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The November issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Friday morning, features the articles: "MF Consolidation Accelerates; Govt Fund Conversions Begin," which looks at Prime to Government fund conversions, consolidation, and Schwab and Fidelity'​s declaration of "​retail" funds; "Prior Speaks on Changes; New Reality at Fidelity," where we summarize recent comments from Fidelity'​s Nancy Prior and changes to the firm'​s funds; and "BlackRock Buys BofA MMFs in Biggest Deal of Decade," which recaps the news that BlackRock acquired BofA'​s $​87 billion money fund business. We have also updated our Money Fund Wisdom database query system with Oct. 31, 2015, performance statistics, and sent out our MFI XLS spreadsheet earlier. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our November Money Fund Portfolio Holdings are scheduled to ship Tuesday, November 10, and our November Bond Fund Intelligence is scheduled to go out Monday, November 16.

MFI'​s lead "Consolidation" article says, "Acquisitions, liquidations, and conversions headlined a busy month in the money market fund space. With now less than a year until MMF reforms take effect, some Prime funds have already begun converting into Government funds. The first batch of these took place this week, and more are slated to convert in December and throughout 2016. To date, over $​230 billion in Prime money funds have converted or declared their intent to convert into Government funds, with over $​40 billion converting this week and next. On the acquisition front, BlackRock shook the money fund world with its purchase of BofA'​s cash management business, and a steady stream of minor fund liquidations, conversions and announcements continued."

The piece continues, "In October, two small Prime money market funds announced conversions to Government, and two more firms announced their exits from the money market space. Nationwide will convert its $​1.​0 billion Nationwide Money Market Fund and its $​1.​8 billion Nationwide VIT MMF to Government funds on 10/​14/​16. Also, Pioneer is converting its $​280 million Pioneer Cash Reserves from Prime to Government on 11/​13/​15. Further, William Blair filed to liquidate its $​1.​4 billion Ready Reserves Fund on Nov. 18, and Delaware filed to convert its $​169 million Delaware Cash Reserves to Delaware Ultrashort [​Bond] Fund in Jan. 2016."

Our latest MFI "​profile," reads, "Fidelity President of Fixed Income Nancy Prior spoke recently about the state of the money market fund industry in a speech at the AFP Annual Conference entitled, "Money Market Funds: The New Reality." She discussed Fidelity'​s second phase of changes to its money market fund lineup, which were announced October 14, and also talked about the size of the Government securities sector, conservative ultra-​short bond funds and the fact that there is no "​silver bullet" for corporate cash investors."

It adds, "The big news in the recent announcement, which followed the late January shocker that Fidelity Cash Reserves will "​go government," is that Fidelity will convert both its $​65.​5 billion Fidelity Institutional Money Market Portfolio and its $​2.​2 billion FIMM Tax Exempt Portfolio into Retail funds. Fidelity will retain just one Prime Institutional fund, the $​47.​8 billion FIMM Prime Money Market Portfolio."

We quote Prior, "In the end, MMFs survived a very long and difficult regulatory process, and will continue to exist in a form we all recognize. That survival was not a given through a series of ups and downs of a regulatory process that lasted more than five years. One result of the regulation, however, is that the current value proposition of prime MMFs -- stability, liquidity, and a competitive market yield -- has been diminished. In fact, investors will no longer be able to maximize all three with any single MMF product. There will be tradeoffs between the different types of funds, and investors will have to choose which features are most important to them. For many of you here, prime MMFs have traditionally been a great cash investment option. They met your needs by providing all three elements -- stability, liquidity, and a competitive yield."

The "BlackRock Buys BofA" article says, "In one of the largest acquisitions ever in the money market fund space, BlackRock announced that it was taking over management of BofA Global Capital'​s cash business. BofA Funds is the 14th largest manager of money market fund assets that we track with $​48.​3 billion -- and according to BlackRock'​s press release announcing the move, has $​87 billion in total cash assets under management. Prior to this transaction, the largest money fund mergers in the past included both BlackRock'​s merger with Merrill Lynch Investment Management in 2006 and BlackRock'​s merger with Barclays Global Investors in 2009. (​See our Dec. 2, 2009 News, "Merged BlackRock, BGI Form World'​s 3rd Largest Money Fund Manager.") When the BofA transaction is complete, BlackRock will become the second largest manager of money fund assets with about $​370 billion in AUM, jumping ahead of now No. 2-​ranked JP Morgan."

