x7. YLDS utilizes Figure Markets's self-custody wallets, giving users control of the tokens without relying on third parties."
Figure Markets CEO, Mike Cagney comments, "We see tremendous applications for YLDS.... Exchange collateral, cross-border remittances, and payment rails are some of the immediate opportunities. But we see this as a catalyst to a much larger migration of TradFi to blockchain."
The release also says, "Starting today, both individuals and institutions can purchase YLDS through Figure Markets (www.figuremarkets.com). Figure Markets -- working with its sister company Figure Technology Solutions -- has been a leader in the real-world asset (RWA) space on blockchain, supporting over $41B in RWA transactions on the Provenance Blockchain, with over $13B in RWA total locked value on-chain. YLDS will add to that number."
June Ou, Interim Executive Director of the Provenance Blockchain Foundation, adds, "We're excited to support YLDS on Provenance Blockchain. We expect, and will support, significant third-party developer interest to use YLDS and its fiat rails in DeFi, payments, and other applications built on Provenance Blockchain. We will also be integral in wrapping YLDS for applications on other L1 blockchains."
Finally, the release says, "YLDS pays an interest rate of SOFR minus 0.50%. Interest is accrued daily and paid monthly in USD or YLDS. Holders can buy/sell YLDS using USD and other stablecoins 24x7 on Figure Markets, and can off-ramp to fiat during US banking hours."
ICI's latest weekly "Money Market Fund Assets" report shows money fund assets falling $9.6 billion to $6.914 trillion, after rising $5.5 billion to a record $6.923 trillion the week prior and rising $44.9 billion two weeks prior. Money fund assets have risen in 20 of the last 29, and 31 of the last 44, weeks, increasing by $610.1 billion (or 9.7%) since the Fed cut on 9/18/24 and increasing by $936.2 billion (or 15.7%) since 4/24/24. MMF assets are up by $905 billion, or 15.1%, in the past 52 weeks (through 2/19/25), with Institutional MMFs up $475 billion, or 13.0% and Retail MMFs up $430 billion, or 18.2%. Year-to-date, MMF assets are up by $63 billion, or 0.9%, with Institutional MMFs up $2 billion, or 0.0% and Retail MMFs up $61 billion, or 2.2%. (Note: Register soon for our upcoming Bond Fund Symposium, which is March 27-28 in Newport Beach, Calif!)
ICI's weekly release says, "Total money market fund assets decreased by $9.55 billion to $6.91 trillion for the week ended Wednesday, February 19.... Among taxable money market funds, government funds decreased by $12.78 billion and prime funds increased by $1.42 billion. Tax-exempt money market funds increased by $1.81 billion." ICI's stats show Institutional MMFs decreasing $21.5 billion and Retail MMFs increasing $12.0 billion in the latest week. Total Government MMF assets, including Treasury funds, were $5.667 trillion (82.0% of all money funds), while Total Prime MMFs were $1.113 trillion (16.1%). Tax Exempt MMFs totaled $133.1 billion (1.9%).
It explains, "Assets of retail money market funds increased by $11.95 billion to $2.80 trillion. Among retail funds, government money market fund assets increased by $8.09 billion to $1.78 trillion, prime money market fund assets increased by $2.12 billion to $893.88 billion, and tax-exempt fund assets increased by $1.74 billion to $121.72 billion." Retail assets account for over a third of total assets, or 40.5%, and Government Retail assets make up 63.7% of all Retail MMFs.
They add, "Assets of institutional money market funds decreased by $21.50 billion to $4.12 trillion. Among institutional funds, government money market fund assets decreased by $20.87 billion to $3.89 trillion, prime money market fund assets decreased by $700 million to $219.46 billion, and tax-exempt fund assets increased by $68 million to $11.36 billion." Institutional assets accounted for 59.5% of all MMF assets, with Government Institutional assets making up 94.4% of all institutional MMF totals.
