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Morningstar published the article, "Where's the Best Place to Park Your Cash?" Author Christine Benz explains, "Not so long ago, one cash investment seemed virtually indistinguishable from the next. With the Fed funds rate barely positive as recently as late 2016, most investors considered their low-yielding CDs and money market funds dead money -- a necessary parking place for near-term expenditures, or a place to hunker down if they were feeling fearful. Nothing more." We review their latest overview of cash options, and we also cover the latest on money market fund asset flows, below.

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This month, Money Fund Intelligence interviews Jason Granet, Deputy Head of Liquidity Solutions for Goldman Sachs Asset Management, and Kathleen Hughes, Global Head of GSAM's Liquidity Solutions Client Business. Goldman Sachs Asset Management is one of the top 5 money fund managers globally, and we discuss the firm's history in cash, their latest priorities and challenges, and developments in Europe and in the world just beyond money markets. Our interview follows. (Note: This article is reprinted from the June issue of our flagship Money Fund Intelligence newsletter; contact us at inquiry@cranedata.com to request the full issue.)

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Money fund assets plunged in the week ended June 18, falling $67.6 billion to $2.878 trillion, according to Crane Data's Money Fund Intelligence Daily, presumably driven by massive quarterly tax payments inflated by now taxable offshore holdings. Yields moved higher in the latest week too, as our Crane 100 Money Fund Index rose by 6 basis points to 1.68% (as of Monday) and our broader all taxable Crane Money Fund Average rose by 6 bps to 1.49%. As was widely reported, money fund assets jumped the previous week. But this appears to be merely a cash buildup in preparation for Friday's June 15 tax payments. Yields are beginning to reflect the Federal Reserve's 7th interest rate hike from a week ago, but they still have a ways to go to reflect the full quarter-point increase. We review our most recent asset and yield totals below, and we also review our latest Weekly Money Fund Portfolio Holdings data below.

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The website Lexology posted an update entitled, "UK Money Market Funds Regulations 2018 Published," which was written by law firm Katten Muchin Rosenman LLP and which discusses how the U.K. will implement European Money Fund Reforms. They write, "On June 11, the Money Market Funds Regulations 2018 (MMFR) were published and set to go into effect on July 21. The MMFR relates to the EU Regulation on Money Market Funds (EU MMF Regulation), and ensures the UK Financial Conduct Authority (FCA) can authorize money market funds (MMFs) and enforce the MMFR from the day that the EU MMF Regulation goes into effect."(See also our May 25 News, "Euromoney Cites Cross, Goldthwait on European Reforms.")

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Wells Fargo Money Market Funds' latest "Portfolio Manager Commentary" discusses the Federal Reserve's recent discussions on rates and monetary policy. They write, "Money market investors, while obviously caring deeply about the Fed's potential interest rate path, also have occasionally found gems in the minutes about monetary policy implementation, details that might matter greatly to the money markets but are afterthoughts to longer-term investors. For example, the development and evolution of the Fed's reverse repurchase program (RRP) over the past five years was revealed bit by bit over time in the minutes."

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Crane Data's MFI International shows total assets in "offshore" money market mutual funds, U.S.-style funds domiciled in Ireland or Luxemburg and denominated in USD, Euro and GBP (sterling), falling sharply in the latest week (but just slightly in June overall) after rising in May and April. Offshore US Dollar MMFs have been rising and falling in waves since December 2017. They rose sharply in January, fell in February and March, rose in April and May and fell in June. Last year, assets of all three currencies combined increased by $100 billion, or 13.7%, to $831 billion. Year-to-date in 2018 (through 6/13/18), MFII assets are up $1 billion to $832 billion, but USD assets are down noticeably. U.S. Dollar (USD) funds (158) account for about half ($408.9 billion, or 49.2%) of the total, while Euro (EUR) money funds (98) total E90.6 billion and Pound Sterling (GBP) funds (110) total L218.7 billion. USD funds are down $16 billion, YTD, but were up $27B in 2017. Many are watching these totals closely for signs that US dollar are being repatriated, but the data only show minor outflows so far.

