Press Releases Archives: February, 2008

Crane Data Unveils New Look-and-Feel on

Crane Data LLC, publisher of Money Fund Intelligence, has unveiled a new look-and-feel and new features to its website at We hope you like the changes! We've moved the Crane 100 Money Fund Index, our daily 7-day current yield benchmark representing the 100 largest taxable money market funds, and our "Search" function into more prominent positions, and have moved up our "Link of the Day" feature so it displays "above-the-fold" on all browsers. The site now has "hotlink" previews via Websnapr, so browsers can see a glimpse of linked websites and pages before clicking through. We've also enhanced the graphics and readability, and have broken out our "Inside Money Fund Intelligence" to highlight features of our PDF newsletter and our XLS data file. We've also moved our "People" section up and moved our "About Crane Data" box down in order to offer regular readers faster access to our more popular sections.

We'll continue relentlessly enhancing and expanding our free and premium website content, so please keep the requests and feedback coming. E-mail President Peter Crane, Chief Technology Officer Shaun Cutts, or webmaster Kamil Grymuza or call 1-508-439-4419 to contact us.

New Kiplinger's Discusses Brokerage Sweep in "Little Guys vs. Brokers". The April issue of Kiplinger's Personal Finance magazine includes a reader question on Wells Fargo brokerage's new policy sweeping cash into a lower-paying bank option instead of a money market fund. The reader says Wells indicates that this is an industrywide trend and asks if this is true and whether there is anything that he can do. Contributing Editor Kimberly Lankford responds, "It's true. The trend started in 2000, when Merrill Lynch switched its customers' sweep accounts from money-market funds to lower-yielding, money market bank accounts. Since then, most brokerage firms that own banks have made the change, says Peter Crane, publisher of Money Fund Intelligence." Brokerages have responded to lower trading commissions by seeking other sources of revenue. The piece says, "[T]he average brokerage sweep account for balances of $50,000 to $100,000 was earning 1.05% [now 0.89%], says Crane, while the average money-fund account was earning 3.78% [now 3.46%]." Kiplinger's adds, "But you don't have to settle for a measly 1%. You just need to make the effort to move your cash into a money-market fund." Says Crane, "This really is a penalty for laziness." E-mail to see our most recent Brokerage Sweep Intelligence, which tracks brokerage bank, money fund and CD rates.

Denver Post's "Out of the frying pan to little gain" says, "Investors, many fleeing the stock market, have poured $215 billion into money market funds so far this year. That's grown the base of assets in these funds to a record $3.36 trillion. Unfortunately, all that cash is producing less income as the Federal Reserve has been cutting short-term interest rates, says Peter Crane, who runs Crane Data, a tracker of money funds. The average yield is 3.64 percent, down from September's 5.06 percent." Also, see Jane Kim of The Wall Street Journal's "Good Deals for Income Investors".

Are Money Funds Lagging Inflation? Jaffe Says 'Yes', Crane Says 'No'. Financial columnist Chuck Jaffe discusses the risk of cash being eroded by inflation in a recent column, "One investment risk: Money fund yields are lagging inflation". He cites the flood of assets into money funds, saying, "As the Federal Reserve was slashing interest rates in recent weeks, billions of dollars in investor money was flowing into some of the most rate-sensitive investments out there, into funds that are almost certain to have a tough time keeping up with inflation." Jaffe cites 2007's CPI inflation rate of 4.1%. But other inflation indicators are much lower -- "core" CPI was 2.4% and the Fed's preferred GDP deflator was 2.2% in calendar '07. Jaffe says, "by the time current adjustments are complete, average money fund will yield about 2.5 percent". But he neglects to mention that money funds returned 5.0% in 2007 (as measured by our Crane 100 Money Fund Index), well above all inflation measures. Our Crane 100 averages 3.61% currently; it is expected to remain above 3.00%. Finally, inflation will likely `decline should the economy slow further. Crane Data believes money funds will continue beating inflation, and believes money funds have thoroughly outperformed inflation over their entire 35-year history. Jaffe quotes Crane, "The phrase 'Don't fight the Fed' applies to cash, too, where money market investors have to take what the Fed is giving. Right now, that means accepting inflation and low yields, which is not fun. But the big mistakes come when people get greedy, when someone fighting to preserve a yield of 5 percent takes risks far beyond the money market and blows up."

"Money Funds Still Hot in '08" to Grow 20 Percent Says Financial Week. The weekly Crain Communications publication article is subtitled, "Corporate cash should help boost assets 20% this year, after 31% surge in 2007". It says, "Despite reports that some money market mutual funds got entangled in the credit crunch of 2007, it was a very good year for such investments overall." The piece cites recent Crane Data estimates, saying, "Another year of phenomenal growth is in store for 2008, according to money fund guru Peter G. Crane.... Managers of money-market funds could see assets grow by 20% this year, to roughly $3.8 trillion, the founder of money fund research firm Crane Data said last week. And he expects increases of up to 15% in 2009, which would put assets above $4 trillion." The article also quotes Treasury Strategies Mike Gallanis on money funds' "lag effect" and The Reserve's Bruce Bent on "institutional investors that were abandoning direct investments in securities in favor of money-market funds". Crane Data projects that money market mutual fund assets will increase to $3.750 trillion in 2008 and to $4.313 trillion in 2009.

"Money market investments likely are safe despite economic turmoil" in South Florida Sun-Sentinel. The article quotes our Peter Crane, "It's a big problem for advisers but the risks remain minimal for individual investors. It adds, "Crane says 10 major fund advisers have said they'll step in" to support their funds. The piece discusses basics on money funds and options for retail investors.