According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets have risen by $23.2 billion in February through 2/19/25 to $7.250 trillion. (They hit a record high on 1/7 at $7.266 trillion.) Assets rose by $52.8 billion in January, $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 last February. 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.
In other news, J.P. Morgan published its "Mid-Week US Short Duration Update," which is titled, "January MMF holdings update: less RRP, more non-fed repo and T-bills." It states, "In January, taxable MMFs experienced another strong month of growth, with balances rising by $90bn and AUMs almost reaching $7.2tn. Despite this increase, MMFs withdrew nearly $235bn from the ON RRP between year-end and the end of January, leaving only about $150bn in total cash at the facility."
JPM explains, "Instead, MMFs collectively shifted more of their portfolios to non-Fed repos during the month, adding an additional $166bn, or 7%, to reach $2.4tn. This increase partly reflects a reversal from the prior month, as dealers typically reduce repo exposure at year-end. As a result, MMFs increased allocations to dealers in the US by $65bn, in France by $55bn, and in the UK by $51bn. However, they reduced exposure to Canadian banks by approximately $70bn by the end of January, due to the fiscal quarter-end."
They tell us, "Interestingly, MMFs boosted their sponsored repo allocation by an additional $47bn month-over-month, setting a new record high of $876bn. Notably, MMFs have now allocated 37% of their entire repo holdings (excluding Fed) via FICC repo, up by 12% from a year ago ... as dealers position towards sponsored repo in anticipation of the clearing mandate."
The piece says, "Also, government MMFs actively allocated more of their portfolios to T-bills, increasing their holdings by nearly $90bn month-over-month, or a 4% rise.... This shift aligns with the increase in T-bill outstandings, which rose by $195bn, indicating that MMFs absorbed nearly 47% of the additional supply during the month.... [A]side from repo (excluding Fed), prime funds directed more of their portfolios towards credit products, specifically increasing allocations to banks located in the Eurozone by $49bn."
It adds, "To that end, at January-end levels, MMFs account for about 40% of total T-bill supply, hovering near the highest levels since May 2021. However, with the debt ceiling unresolved and T-bill supply beginning to turn negative towards the end of February, some MMFs might consider reallocating their T-bill holdings towards other avenues. To the extent that MMFs can, it's possible they will deploy more towards non-Fed repos, or the ON RRP as a backstop."
Finally, Fitch Ratings' "Local Government Investment Pools: 4Q24 comments, "Fitch Ratings' two local government investment pool (LGIP) indices experienced an aggregate asset increase in the fourth quarter of 2024 (4Q24), in line with seasonal flow trends. Total assets for the Fitch Liquidity LGIP Index and the Fitch Short-Term LGIP Index were $644.2 billion at the end of 4Q24, representing an increase of $39.2 billion qoq and an increase of $39.6 billion yoy. The Fitch Liquidity LGIP Index rose by 6.0% qoq and the Fitch Short-Term LGIP Index was up 7.4% qoq, compared to average increases of 7.2% and 12.1%, respectively, over the past three years during the fourth quarter."
The update continues, "Weighted average maturities (WAMs) increased in 4Q24 as the Fed implemented two more interest rate cuts in November and December, ending the year with a target range of 4.25% to 4.5%. The WAM of the Fitch Liquidity LGIP Index increased to 37 days, still higher than prime '2a-7' money market funds at 29 days. The Fitch Short-Term LGIP Index ended the quarter with a duration of 1.27 years, down 4% from last quarter. Both Fitch indices ended 4Q24 with decreased average yield profiles, with net yields averaging 4.53% for the Liquidity Index and 4.29% for the Short-Term Index."
It adds, "The Fitch Liquidity LGIP Index increased exposure to Government Agencies by 1.29% and reduced exposure to CP by 0.98% qoq. Overall exposure to Government Agencies, Supranational, and ABS increased by 2.25% qoq."
