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Last week, Euromoney hosted a webinar entitled, "Managing the 24-hour money market," which featured Calastone's Edward Lopez and SSGA's Will Goldthwait. The session, sponsored by Calastone, covered, "The importance of robust, accountable and informed technology in underpinning the money market," and touched on negative yields, European money fund issues and managing cash in the time of Covid. Lopez comments, "We've seen a lot more need for automation. From the Calastone perspective, our core business is automating the mutual fund flow. But what we've seen recently is more of a focus around the specific vertical for institutional money funds. So, while there had been a little bit of automation in that part of the mutual fund space, what we've seen is there has been a drive to automate the trading, reporting and the settlement side of things.... What's come about with Covid and working from home is now you've got Treasury teams and maybe many of you on the call ... working remotely. And while you might have had a manual process that worked well when you were all sitting on the same floor, or in the same office, now that everyone's working from home ... you could start to see [some] risk.... So we've seen ... a lot more requests to automate some of those processes where we've seen a lot of manual activity in the past."

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Federated Hermes, the 6th largest manager of money market funds, reported Q2'20 earnings late last week and held an earnings call on Friday. (See the earnings call transcript here from Seeking Alpha.) The company's earnings release explains, "Money market assets were a record $457.6 billion at June 30, 2020, up $124.5 billion or 37% from $333.1 billion at June 30, 2019 and up $6.3 billion or 1% from $451.3 billion at March 31, 2020. Money market fund assets were $344.8 billion at June 30, 2020, up $113.5 billion or 49% from $231.3 billion at June 30, 2019 and up $8.7 billion or 3% from $336.1 billion at March 31, 2020."

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Money market fund assets decreased in the latest week, their 9th decline in 10 weeks and second month in a row of declines. ICI's latest weekly "Money Market Fund Assets" report says, "Total money market fund assets decreased by $18.26 billion to $4.57 trillion for the week ended Wednesday, July 29, the Investment Company Institute reported.... Among taxable money market funds, government funds decreased by $12.42 billion and prime funds decreased by $5.44 billion. Tax-exempt money market funds decreased by $400 million." ICI's stats show Institutional MMFs decreasing $14.9 billion and Retail MMFs decreasing $3.4 billion. Total Government MMF assets, including Treasury funds, were $3.691 trillion (80.8% of all money funds), while Total Prime MMFs were $757.3 billion (16.6%). Tax Exempt MMFs totaled $122.2 billion, 2.7%. We review their latest weekly stats, as well as their most recent monthly "Trends" data update, below.

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A week ago, we hosted "Crane's Money Fund Webinar: Portfolio Manager Perspectives," which featured Federated Hermes' Sue Hill, Northern Trust Asset Management's Peter Yi and UBS Asset Management's David Walczak. The three senior PMs discuss fee waivers, negative yields and the outlook for future regulatory changes, among other things. We quoted from Part I of the webinar on Monday, and we excerpt from the second half of the webinar below. (Click here to access the recording, click here to see our Webinar page and watch for details and register for our next event, "Crane's Money Fund Webinar: Mini Fund Symposium, which will take place August 26, 2020, 1-4pm EDT.)

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The European Central Bank published "Financial Stability Review May 2020," which comments, "Money market funds (MMFs) came under severe liquidation pressure as financial and non-financial investors redeemed large amounts of shares. This is turn led to a freeze in demand and issuance of commercial paper, an important source of short-term funding for financial and non-financial corporates.... High demand for precautionary cash buffers and a diminishing supply of term interbank loans have also increased funding costs in unsecured money markets, predominantly at longer maturities. Central banks across the globe intervened swiftly to ensure liquidity in financial markets." We excerpt from this publication and also quote a recent update from Moody's on European MMFs, below.

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S&P Global Ratings recently published an update an entitled, "U.S. Domestic 'AAAm' Money Market Fund Quarterly Trends (Second-Quarter 2020)." They explain, "S&P Global Ratings' 'AAAm' money market fund quarterly trends highlight statistics of U.S. managed funds that seek to maintain principal preservation. These statistics provide a benchmarking tool of the ‘A-1+’ credit quality, portfolio composition, maturity distribution, net asset movements, and yields of 'AAAm' principal stability rated funds. The statistics demonstrate the investment practices of funds conforming to the principal stability fund rating criteria."

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Last week, we hosted "Crane's Money Fund Webinar: Portfolio Manager Perspectives, which featured Federated Hermes' Sue Hill, Northern Trust Asset Management's Peter Yi and UBS Asset Management's David Walczak. The three senior PMs discussed money market supply, asset flows, yields and the outlook for Prime money market funds, among other things. We excerpt from the first half of the webinar below. (Watch for more quotes next week, click here to access the recording and click here for our Webinar page.)

