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MarketWatch writes "​Fed to savers: Cash is trash". The Chuck Jaffe piece says, "The Federal Reserve has telegraphed the future of interest rates and inflation, and here'​s the takeaway: "​Money-​market funds are the Stupid Investment of the Week." Stupid Investment of the Week showcases conditions and characteristics that make a security less than ideal for the average consumer, in the hope that spotlighting trouble in one case makes it easier to avoid trouble elsewhere. The column is not an automatic sell signal, which is particularly true for people who use money funds to park cash that they can plow into an investment strategy on a moment'​s notice. But most people don'​t use money funds that way, and that'​s part of the problem." Jaffe quotes Pete Crane, "There'​s no argument that cash is dumb in this environment. The question is, '​Is what you want to go to instead of cash even dumber?' If what'​s important is having your cash ready and at hand, then no return is the cost you pay for convenience." In other news, see also Bloomberg'​s "​Federated Threatens to Sue SEC Over Planned Money-​Fund Rules," which says, "Federated Investors Inc., the third- largest manager of U.​S. money-​market mutual funds, is planning legal action to block rule changes being contemplated by the Securities and Exchange Commission that the company said could destroy the $​2.​7 trillion cash-​management industry."

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Following the successful conclusion of our 2nd annual Crane'​s Money Fund University last week in Boston, we'​re preparing to focus on Crane Data'​s big annual show, Crane'​s Money Fund Symposium 2012. Our 4th annual Money Fund Symposium will be held June 20-​22, 2012, at The Westin Convention Center in Pittsburgh. Crane Data'​s big event in Philadelphia last year attracted over 380 speakers, sponsors, and attendees, and we expect our Pittsburgh conference to be even bigger and better. Crane'​s Money Fund Symposium offers money market portfolio managers, investors, issuers, and service providers a concentrated and affordable educational experience, as well as an excellent and informal networking venue. Registration for Crane'​s Money Fund Symposium 2012 will (​again) be $​750; exhibit space is $​3,​000; and sponsorship opportunities are $​4.​5K, $​6K, $​7.​5K, and $​10K. Our mission is to deliver a better and less expensive conference alternative to money market fund professionals and investors, and we hope to see you in Pittsburgh this summer! Crane Data is also assisting German conference company IQPC with a new European Money Fund Summit, which is tentatively scheduled for November 14-​16, 2012, in Frankfurt, Germany. Finally, mark your calendars for next year'​s Money Fund University, which is tentatively scheduled for Jan. 23-​24 in New York City.

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As we wrote in the January issue of our flagship Money Fund Intelligence newsletter, online money fund trading portal Treasury Partners announced the launch of a "​transparency" initiative late last week. The firm issued a press release saying, "HighTower'​s Treasury Partners has launched a proprietary tool designed to assist its Money Market Portal clients in rapidly assessing portfolio risk and responding to global credit exposure."

The announcement explains, "This new analytical tool, FundView, enables clients managing their own liquidity to perform rigorous due diligence on the more than 140 domestic and offshore funds available via Treasury Partners online Money Market Portal. With FundView, these clients can search their investment portfolios for exposure to individual securities, issuers, maturity dates, asset classes and CUSIPs by country. FundView also enables investors to run cross-​fund analysis, improve diversification, and adjust portfolio risk, including counter-​party and headline risk."

It adds, "FundView is the latest in a series of innovative, proprietary technology Treasury Partners has launched on its platform over the past three decades."

Jerry Klein comments, "​Due to the increasing volatility in the global markets, identifying and reacting quickly to portfolio exposures is now more critically important than ever. And, judging from the extremely positive comments we'​ve received since the FundView launch, our Portal clients obviously agree."

Treasury Partners is one of a number of money fund "​portals" or supermarkets that are using Crane Data'​s Money Fund Portfolio Holdings series to power their transparency and analytics initiatives. Recently, Comerica Securities' online money market fund trading system, `​Maestro, began providing clients access to money fund news, fund statistics and portfolio holdings information from Crane Data too. Maestro users may now view issuer, country and concentrations of fund holdings, as well as '​shadow' NAVs and performance statistics."