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 Feb. 14) includes Holdings information from 62 money funds (up 15 from two weeks ago), or $3.585 trillion (up from $2.901 trillion) of the $7.213 trillion in total money fund assets (or 49.7%) 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 Feb. 12 News, "Feb. Money Fund Portfolio Holdings: Treasuries Higher, Fed Repo Plunges.")
Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Treasuries totaling $1.713 trillion (up from $1.383 trillion two weeks ago), or 47.8%; Repurchase Agreements (Repo) totaling $1.226 trillion (up from $1.003 trillion two weeks ago), or 34.2%, and Government Agency securities totaling $306.3 billion (up from $273.5 billion), or 8.5%. Commercial Paper (CP) totaled $139.4 billion (up from two weeks ago at $107.1 billion), or 3.9%. Certificates of Deposit (CDs) totaled $79.5 billion (up from $58.4 billion two weeks ago), or 2.2%. The Other category accounted for $85.2 billion or 2.4%, while VRDNs accounted for $36.3 billion, or 1.0%.
The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.713 trillion (47.8% of total holdings), Fixed Income Clearing Corp with $345.3B (9.6%), the Federal Home Loan Bank with $196.2 billion (5.5%), JP Morgan with $110.2B (3.1%), Citi with $87.2B (2.4%), BNP Paribas with $82.4B (2.3%), Federal Farm Credit Bank with $75.2B (2.1%), RBC with $64.1B (1.8%), Barclays PLC with $51.2B (1.4%) and Goldman Sachs with $47.1B (1.3%).
The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($294.9B), Goldman Sachs FS Govt ($277.7B), JPMorgan 100% US Treas MMkt ($251.9B), Fidelity Inv MM: Govt Port ($220.5B), Morgan Stanley Inst Liq Govt ($182.5B), BlackRock Lq FedFund ($172.3B), State Street Inst US Govt ($168.5B), BlackRock Lq Treas Tr ($154.7B), Fidelity Inv MM: MM Port ($150.7B) and Dreyfus Govt Cash Mgmt ($131.2B). (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, Investment News writes on, "Pershing discussing move to control portion of broker-dealers' cash." They tell us, "The financial advice industry's skirmish over cash sweep accounts is taking another turn, with clearing giant Pershing evaluating plans to create a new charge, akin to a tax, on cash held by its broker-dealer clients. Pershing is discussing with broker-dealers that use its platform plans to get first dibs on cash -- up to $10,000 -- held in their customers' accounts."
The piece explains, "Industry sources stressed that Pershing has not yet finalized details of the new cash sweep plan but is discussing it with broker-dealer clients. But, similar to a decision late last year by its leading competitor, Fidelity, Pershing is discussing intentions to sweep the first $10,000 held in a broker-dealer's customer's account into a money market fund or similar cash product that it controls, according to two senior industry executives with first-hand knowledge of Pershing's plan."
Investment News comments, "Cash sweep programs have turned into a bit of a viper's nest for the financial advice industry, particularly large broker-dealers. Brokerage firms in particular have been criticized for having low rates in their sweep options while benefiting from margin loans they make and the spreads they retain from that cash. There have been numerous lawsuits filed over the issue, and companies have responded to the pressure by increasing the rates they pay clients for those cash positions."
They add, "The interest rate for the customer's cash -- as currently discussed by Pershing -- will be 2.25 percent annually, according to the executives, who spoke confidentially to InvestmentNews about the matter. Pershing, however, would not rebate, meaning share, any additional interest it receives from borrowers when it lends the cash, potentially eating into a broker-dealer's profitability. Pershing is currently discussing with its broker-dealer clients about the changes to its cash sweep program and it's not clear when any new plan goes into place."
Finally, they state, "Toward the end of last year, Fidelity told registered investment advisors it would begin default all non-retirement cash to an in-house option in 2025. A subsidiary of The Bank of New York Mellon Corp., Pershing provides trading and clearing services to and works with some of the largest independent broker-dealers in the industry, including Osaic and Cetera Financial Group."