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The June issue of our Bond Fund Intelligence, which will be sent out to subscribers Thursday morning, features the lead story, "Vanguard Launches Total World Bond ETF Amidst Pain," which reviews recent troubles with Global bond funds and the launch of a new Vanguard ETF, and the profile, "JPMAM's McNerny Talks on Ultra-Short Income ETF," which reviews a recent J.P. Morgan Asset Management Webcast. Also, we recap the latest Bond Fund News, including how most bond fund yields inched higher in the latest month. BFI also includes our Crane BFI Indexes, which show returns higher in May for all categories except Global and High Yield funds. We excerpt from the latest BFI below. (Contact us if you'd like to see a copy of Bond Fund Intelligence and our BFI XLS spreadsheet "complement," and watch for our next Bond Fund Portfolio Holdings data set to be sent out next Thursday (6/21).

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Capital Advisors Group published a research brief entitled, "Deposit Betas Rising but Still Falling Short," which discusses how bank deposit rates have lagged money fund and market rates since the Fed began hiking rates 2 1/2 years ago. Author Lance Pan writes, "After almost a decade of near-zero investment returns, liquidity investors are beginning to reap the benefits of higher rates. This is true for investments in capital markets, where rates have risen along with the Federal Reserve's actions. On the other hand, depositors may need to wait a bit longer -- a lot longer if banks have their way." (Note: The Federal Reserve is expected to raise short-term interest rates for the 7th time since December 2015 today. Watch for details tomorrow and watch for money fund rates to rise again in the coming weeks.)

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Crane Data released its June Money Fund Portfolio Holdings Monday, and our most recent collection of taxable money market securities, with data as of May 31, 2018, shows a drop in Treasuries and a jump in Repo for the second straight month. Money market securities held by Taxable U.S. money funds overall (tracked by Crane Data) increased by $16.7 billion to $2.925 trillion last month, after increasing $46.4 billion in April, decreasing $105.0 billion in March, and increasing $70.6 billion in February. Repo continued to be the largest portfolio segment, followed by Treasury securities then Agencies. 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 the latest files, or contact us to see our latest Portfolio Holdings reports.)

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The Federal Reserve released its latest quarterly "Z.1 Financial Accounts of the United States" statistical survey (formerly the "Flow of Funds") late last week. Among the 4 tables it includes on money market mutual funds, the First Quarter, 2018 edition shows that Total MMF Assets declined by $54 billion to $2.793 trillion in Q1. The Household Sector remained the largest investor segment with $998 billion; though assets here dipped back below $1 trillion in Q1 (after breaking over this level in Q3'17). The next largest segment, Funding Corporations (this is mainly Securities Lending reinvestment cash we believe) jumped again in the first quarter, while State and Local Govt Retirement and Nonfinancial Corporate Businesses holdings declined slightly. We review the latest Z.1 stats below, and we also remind you about and recap details about our upcoming big show, Crane's Money Fund Symposium in Pittsburgh, June 25-27. (Tickets are still available -- we hope to see you there!)

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Crane Data's latest Money Fund Market Share rankings show assets were up sharply for a number of U.S. money fund complexes in May. Money fund assets overall rose by $63.6 billion, or 2.1% last month to $3.067 trillion, and assets have risen by $40.5 billion, or 1.3%, over the past 3 months. They have increased by $251.6 billion, or 8.9%, over the past 12 months through May 31, 2018. Increases among the 25 largest managers last month were seen by JP Morgan, Goldman Sachs, Fidelity, Wells Fargo, and Vanguard, who increased assets by $25.6 billion, $11.4B, $8.4B, $8.0B, and $4.3B, respectively. We review these market share totals below, and we also look at money fund yields the past month, which continued higher in May.

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The June issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Thursday morning, features the articles: "MMF Assets Turn Positive in '18, Despite Brokerage Sweeps," which discusses how the assets of money market mutual funds are beginning to see inflows; "Goldman Sachs AM's Granet & Hughes Talk Liquidity," which interviews Jason Granet and Kathleen Hughes of Goldman Sachs Asset Management; and, "ICI 2018 Fact Book Sparse on Money Fund Commentary," which excerpts from the annual compilation of statistics and commentary on the mutual fund industry. We've also updated our Money Fund Wisdom database with May 31, 2018, statistics, and sent out our MFI XLS spreadsheet this a.m. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our June Money Fund Portfolio Holdings are scheduled to ship on Monday, June 11, and our June Bond Fund Intelligence is scheduled to go out Thursday, June 14.

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