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Barron'​s writes Money Funds are "​Broken Forever". The piece says, "​What'​s the difference between a piggy bank and a money-​market fund? Not much. Neither is insured, and the returns are basically the same: nothing. The average money fund these days pays just two basis points, or 0.​02%. A third of them pay nothing at all. Yet in November and December 2011, investors put more cash into money funds -- $​91.​7 billion -- than they had since December 2008 and January 2009, when $​195 billion poured into the funds. Retail assets account for about a third of the $​2.​7 trillion held in domestic money-​market funds. The reason for that is safety. And that'​s where the trouble begins -- both for the companies that run money-​market funds and the individuals who stash their money there. There are three big reasons for this, starting with the Federal Reserve. The Fed has made clear that it plans to keep overnight rates at their historic lows, which means that the securities money funds buy are also yielding exceedingly low rates. And low rates make it exceptionally hard -- virtually impossible, in fact -- for the funds, and therefore investors, to make any money." It quotes Peter Crane, "We will undoubtedly see more consolidation, but less than people expect. Most of the consolidations or liquidations we'​ve seen are from funds run by [​funds like] AARP and PayPal. They were never really in the business in the first place." Barron'​s adds, "​The notion of paying for safety, however, isn'​t far-​fetched, Crane says. "​Negative interest rates are nothing new. They used to be called checking accounts," he says. "​For centuries, people have paid banks to hold money, not the other way around. There'​s always been a price for safety, and people are always willing to pay.""

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Later this morning, Crane Data'​s January Money Fund Intelligence newsletter will be e-​mailed to subscribers. The new edition contains articles entitled: "Outlook Bleak for 2012, But MMFs See Glimmers," which reviews recent asset and regulatory trends; "Interview w/​Schwab MF Strategist Rick Holland," which quotes industry veteran Rick Holland; "Top MMFs of 2011; Our 3rd Annual MFI Awards," which announces the top-​performing funds for 2011; and "Treasury Partners Enters Portal Transparency War;" which reviews the latest analytical tool offered to portal investors. We have also updated our Money Fund Wisdom database with December 31, 2011, performance information and are in the process of sending out our monthly Money Fund Intelligence XLS and Crane Index products.

The latest MFI says, "The coming year looks bleak for money market mutual funds, but things are not nearly as challenging as they appeared to be just one month ago. Sure, zero yields and the threat of radical regulatory change are even more threatening than they'​ve been the previous three years. But glimmers of hope and relief appeared on both fronts late in the year, and money fund investors and providers have reason for optimism in 2012."

In our regular fund family article, we write, "Money Fund Intelligence'​s latest monthly fund family "​profile" features Charles Schwab Investment Management'​s Rick Holland, Schwab'​s new portfolio strategist for money market funds. We discuss Schwab'​s history with money funds, current portfolio tactics, recent customer concerns, and the outlook for the money market mutual fund business in general. Our Q&​A follows." Look for these product shortly, or watch www.​cranedata.​com for more excerpts in coming weeks.

In other news, Sunday'​s New York Times featured the article, "​Money Funds Could Face More Changes". It discusses Norwegian lender Eksportfinans and potential pending regulatory changes. The piece says, "About 20 American money market mutual funds -- those trusted staples of institutional and individual cash management -- were caught holding notes issued by the bank, Eksportfinans of Norway. The downgrade put the notes well below the quality threshold set by fund regulators."

The Times explains, "​What happened next? The answer depends on whether you'​re talking to mutual fund executives or to their regulators -- and the gap between the answers explains the regulatory fight that the $​2.​6 trillion money fund industry faces in 2012. Ask a mutual fund industry executive and you'​ll hear that the affected funds were quietly bailed out by their sponsors. In fact, fund industry executives say the Eksportfinans episode simply proved that the money fund industry is much safer and resilient because of the reforms put in place after 2008, when the Lehman Brothers bankruptcy set off a panic. But ask a federal regulator about the Eksportfinans event and you'​ll hear that the financial system dodged a bullet that could have started another ruinous stampede. As regulators see it, the episode is a worrisome reminder that, despite the new rules already in place, money funds still pose too big a risk to the nation'​s financial stability."

It adds, "​The commission is expected to propose steps early in the year that would change the kind of money funds available to individual and institutional investors, and comments are already being filed from all sides. But industry executives and analysts contend that there doesn'​t seem to be a strong empirical link between the risks the regulators are trying to address and some of the changes they want to make.... Ms. Schapiro has confirmed that some combination of these ideas is likely to be proposed in the first three months of this year, but the fight over what is eventually adopted will be long and loud. Regulators seem to be betting that money funds are so strategically important to big mutual fund families that even the sweeping changes on the drawing board will not kill the funds."

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