A separate article, "Osaic Is Focus of Latest Cash Sweep Class Action Suit," published on WealthManagement.com, says, "Osaic is the latest firm to face a class action lawsuit targeting its cash sweep practices. In the suit filed in Arizona federal court, plaintiff Robert Gehring argued the firm 'underpaid their customers in violation of their fiduciary duties' by undercutting the interest owed to clients. In some cases, Osaic's rate of interest was as high as five to 21 times the customers' paid rate."
The piece explains, "The suit against Osaic is the latest in an ever-growing number of calls for class actions in the past year that have targeted nearly every major financial services firm, from the wirehouses to independent behemoths like LPL and Ameriprise. According to the suit, New Hampshire-based Gehring was originally a customer of American Portfolios before it was acquired by Advisor Group (later rebranded as Osaic). Like many firms, Osaic runs cash sweep programs for discretionary and non-discretionary accounts.... Osaic offered cash sweep programs through Pershing and National Financial Services, which established and ran deposit programs, including Osaic's Bank Deposit Sweep Program and the Insured Cash Account Program."
It adds, "Last month, the SEC charged Wells Fargo and Merrill Lynch's advisor units with failing to supervise their cash sweep programs. The agency claimed the firms' policies didn't consider clients' best interests when selecting cash sweep options. Merrill and Wells Fargo agreed to pay $60 million to settle the charges collectively. Last year, lawsuits calling for broader class actions related to the firms' cash sweep policies were filed against Wells Fargo, Ameriprise, LPL, UBS, Raymond James and J.P. Morgan (among others). Wells Fargo, Bank of America and Morgan Stanley were among the firms that changed their sweep pricing in response to the scrutiny."
Earlier this month, the ICI published a "Viewpoint" titled, "Sold Under False Pretenses: The SEC's Money Market Fund Reform is Causing Damage," which explains, "In response to pandemic-induced stress in money markets three years earlier, the Securities and Exchange Commission (SEC) adopted rule amendments in July 2023 that required significant changes to prime money market funds (MMFs). While strengthening the resiliency of MMFs was a worthy objective, the Commission adopted these amendments without seeking public input on specific elements of the amendments' most consequential change: the imposition of a first-ever mandatory liquidity fee on prime institutional funds. MMFs serve as an attractive cash management option and have surged in popularity as investors have taken advantage of higher yields in recent years. But the prime institutional segment of the MMF market has experienced significant consolidation and reduced competition as a direct consequence of the SEC's flawed rule amendments." (Note: Register soon for our upcoming Bond Fund Symposium, which is March 27-28 in Newport Beach, Calif!)
The piece continues, "Then SEC Chair Gary Gensler presented the 2023 reform as one that would 'enhance these funds' resiliency and ability to protect against dilution.' But Commissioner Hester Peirce took quite a different view in her dissenting statement, pointedly asking if one of the goals of the reform was to 'kill prime funds' -- something that Chair Gensler denied. Commissioner Peirce and Commissioner Mark Uyeda, as well as ICI and other commentators, expressed deep concern that, rather than helping MMFs, the rule changes would jeopardize the viability of this important type of MMF. Now that the final implementation deadline has passed, we can begin assessing whether the SEC's MMF reforms worked as the previous SEC leadership said they would. The bottom line is that many of the concerns with the 2023 reforms have come to fruition, leaving the MMF market facing greater uncertainty."
In a sidebar titled, "Flaws with the Final Rule," the ICI states, "The mandatory liquidity fee requirement surprised MMF sponsors because it was not discussed in any detail in the SEC's original proposal. Not only is the fee difficult to calculate and for investors to understand; it does not reflect how prime institutional money market funds typically use their portfolios to manage redemptions. The SEC's 5% net redemption threshold standard for determining whether a fee should be imposed is an arbitrary standard unsupported by data. The 1 basis point threshold for implementing the fee is completely at odds with securities law standards for materiality. The SEC disregarded standard portfolio management liquidity and trading practices by requiring determination of a redemption's impact using a hypothetical vertical slice of the portfolio as a proxy for the impact on remaining shareholders -- even after requiring a significant increase in liquidity. The final rule epitomizes an exercise in academic regulation, uninformed by relevant data, analysis, or feedback on crucial elements from the impacted parties."