We also look at how money fund managers are reducing fee waivers in the sidebar, "Fee Waivers Being Reduced." It says, "As yields creep up and a possible interest rate hike looms, money fund managers are beginning to reduce the amount of fee waivers. In Q3 earnings calls and releases, Federated, Schwab, Northern Trust and T. Rowe Price all reported lower fee waivers and higher MMF revenue. And, we take our quarterly look at the largest money fund markets in the world in our story, "Global MMF Data Shows: Big Jumps in Ireland and China." It says, "The Investment Company Institute'​s latest "​Worldwide Mutual Fund Assets and Flows" show that global money market mutual fund assets increased in the 2nd Quarter of 2015, rising $​31 billion, or 0.​7%, to $​4.​580 trillion. Ireland solidified its spot as the second largest MMF market with a big jump, while China and Luxembourg also gained assets in Q2. Globally, MMF assets increased by $​107.​5 billion, or 2.​2%, over the past year (​through 6/​30/​15)."

Our November MFI XLS, with Oct. 31, 2015, data, shows total assets increasing $​56.​5 billion in October after declining by $​9.​4 billion in September, rising $​7.​2 billion in August, and jumping $​52.​4 billion in July. YTD, MMF assets are down by just $​8.​2 billion, or 0.​3% (​through 10/​31/​15). Our broad Crane Money Fund Average 7-​Day Yield and 30-​Day Yield remained at 0.​02%, while our Crane 100 Money Fund Index (​the 100 largest taxable funds) went up a basis point to 0.​05% (​7-​day).

On a Gross Yield Basis (​before expenses were taken out), funds averaged 0.​18% (​Crane MFA, up one bps) and 0.​21% (​Crane 100, unchanged). Charged Expenses averaged 0.​15% (​unchanged) and 0.​17% (​up one bps) for the two main taxable averages. The average WAMs (​weighted average maturities) for the Crane MFA was 36 days (​up two days from last month) and for the Crane 100 was 36 days (​unchanged). (​See our Crane Index or craneindexes.​xlsx history file for more on our averages.)

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Below, we link and excerpt from more coverage of BlackRock'​s takeover of BofA Funds money fund assets. (​See yesterday'​s News, "BlackRock Taking Over BofA MMFs in One of Biggest Acquisitions Ever.") Reuters writes in "BlackRock to buy Bank of America'​s $​87 billion money-​market fund business," "Bank of America Corp, the No. 2 U.​S. bank, has agreed to sell its $​87 billion money-​market fund business to BlackRock Inc in one of the cash-​management industry'​s largest deals ever. The transaction comes as big banks have faced pressure to simplify their businesses since the global financial crisis and marks the largest in a series of deals reshuffling the cash-​management industry before costly regulatory reforms take effect in 2016. Terms of the transaction were not disclosed. The agreement is expected to lift BlackRock'​s global cash-​management business to $​372 billion from about $​285 billion, according to the New York-​based company.... Mergers and acquisitions trimmed the money funds industry from 75 providers in the United States last summer to just 67 this year, according to Crane Data, an industry research service. Once the deal closes next year, BlackRock will leapfrog JPMorgan Chase & Co to become the second largest money fund family, behind Fidelity Investments, according to Peter Crane of the research service.... "Everybody has been talking about consolidation for years, but it really didn'​t happen until today," said Crane. "So many large players have resisted getting out of the business until now, but it'​s just a matter of the costs and uncertainty of money fund reforms proving to be overwhelming to some players." Crane said Bank of America'​s decision came after an evaluation of which businesses were essential. "At the same time asset managers are trying to get bigger, banks are trying to get smaller," he said. "This reflects regulatory pressure on both sides."" See too WSJ'​s "​Bank of America to Sell $​87 Billion Money-​Market Fund Business to BlackRock" and Bloomberg'​s "​BofA Sells $​87 Billion Money-​Market Funds Unit to BlackRock".

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