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This month, MFI interviews T. Rowe Price Group Vice President Joseph Lynagh, who runs the firm's cash management and ultra-short bond strategies and will be retiring early next year after three decades at the Baltimore-based fund manager. We ask him about T. Rowe's history in cash, fee waivers and a number of other topics. He says we'll have to "buckle down" to make it through this latest zero yield environment. Our Q&A follows. (Note: The following is reprinted from the July issue of Money Fund Intelligence, which was published on July 8. Contact us at info@cranedata.com to request the full issue or to subscribe.)

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Last week, BNY Mellon and a number of other financial firms released second quarter earnings, which shed some light on the growing pain of fee waivers versus the benefits of higher money fund balances on asset managers. BNY's release explains, "Fee revenue increased 2% primarily reflecting higher fees in Pershing and Asset Servicing, partially offset by money market fee waivers, lower investment management fees and the unfavorable impact of a stronger U.S. dollar." Crane Data estimates that fee waivers are costing funds about 7 basis points currently; the average charged expense ratio for our Crane 100 MF Index has declined from 0.27% to 0.20% since the start of the year. (Note: Thanks to those who attended "Crane's Money Fund Webinar: Portfolio Manager Perspectives" yesterday, and thanks to Federated Hermes' Sue Hill, Northern Trust Asset Management's Peter Yi and UBS Asset Management's David Walczak for participating. Nice job! Click here to access the recording and click here to see our Webinar page.)

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While we still hope to hold our flagship Money Fund Symposium in Minneapolis later this year (Oct. 26-28, 2020), we're officially cancelling our European Money Fund Symposium, which was scheduled for Nov. 19-20, 2020 in Paris, France. (We'll likely hold a slimmed-down, virtual European MFS on Nov. 19.) Crane Data continues to monitor travel restrictions and will give full refunds or credits for any events that are cancelled or that registered attendees can't make it to, and we continue to ramp up our virtual event capabilities. We review our latest events below. (Join us at 1pm Wednesday (7/22) for our next online event, "Crane's Money Fund Webinar: Portfolio Manager Perspectives," which will feature Peter Crane hosting a panel including Federated Hermes' Sue Hill, Northern Trust Asset Management's Peter Yi and UBS Asset Management's David Walczak.)

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The Securities and Exchange Commission's latest monthly "Money Market Fund Statistics" summary shows that total money fund assets dropped by $127.3 billion in June to $5.104 trillion, only the 2nd decrease in the past 24 months. (Month-to-date in July through 7/17, assets have decreased by $85.2 billion according to our MFI Daily.) The SEC shows that Prime MMFs increased $21.3 billion in June to $1.162 trillion, while Govt & Treasury funds plummeted $145.1 billion to $3.806 trillion. Tax Exempt funds decreased by $3.5 billion to $136.6 billion. Yields were down across the board in June, except for a slight increase in Tax Exempt Institutional yields. 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. (Note: We'll be hosting "Crane's Money Fund Webinar: Portfolio Manager Perspectives" on Wednesday, July 22 at 1:00pm EDT, which will feature Federated Hermes' Sue Hill, Northern Trust Asset Management's Peter Yi and UBS Asset Management's David Walczak. Click here to register.)

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TD Securities' Priya Misra recently hosted a "Virtual Roundtable," entitled, "Managing Money Markets," which featured Federated Hermes' Deborah Cunningham, Fidelity's Richard Bohan, TD Securities' Mathieu Lachance and Crane Data’s Peter Crane. Misra kicked things off by saying, "It has been an unprecedented time for the market, and especially money markets. Government money market funds have seen significant inflows of over a trillion since Covid. Prime funds saw some outflows, but they have started to come back pretty significantly. Bill issuance has been very high with more than $2 trillion of additional Treasury bills outstanding [and] the GSE market has been robust with significant issuance of floaters from Fannie, Freddie and Home Loan.... So, we have a challenging backdrop with a ton of supply, inflows which risk going the other way and a low rate environment.... I'm very excited to have this all-star panel today to analyze all these issues." (Please Note: We'll be hosting our next "Crane's Money Fund Webinar: Portfolio Manager Perspectives" on Wednesday, July 22 at 1:00pm EDT, which will feature Federated Hermes' Sue Hill, Northern Trust Asset Management's Peter Yi and UBS Asset Management's David Walczak. Click here to register.)

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