The Viewpoint discusses, "A Surprising Change with Unsurprising Consequences," saying, "At the end of June 2023, shortly before the SEC's reforms were adopted, there were 25 publicly available prime institutional MMFs. After the effective date of the reforms, that number plummeted to nine as sponsors liquidated, merged, or converted their funds to avoid the complexities of the mandatory liquidity fee. Net assets and the total number of sponsors have suffered a similar fate."
ICI provides a table, "By the Numbers: Before and After SEC Reforms," which shows Total net assets of $631 billion before the new rule and Total net assets of $322 billion after the new rule. It says, "ICI earlier cautioned the SEC about creating a regulatory environment that dampens competition and accelerates industry consolidation. Indeed, the final rule amendments were so complex and costly that only a handful of the very largest sponsors were willing to dedicate the effort and resources necessary to comply. Even some of the most sophisticated sponsors determined that the challenges of maintaining the products were too great after evaluating the new requirements."
ICI asks, "Where Did That Money Go?" They reply, "For the public funds, $44 billion went to government or prime retail money market strategies, $16 billion liquidated or converted to non-money market strategies, and $220 billion remained in prime institutional MMFs. For the nonpublic funds, $236 billion went to government strategies, $15 billion liquidated or converted to non-money market strategies, and $102 billion of the original $356 billion remained in prime institutional MMFs. All told, the SEC's reforms drove $309 billion out of prime institutional money market funds. The full impact probably won't be known until the remaining funds and shareholders experience the imposition of a mandatory fee."
Commenting on "Burdens on Funds and Their Shareholders," ICI says, "Many sponsors of prime institutional MMFs expressed concern that the SEC did not fully appreciate the magnitude of the operational changes. For instance, ongoing data analysis is necessary to validate the methodology underlying each sponsor's good faith estimate of market impact costs as one requirement for implementing the mandatory liquidity fee framework. The process for calculating and verifying whether a mandatory fee should be imposed is complex, burdensome, serves no legitimate regulatory purpose, and is a new daily operational process that all sponsors of institutional prime funds must support. Not only that, but current or historical transactional data on the liquidity market is limited, and requiring inclusion of 'market impact' in this fee is highly speculative."
It continues, "The size of the mandatory liquidity fee is determined by making a good faith estimate of the spread, other transaction, and market impact costs the fund would incur if it were to sell a pro rata amount of each security in its portfolio (vertical slice) to satisfy the amount of net redemptions. This pro rata methodology is not consistent with money market trading practices, and the limited availability of data and speculative nature of the fee calculations are intractable complications."
ICI then states, "Furthermore, it's uncertain whether the mandated liquidity fee methodology accurately reflects actual liquidity costs, as opposed to the hypothetical cost of liquidating a vertical slice of the portfolio on the given day, which could result in inflated fees that punish redeeming investors. This complex, expensive process to collect fees on floating NAV funds that could be quite small not only serves no regulatory purpose but has further created an anti-competitive market, causing significant participants to leave the space and presenting a barrier for new entrants to the market. These costs are ultimately borne by the shareholders of the funds in the form of expense and product selection. In addition, this unjustified calculation and verification process can result in delays in the delivery of shareholder redemptions, including on days where a fee is not applied."
