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The Investment Company Institute's latest weekly "Money Market Fund Assets" report shows assets rising for the fourth week in a row and the fifth week out of the past six. Over the past 4 weeks, money fund assets have increased by $66.8 billion, and over the past 6 weeks assets are up $103.4 billion. Money fund assets are up by $324 billion, or 7.5%, YTD in 2021. (This follows a gain of $665.0 billion, or 18.3%, in 2020.) Inst MMFs are up $418 billion (15.1%), while Retail MMFs are down $94 billion (-6.1%). Over the past 52 weeks, money fund assets have increased by $301 billion, or 7.0%, with Retail MMFs falling by $98 billion (-6.4%) and Inst MMFs rising by $399 billion (14.3%).

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After the chaos and turmoil of the coronavirus lockdown in 2020, 2021 was a relatively stable and uneventful year. Yields remained pinned to zero, assets held fast at around $5 trillion, and money funds engaged in seemingly endless discussions around further money fund reforms in the U.S. and Europe. Other major themes of the year included: gradual consolidation, ESG and Social MMFs, continued interest in ultra-short bond funds and the expansion of money funds in worldwide markets. Below, we've selected and excerpted from a number of our news stories of 2021 to remind readers and to highlight the major trends of the past year.

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Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics Tuesday, which track a shifting subset of our monthly Portfolio Holdings collection. The most recent cut (with data as of Nov. 26) includes Holdings information from 64 money funds (down from 78 a week ago), which represent $2.201 trillion (down from $2.458 trillion) of the $4.925 trillion (44.7%) in total money fund assets tracked by Crane Data. (Our Weekly MFPH are e-mail only and aren't available on the website. See our Nov. 10 News, "Nov. MF Portfolio Holdings: Treasuries Recover But Repo Still No. 1," for more.)

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The Investment Company Institute released its latest monthly "Trends in Mutual Fund Investing" and "Month-End Portfolio Holdings of Taxable Money Funds" for October 2021 yesterday. ICI's monthly "Trends" report shows that money fund assets increased $11.1 billion in October to $4.554 trillion. This follows increases of $6.4 billion in September and $25.5 in August, decreases of $24.4 billion in July and $73.4 billion in June, and increases of $78.6 billion in May and $31.9 billion in April. MMFs increased by $129.4 billion in March and $39.4 billion in February, but decreased $5.2 billion in January, $10.0 billion in December and $12.0 billion in November. For the 12 months through Oct. 31, 2021, money fund assets have increased by $197.1 billion, or 4.5%. (Month-to-date in November through 11/26, MMF assets have increased by $67.6 billion according to Crane's MFI Daily.)

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Earlier this month, Fidelity Investments hosted a webinar entitled, "Fidelity Conservative Income Bond Fund and the Markets," which featured Fidelity's Michael Morin, head of Fidelity Institutional Liquidity Management and CIB Portfolio Manager Julian Potenza. They discussed the latest strategies for Fidelity's offering just beyond money market funds and the overall ultra-short bond fund market. Morin explains, "We designed the fund during the first zero interest rate policy period, and we spent a lot of time and energy with our quantitative team asking ourselves, 'How would this fund perform through market cycles?' We knew we were going to start off at a zero-interest rate environment, which is where we are today, and [then] would be in a rising rate environment."

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J.P. Morgan Securities released its "Short-Term Fixed Income 2022 Outlook" earlier this week, and the update, entitled, "The same, only different," tells us, "In 2022, the prospect of Fed rate hikes should meaningfully boost yields away from the zero bound, allowing money funds to recapture some fee waivers. The Fed's balance sheet and US fiscal policy will also play a much smaller role and fade in the background. Even so, the amount of excess liquidity in the money markets, and the broader financial markets, will remain substantial. At the same time, overall money market supply will remain anemic as Treasury is unlikely going to revitalize its net T-bill issuance. Much like this year, the supply-demand mismatch will continue to pose challenges for participants in money markets. Usage at the Fed RRP is unlikely going to see much relief any time soon."

