Money Market News

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The U.S. Securities and Exchange Commission released its latest "Money Market Fund Statistics" summary last week. It shows that total money fund assets were up $46.2 billion in September to $3.034 trillion, with Prime funds increasing for the 9th month in a row. Prime MMFs gained $22.8 billion (after gaining $16.8 billion in August, $9.5 billion in July, and $4.0 billion in June) to $664.5 billion. Government money funds increased by $24.5 billion, while Tax Exempt MMFs fell by $1.0 billion. Gross yields were flat for Prime MMFs, but they increased for Tax Exempt MMFs. 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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Two new publications discuss the possibility of the "repatriation" of offshore corporate profits, its mechanics and the potential impact on the cash and money fund markets. The first, a "Liquid Insight" published by Bank of America Merrill Lynch, is entitled, "Repatriation Could Result in Modest USD Funding Pressure," while the second, written by Capital Advisors Group, is entitled, "The Trump Tax Plan and Its Implications for Cash Portfolios." BofAML's Mark Cabana explains, "As Washington has increasingly focused on tax reform, clients have asked questions about how repatriation might impact the front end of the US rates curve. While there are still many unknown elements of the plan, we believe repatriation could provide modest upward USD funding pressure for foreign banks but likely leave the overall stock of commercial paper outstanding little changed." We excerpt from both of these updates below.

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The Investment Company Institute released its latest monthly "Money Market Fund Holdings" summary (with data as of Sept. 30, 2017) Monday. This monthly update reviews the aggregate daily and weekly liquid assets, regional exposure, and maturities (WAM and WAL) for Prime and Government money market funds. The MMF Holdings release says, "The Investment Company Institute (ICI) reports that, as of the final Friday in September, prime money market funds held 30.0 percent of their portfolios in daily liquid assets and 45.0 percent in weekly liquid assets, while government money market funds held 57.6 percent of their portfolios in daily liquid assets and 75.4 percent in weekly liquid assets." Prime DLA increased from 27.3% last month and Prime WLA increased from 43.1% last month. We review ICI's latest Holdings update, and a new update from Fitch on European MMF reforms, below. (Note: Thanks to those who stopped by to visit us at AFP in San Diego! It was great to see all our money fund friends and was a great time in SD.... See you next year in Chicago!)

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This month, Bond Fund Intelligence recaps a session from our 5th Annual European Money Fund Symposium, which took place late last month in Paris, France. The segment, "Ultra-Short Bond Funds and Separate Accounts," featured Neil Hutchison from J.P. Morgan Asset Management, Rob Sabatino from UBS Asset Management, and Thierry Darmon from Amundi. The three discussed positioning in the fund space just beyond money funds, regulations, and the popularity of bond funds in Europe. (Note: This "profile" is reprinted from the September issue of BFI. Contact us if you'd like to see the full issue, or if you'd like to see our new Bond Fund Portfolio Holdings product.)

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The latest Barron's magazine features the article, "Money-Market Funds Are Back," which discusses money fund yields moving over 1% and compares them with the dismal yields on brokerage sweep accounts. It says, "It's not much, but as the Federal Reserve edges short-term interest rates higher, money funds are finally starting to offer a yield -- sometimes even more than 1%. With a rate hike probable in December and three more expected in 2018, "money market funds will become more attractive than they've been in a decade," says Peter Crane, president of Crane Data. Consider the Vanguard Prime Money Market fund (ticker: VMMXX), yielding 1.13%, or the Fidelity Money Market fund (SPRXX), yielding 0.99%." We quote from some of the Barron's piece, and we also excerpt from a recent AFP Conversations Podcast featuring SSGA's Todd Bean and Will Goldthwait, below.

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As treasury managers and money market fund providers gather in San Diego for this week's AFP conference, online money market trading portal ICD announces the release of a new white paper, as well as an outside investment. Their latest release, entitled, "ICD Publishes Comprehensive Whitepaper on Treasury Investment Options and Investment Risk Management," explains, "Institutional Cash Distributors (ICD), the world's largest independent fund portal, today released their latest ICD Intelligencer. The whitepaper investigates various surveys on institutional short-term portfolio asset allocation, strengths and weaknesses of treasury investment options, yield comparisons on various products, and best practices for trading and investment risk management." We review this, as well as an earlier press release, "ICD Announces Major Growth Investment from Parthenon Capital Partners," below. (See also our June 28 News, "BlackRock to Acquire Money Fund Trading Portal Tech Firm Cachematrix," and visit us at Booth #1101 at AFP 2017!)