Finally, the article adds, "The aftermath of the SEC's MMF reform demonstrates that in addition to imposing compliance costs borne by fund investors, bad regulation can damage funds' overall utility. Had the Commission undertaken a thoughtful and transparent rulemaking process by engaging with MMF sponsors, service providers, and investors, it might have been able to achieve its policy goals without causing such unnecessary damage. Thus, there are two key conclusions: Responsibility for potential vulnerabilities in the MMF market caused by the mandatory liquidity fee sits with the SEC and the central bank community that urged the SEC to take these steps, and not with the MMF providers. The existence of the mandatory liquidity fee in the MMF regulatory framework should not be used by policymakers to justify extending the practice to other types of funds."
It concludes, "Using the same regulatory playbook in other areas of the market could have devastating consequences. Take for example the SEC's heavily criticized 2022 mandatory swing pricing proposal for mutual funds, the SEC proposal most similar to the MMF amendments. It's chilling to consider the potential impact of similarly misguided rulemaking on more than 6,700 long-term mutual funds, with their combined $21.7 trillion in assets. The stakes are too high for these recent substantive and procedural policy mistakes to be repeated."
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 $1.483 trillion, while yields moved lower. Assets for EUR and GBP rose over the past month while USD inched down. 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 $20.4 billion over the 30 days through 2/13. The totals are up $50.7 billion (3.5%) 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 decreased $111 million over the last 30 days and are up $16.6 billion YTD to $760.3 billion; they increased $94.1 billion in 2024. Euro funds increased E11.0 billion over the past month. YTD, they're up E11.4 billion to E329.1 billion, for 2024, they increased by E82.9 billion. GBP money funds increased L6.3 million over 30 days, and they're up L16.2 billion YTD at L270.9B, for 2024, they rose L19.3 billion. U.S. Dollar (USD) money funds (260) account for over half (51.3%) of the "European" money fund total, while Euro (EUR) money funds (181) make up 24.5% and Pound Sterling (GBP) funds (171) total 24.2%. We summarize our latest "offshore" money fund statistics and our Money Fund Intelligence International Portfolio Holdings (which went out to subscribers Friday), below.
Offshore USD MMFs yield 4.30% (7-Day) on average (as of 2/13/25), down 3 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 2.67% on average, down 21 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 18 months ago, but they broke back below 5.0% 7 months ago. They now yield 4.50%, down 15 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 February MFI International Portfolio Holdings, with data as of 1/31/25, show that European-domiciled US Dollar MMFs, on average, consist of 26% in Commercial Paper (CP), 17% in Certificates of Deposit (CDs), 21% in Repo, 23% in Treasury securities, 12% in Other securities (primarily Time Deposits) and 1% in Government Agency securities. USD funds have on average 45.0% of their portfolios maturing Overnight, 6.1% maturing in 2-7 Days, 8.5% maturing in 8-30 Days, 9.6% maturing in 31-60 Days, 10.5% maturing in 61-90 Days, 13.8% maturing in 91-180 Days and 6.6% maturing beyond 181 Days. USD holdings are affiliated with the following countries: the US (38.5%), France (10.9%), Japan (10.2%), Canada (8.5%), Australia (5.3%), the U.K. (4.1%), Sweden (3.7%), Germany (3.4%), the Netherlands (3.2%) and Finland (2.7%).
The 10 Largest Issuers to "offshore" USD money funds include: the US Treasury with $171.5 billion (23.1% of total assets), Fixed Income Clearing Corp with $33.5B (4.5%), Credit Agricole with $22.0B (3.0%), JP Morgan with $20.1B (2.7%), Barclays PLC with $19.2B (2.6%), Nordea Bank with $18.5B (2.5%), Sumitomo Mitsui Banking Corp with $17.9B (2.4%), Mizuho Corporate Bank Ltd with $16.8B (2.3%), Mitsubishi UFJ Financial Group Inc with $16.2B (2.2%) and Australia & New Zealand Banking Group Ltd with $16.0B (2.1%).