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This month, BFI interviews Steve Kane, co-CIO and generalist portfolio manager at TCW Investment Management. We discuss the new ESG Securitized Bond Fund, TCW and MetWest's broader bond fund lineup, and the manager's latest observations. Our Q&A follows. (Note: The following is reprinted from the November issue of our Bond Fund Intelligence, which was published on Nov. 15. Contact us at info@cranedata.com to request the full issue or to subscribe. Also, mark your calendars for our next Bond Fund Symposium, which will take place March 28-29, 2022, in Newport Beach, Calif.)

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The Federal Reserve Bank of New York's "Liberty Street Economics" blog features an update entitled, "Preemptive Runs and the Offshore U.S. Dollar Money Market Funds Industry." Authors Marco Cipriani and Gabriele La Spada tell us, "In March 2020, U.S. dollar-denominated prime money market funds (MMFs) suffered heavy outflows as concerns about the COVID-19 pandemic increased in the United States and Europe. Investors redeemed their shares en masse not only from funds domiciled in the United States ('domestic') but also from offshore funds. In this post, we use differences in the regulatory regimes of domestic and offshore funds to identify the impact of the redemption gates and liquidity fees recently introduced as part of MMF industry reforms in both the United States and Europe."

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Crane Data is making plans for its fifth annual ultra-short bond fund event, Bond Fund Symposium, which will take place March 28-29, 2022 at the Hyatt Regency Newport Beach (Calif.). Crane's Bond Fund Symposium offers a concentrated and affordable educational experience, as well as an excellent networking venue, for bond fund and fixed-income professionals. After cancelling our 2020 Boston event and holding a virtual BFS last year, we look forward to seeing the "cash-plus" community in person again in 2022! Registrations are now being accepted ($750) and sponsorship opportunities are available. We review the preliminary draft agenda and details below, and we also give an update on our upcoming "basic training" show, Money Fund University, which will be held in Boston, January 20-21, 2022.

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The Securities and Exchange Commission's latest monthly "Money Market Fund Statistics" summary shows that total money fund assets rose by $7.9 billion in October to $5.038 trillion. (Month-to-date in November, assets are up $22.4 billion through 11/17, according to our MFI Daily.) The SEC shows that Prime MMFs declined by $12.0 billion in October to $857.8 billion, Govt & Treasury funds increased $21.0 billion to $4.084 trillion and Tax Exempt funds decreased $1.1 billion to $96.5 billion. Yields were flat or slightly higher in October. The SEC's Division of Investment Management summarizes monthly Form N-MFP data and includes asset totals and averages for yields, liquidity levels, WAMs, WALs, holdings, and other money market fund trends. We review their latest numbers below.

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The U.S. Treasury's Office of Financial Research published its "OFR 2021 Annual Report to Congress" Wednesday, which analyzes threats to the financial stability of the U.S. and contains several sections relating to money market funds. Under "Assessing Risks Inside the Markets," the OFR writes, "With respect to the financial markets themselves, vulnerabilities pose potential liquidity risks. While liquidity risks were contained this year at the printing of this report, the OFR continues to study the uncertainty surrounding the impact of future investor runs in short-term funding markets. Sudden pressure on money market funds and other alternative cash vehicles to raise large amounts of cash strained liquidity in these markets in 2020 and prompted intervention by the Federal Reserve. As regulators explore reform options, there is a continuing need to monitor the interconnectedness of these markets and their participants."

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Money market fund managers continue to launch "D&I" share classes, the latest trend in the ESG money fund space, according to a recent trio of announcements. The most recent moves comes from SSGA, which announced new "Opportunity" share classes, and BlackRock, which went live with its new Bancroft and Cabrera classes. The first press release, entitled, "State Street Global Advisors Introduces I&D Focused Share Class within Cash Management Suite," tells us, "State Street Global Advisors, the asset management business of State Street Corporation (STT), announced the launch of a new money market fund share class, the Opportunity Class, which will benefit philanthropic organizations whose values align with State Street's commitment to racial equity and social justice. With the launch of the new Opportunity Class shares within State Street Global Advisors' existing money market fund suite, the firm is answering the call from clients who are increasingly interested in supporting I&D initiatives with their strategic cash investments."

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