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The October issue of Crane Data's Bond Fund Intelligence, which was sent to subscribers Friday, features the story, "Worldwide Bond Funds Show Record Asset Gains in Q2," which reviews asset changes in the largest bond fund markets globally. BFI also includes the article, "EMFS Discusses Ultra-Short Bond Funds in Europe," which quotes panelists from a session on Ultra-Short Bond Funds at our recent European Money Fund Symposium. In addition, we recap the latest Bond Fund News, including the briefs: Yields Higher in September; Returns Down; Invesco on Investing in a Low Yield World; and more. BFI also includes our Crane BFI Indexes, averages and summaries of major bond fund categories. We excerpt from the October issue below. (Contact us if you'd like to see a copy of our latest Bond Fund Intelligence, which is $500 a year, and BFI XLS data spreadsheet, which is $1,000, and watch for our latest Bond Fund Portfolio Holdings data late next week.)

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We wrote earlier this year about the $1.0 trillion brokerage sweep cash sector and discussed how rates were finally inching higher after almost a decade stuck at virtually zero. As money fund yields, on average, approach 1.0%, the much lower-yielding brokerage sweep rates also continue to grind higher. The latest to bump rates up is Wells Fargo Advisors. Wells also announced an expansion of its available FDIC insurance, moving the total coverage limit from $1 million to $1.25 million. We review Wells changes, and the overall brokerage sweep market, below. (See our July 27 News, "WSJ on Corporate Deposits; Brokerages Raise Rates; TBS Deal on Sweeps," our July 6 News, "More Money Fund Symposium: European Reforms and Brokerage Sweeps," and our May 9 News, "Signs of Life in FDIC Brokerage Sweeps; StoneCastle on Sweep Platforms.")

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Crane Data released its October Money Fund Portfolio Holdings Tuesday, and our latest collection of taxable money market securities, with data as of Sept. 30, 2017, shows a strong rebound in Treasuries (after a big drop last month), but most other segments were flat. Money market securities held by Taxable U.S. money funds overall (tracked by Crane Data) increased by $8.5 billion to $2.759 trillion last month, after increasing $58.6 billion in August and $61.5 billion in July. Repo remained the largest portfolio segment, while Treasuries reclaimed the No. 2 spot from Agencies. CDs remained in fourth place, followed by Commercial Paper, 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 if you'd like to see a sample of our latest Money Fund Portfolio Holdings reports.)

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Crane Data's latest Money Fund Market Share rankings show assets in U.S. money fund complexes were up again in September, as overall assets increased by $32.0 billion, or 1.1%. Total assets have increased by $133.6 billion, or 4.8%, over the past 3 months. They've increased by $327.5 billion, or 12.6%, over the past 12 months through September 30, but note that our asset totals have been inflated by the addition of a number of funds. (Crane Data added batches of previously untracked funds in December, February and April. These funds, which total over $200 billion, include a number of internal funds that we hadn't been aware of prior to disclosures of the SEC's Form N-MFP.) The biggest gainers in September were Fidelity, whose MMFs rose by $7.1 billion, or 1.3%, SSGA, whose MMFs rose by $4.6 billion, or 5.7%, and Dreyfus, whose MMFs rose by $4.5 billion, or 2.5%.

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The October issue of our flagship Money Fund Intelligence newsletter was sent out to subscribers Friday morning. It features the articles: "Money Fund Reform One Year Later; Slow Recovery, Changes," which reviews the past year since radical reforms were implemented, "IMMFA's Lowe on European Money Fund Reforms, LVNAV," which excerpts from the IMMFA Secretary General's recent keynote speech, and, "Worldwide MMF Assets: China Surges, Ireland Up," which reviews MMF assets in different countries. We also updated our Money Fund Wisdom database with Sept. 30, 2017, statistics, and sent out our MFI XLS spreadsheet Friday a.m. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our October Money Fund Portfolio Holdings are scheduled to ship Tuesday, October 10, and our October Bond Fund Intelligence is scheduled to go out Friday, October 13.

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Today, we continue with excerpts from our recent European Money Fund Symposium. As we mentioned in yesterday's News, this year's event took place in Paris, France, so we took this opportunity to learn more about the French money market mutual fund marketplace. France is the fourth largest market in the world, and the second largest market in Europe (behind Ireland), with $399.9 billion, or 7.5% of worldwide assets, according to the ICI. Last week's event included the segment "French Money Funds Issues & Outlook," which featured Manuel Arrive of Fitch Ratings; Vanessa Robert of Moody's Investors Service; and, Mikael Pacot of Axa I.M. and also Chairman of the Money Market Fund Working Group at the French industry association, AFG. Each gave a brief update on the status of the variable NAV-dominated, and longer-term French money market fund industry.

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