Euro MMFs tracked by Crane Data contain, on average 39% in CP, 23% in CDs, 16% in Other (primarily Time Deposits), 20% in Repo, 2% in Treasuries and 0% in Agency securities. EUR funds have on average 40.0% of their portfolios maturing Overnight, 6.0% maturing in 2-7 Days, 12.2% maturing in 8-30 Days, 9.3% maturing in 31-60 Days, 10.5% maturing in 61-90 Days, 12.5% maturing in 91-180 Days and 9.5% maturing beyond 181 Days. EUR MMF holdings are affiliated with the following countries: France (30.1%), Japan (11.5%), Canada (9.5%), the U.S. (8.5%), Germany (6.2%), the Netherlands (5.6%), the U.K. (4.7%), Spain (4.0%), Austria (3.6%) and Australia (3.6%).
The 10 Largest Issuers to "offshore" EUR money funds include: Credit Agricole with E19.1B (6.8%), BNP Paribas with E15.3B (5.4%), Republic of France with E10.4B (3.7%), JP Morgan with E10.3B (3.7%), Societe Generale with E10.3B (3.6%), Sumitomo Mitsui Banking Corp with E8.8B (3.1%), Toronto-Dominion Bank with E7.8B (2.8%), Bank of Nova Scotia with E7.7B (2.7%), ING Bank with E7.5B (2.7%) and Mizuho Corporate Bank Ltd with E7.0B (2.5%).
The GBP funds tracked by MFI International contain, on average (as of 1/31/25): 38% in CDs, 17% in CP, 21% in Other (Time Deposits), 20% in Repo, 3% in Treasury and 1% in Agency. Sterling funds have on average 39.0% of their portfolios maturing Overnight, 7.4% maturing in 2-7 Days, 9.4% maturing in 8-30 Days, 10.5% maturing in 31-60 Days, 10.9% maturing in 61-90 Days, 14.7% maturing in 91-180 Days and 8.3% maturing beyond 181 Days. GBP MMF holdings are affiliated with the following countries: France (15.5%), Japan (14.9%), the U.K. (13.5%), Canada (11.7%), the U.S. (11.0%), Australia (9.9%), the Netherlands (3.9%), Singapore (3.6%), Finland (3.0%), and Spain (2.2%).
The 10 Largest Issuers to "offshore" GBP money funds include: UK Treasury with L16.6B (6.8%), BNP Paribas with L11.7B (4.8%), Mizuho Corporate Bank Ltd with L10.2B (4.2%), RBC with L8.9B (3.7%), Sumitomo Mitsui Trust Bank with L8.8B (3.6%), JP Morgan with L8.6B (3.5%), Mitsubishi UFJ Financial Group Inc with L8.5B (3.5%), Toronto-Dominion Bank with L8.3B (3.4%), Commonwealth Bank of Australia with L7.9B (3.3%) and Goldman Sachs with L7.5B (3.1%).
The February issue of our Bond Fund Intelligence, which was sent to subscribers Friday morning, features the stories, "Debate Over Bond Funds vs. Cash Continues, Heats Up," which features recent stories pushing bond funds over cash, and "Federated Hermes' Ostrowski on Volatility & Vigilantes," which excerpts from a recent Insight piece. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns rebounding in January while yields were slightly lower. 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 "Debate Over Bond Funds" article states, "Strategists and asset managers continue to urge investors to move from cash into bonds, though money funds (barely) outperformed bond funds in 2024. Reuters writes, 'Third Time Lucky for 'Year of the Bond' Call?' The article says, 'After two years of significant underperformance by bonds, investors may have a hard time swallowing claims that 2025 will be the 'year of the bond.' But there are compelling reasons to believe this will be a case of third time lucky.'"
It continues, "Barron's echoes the theme in, 'These Bond Funds Are Better Than Cash. It's Time to Go Longer.' Their piece states, 'Many income investors have gravitated to cash these past few years, given the juicy yields at the front end of the yield curve. The yield curve was inverted until recently, and it made sense for investors to park money in shorter-dated products, including money-market funds.'"
