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Bloomberg published a story on Friday entitled, "Money Funds Look at Loophole to Preserve $​1 Share Price." Dave Michaels and Christopher Condon write, "Don'​t mourn the stable $​1-​per-​share money-​market mutual fund just yet. Firms including Federated are suggesting that fund companies can avoid new U.​S. Securities and Exchange Commission requirements to show share-​price variations by limiting holdings to very short-​term corporate debt. Fund sponsors warned after the SEC adopted rules for institutional prime funds that a floating price would put off corporations such as Boeing Inc. that use the products to manage billions in spare cash. Two months later, Joseph Lynagh, head of money markets and short cash funds at Baltimore-​based T. Rowe Price, is saying some fund companies will absolutely roll out products to take advantage of the loophole. T. Rowe Price, he said, isn'​t planning any such products. "You may see stuff engineered that camps out on that border," said Peter Crane, president of money-​market researcher Crane Data LLC. "​There could be a market for it." ... One aspect of the rules received little public notice. It left intact a longstanding provision that mutual funds can value debt that matures within 60 days at original cost, instead of at market prices. As a result, a fund invested exclusively in 60-​day debt probably wouldn'​t see its share price vary from $​1. The exemption "​has always been there but now it takes on significance," said Jay Baris, chairman of law firm Morrison & Foerster LLP'​s investment management practice. "Now, if you are an institutional fund and you want to maintain a steady net-​asset value, you can do it provided all your portfolio securities are under 60 days." While limiting a fund to shorter debt maturities makes it safer, a 60-​day cut-​off wouldn'​t have saved the Reserve Primary Fund. Most of the $​785 million of Lehman debt it held when the bank failed was within 60 days of maturing.... Limiting investments to debt that matures in 60 days or less would require funds to give up the higher return earned by longer-​term investments. With rates low, many funds use a "​barbell" strategy balancing very short-​term investments with longer-​term debt that earns a higher yield, Crane said. The weighted average life of all prime money funds is currently 78 days, according to the Investment Company Institute, the lobbying group for mutual funds. "They have got to get out there and do six-​month trades just to get some yield," Crane said.... Some prime funds already operate with short maturities. Invesco'​s STIC Prime Portfolio, which manages $​2.​8 billion, only invests in securities that mature in 60 days or less. In periods with interest rates higher than today'​s, the fund will "​tend to have a better yield than Treasury and agency funds" though not as high as a fund that holds securities with the maximum maturity of 397 days, said Bill Hensel, an Invesco spokesman <​b:>`​_. Chris Donahue, chief executive officer at Pittsburgh-​based Federated, which manages $​240 billion in money-​fund assets, doesn'​t offer such a fund. He said the product might grow more attractive in coming years. "In a different rate environment, that would work," Donahue said during a July 25 earnings call. "​And its economics would be very comparable to the current fund." ... Corporations that park cash in money funds will eventually divide it into ones maintaining a stable $​1 share price and those whose share prices float but earn a higher yield by investing in riskier corporate debt, Lynagh said. "​This is where the industry will begin to differentiate itself," he said.

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Crane Data published its latest Money Fund Intelligence Family & Global Rankings Wednesday, which ranks the asset totals and market share of managers of money funds in the U.​S. and globally. The September edition, with data as of August 31, shows sizeable asset increases for the majority of money fund complexes in the latest month, and modest gains over the past three months and year. This comes after several months of decreases. (​These "Family" rankings are available to our Money Fund Wisdom subscribers.) JP Morgan, BlackRock, Federated, Fidelity, and Morgan Stanley were the biggest gainers in August, rising by $​7.​3 billion, $​6.​9 billion, $​5.​5 billion, $​5.​3 billion, and $​4.​8 billion respectively, while Morgan Stanley, BofA Funds, Wells Fargo, Franklin, and Fidelity led the increases over the 3 months through August 31, 2014, rising by $​4.​2B, $​3.​8B, $​2.​5B, $​2.​3B, and $​1.​5 billion respectively. Money fund assets overall jumped by $​40.​8 billion in August, increased by $​6.​6 billion over the last three months, and increased by $​15.​2 billion over the past 12 months (​according to our Money Fund Intelligence XLS).

Our latest domestic U.​S. money fund Family Rankings show that Fidelity Investments remained the largest money fund manager with $​410.​0 billion, or 16.​4% of all assets (​up $​5.​3B in August, up $​1.​5B over 3 mos. and down $​16.​9B over 12 months), followed by JPMorgan'​s $​238.​5 billion, or 9.​5% (​up $​7.​3B, down $​269M, and down $​908M for the past 1-​month, 3-​months and 12-​months, respectively). Federated Investors ranks third with $​202.​4 billion, or 8.​1% of assets (​up $​5.​5B, down $​1.​8B, and down $​20.​0B), BlackRock ranks fourth with $​188.​4 billion, or 7.​5% of assets (​up $​6.​9B, down $​1.​4B, and up $​41.​4B), and Vanguard ranks fifth with $​171.​9 billion, or 6.​9% (​up $​592M, down $​125M, and down $​1.​7B).

The sixth through tenth largest U.​S. managers include: Schwab ($​159.​6B, 6.​5%), Dreyfus ($​157.​0B, or 6.​3%), Goldman Sachs ($​133.​3B, or 5.​3%), Wells Fargo ($​111.​9B, or 4.​5%), and Morgan Stanley ($​106.​1B, or 4.​2%). The eleventh through twentieth largest U.​S. money fund managers (​in order) include: SSgA ($​83.​1B, or 3.​3%), Northern ($​76.​2B, or 3.​0%), Invesco ($​59.​5B, or 2.​4%), BofA ($​50.​7B, or 2.​0%), Western Asset ($​40.​7B, or 1.​6%), UBS ($​36.​3B, or 1.​5%), First American ($​36.​1B, or 1.​4%), Deutsche ($​32.​2B, or 1.​3%), Franklin ($​20.​7B, or 0.​8%), and RBC ($​18.​2B, or 0.​7%). Crane Data currently tracks 74 managers, the same number as last month.

Over the past year, BlackRock showed the largest asset increase (​up $​41.​4B, or 28.​3%; note that most of this though is due to the addition of securities lending shares to our collections), followed by Goldman Sachs (​up $​12.​8B, or 10.​0%), and Morgan Stanley (​up $​11.​4B, or 12.​1%). Other gainers since August 31, 2013, include: BofA (​up $​9.​4B, or 22.​2%), SSgA (​up $​6.​6B, or 8.​6%), American Funds (​up $​4.​3B, or 30.​9%), and SEI (​up $​1.​7B, or 14.​8%). The biggest declines over 12 months include: Federated (​down $​20.​0B, or -​9.​1%), Fidelity (​down $​16.​9B, or -​4.​0%), UBS (​down $​11.​1B, or -​22.​8%), and Deutsche (​down $​7.​8B, or -​18.​6%). (​Note that money fund assets are very volatile month to month.)

When "​offshore" money fund assets -- those domiciled in places like Dublin, Luxembourg, and the Cayman Islands -- are included, the top 10 managers match the U.​S. list, except for BlackRock moving up to No. 3, Goldman moving up to No. 4, and Western Asset appearing on the list at No. 9. (​displacing Wells Fargo from the Top 10). Looking at these largest Global Money Fund Manager Rankings, the combined market share assets of our MFI XLS (​domestic U.​S.) and our MFI International ("​offshore), we show these largest families: Fidelity ($​416.​4 billion), JPMorgan ($​361.​4 billion), BlackRock ($​311.​2 billion), Goldman Sachs ($​213.​8 billion), and Federated ($​210.​9 billion). Dreyfus ($​180.​9B), Vanguard ($​171.​9B), Schwab ($​160.​8B), Western ($​137.​6B), and Morgan Stanley ($​125.​3B) round out the top 10. These totals include offshore US dollar funds, as well as Euro and Sterling funds converted into US dollar totals.

In other news, our August 2014 Money Fund Intelligence and MFI XLS show that both net and gross yields remained at record lows for the month ended August 31, 2014. Our Crane Money Fund Average, which includes all taxable funds covered by Crane Data (​currently 848), remained at a record low of 0.​01% for both the 7-​Day and 30-​Day Yield (​annualized, net) averages. (​The Gross 7-​Day Yield was also unchanged at 0.​13%.) Our Crane 100 Money Fund Index shows an average yield (​7-​Day and 30-​Day) of 0.​02%, also a record low, down from 0.​03% a year ago. (​The Gross 7- and 30-​Day Yields for the Crane 100 remained unchanged at 0.​16%.) For the 12 month return through 8/​31/​14, our Crane MF Average returned a record low of 0.​01% and our Crane 100 returned 0.​02%.

Our Prime Institutional MF Index yielded 0.​02% (​7-​day), the Crane Govt Inst Index yielded 0.​01%, and the Crane Treasury Inst, Treasury Retail, Govt Retail and Prime Retail Indexes all yielded 0.​01%. The Crane Tax Exempt MF Index also yielded 0.​01%. (The Gross Yields for these indexes were: Prime 0.​18%, Govt 0.​9%, Treasury 0.​06%, and Tax Exempt 0.​12% in August.) The Crane 100 MF Index returned on average 0.​00% for 1-​month, 0.​00% for 3-​month, 0.​01% for YTD, 0.​02% for 1-​year, 0.​04% for 3-​years (​annualized), 0.​05% for 5-​year, and 1.​61% for 10-​years.

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