Our "Profile" article states, "Federated Hermes' Robert Ostrowski writes on 'Volatility, velocity and vigilantes.' He comments, 'Volatility is how markets express uncertainty, and 2024 offered its share of ups and downs. After a choppy start to the year, and a rally through much of Q2 and Q3, the Bloomberg US Aggregate ultimately gave up a portion of year-to-date (YTD) return in Q4, while remaining modestly positive for the year at 1.25%. Growing investor expectations of a Trump win fueled a risk rally in the weeks before the election (higher rates/tighter spreads), defining the quarter and creating the negative total returns.'"
It continues, "He explains, 'It wasn't quite 2016 all over again, but the net result was very similar. During this past quarter, the 10-yr Treasury yield moved up 77 basis points, while in Q4 2016, the 10-yr Treasury yield moved up 84 bps, albeit all coming after the election surprise. Also similar was a steepening of the yield curve which occurred in both post-election environments, a likely result of some of the increased market uncertainty over future policy effects.'"
Our first News brief, "Returns Rebound, Yields Lower in Jan. Bond fund returns were higher in January after falling in December. Our BFI Total Index rose 0.68% over 1-month and rose just 4.34% over 12 months. (Money funds rose 4.99% over 1-year as measured by our Crane 100 Index.) The BFI 100 increased 0.73% in Jan. and rose 4.10% over 12 mos. Our BFI Conservative Ultra-Short Index was up 0.42% over 1-month and 5.40% for 1-year; Ultra-Shorts rose 0.45% and 5.63%. Short-Term returned 0.61% and 4.93%, and Intm-Term rose 0.72% in Jan. and rose 3.06%. BFI's Long-Term Index was up 0.66% and up 2.38%. High Yield returned 1.07% in Jan. and 8.17% over 12 mos."
A second News brief, "Bloomberg's, 'Pimco, Dodge & Cox Lead Revival in Actively Managed Bond Funds.' explains, 'US bond funds actively managed by industry heavyweights like Pacific Investment Management Co. attracted the most new investment last year as money returned after a two-year dry spell. A majority of the top 10 bond mutual funds ... were active ones attracting a combined $74 billion in assets, according to data compiled by Morningstar Direct. The cohort outpaced their passive counterparts. Among the six active funds receiving the most flows were the Pimco Income Fund, Dodge & Cox Income Fund, and Capital Group’s The Bond Fund of America.'"
Our next News brief, "New Vanguard Ultra-Short T-Bill ETFs. Their press release tells us, 'Vanguard launched Vanguard Ultra-Short Treasury ETF (VGUS) and Vanguard 0-3 Month Treasury Bill ETF (VBIL), two fixed income index ETFs. The pair of ETFs will be managed by Vanguard Fixed Income Group veteran, Josh Barrickman.' The Independent Vanguard Adviser newsletter comments, 'You can already buy SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) or iShares 0-3 Month Treasury Bond ETF (SGOV) — both are around $30 billion funds <b:>`_…. Also, there's the `U.S. Treasury 3 Month Bill ETF (TBIL) ... and WisdomTree's Floating Rate Treasury ETF (USFR).'"
A BFI sidebar, "Vanguard Cuts Expenses," states, "A press release, 'Vanguard Announces Largest Ever Expense Ratio Reduction,' says, 'Vanguard … announced historic expense ratio reductions to one hundred sixty-eight mutual fund and exchange-traded share classes across eighty-seven funds…. Salim Ramji, Vanguard's CEO says, 'We're proud to build on Vanguard's legacy of lowering the costs of investing ... by announcing our largest ever set of expense ratio reductions. Lower costs enable investors to keep more of their returns, and those savings compound over time.'"
Finally, another sidebar, "JPM on Ultra-Shorts," says, "J.P. Morgan writes in a recent, 'Mid-Week US Short Duration Update,' '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.... 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.... Conversely, during months with negative returns—specifically February, April, and October—outflows were also observed.'"
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."
