Money Fund Intelligence

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Money Fund Intelligence is a must-read for money market mutual fund and cash investment professionals. The monthly PDF contains:

  • Money Market News - Coverage of cash happenings, new products, companies in the news, people, and more.
  • Feature Articles - Stories like "Trading Portals", "Enhanced Cash", and "Brokerages Push Banks".
  • Money Fund Profiles - In-depth interviews with portfolio managers and management teams.
  • Fund Performance/Rankings - Full listings of fund 7-day yields, monthly and longer-term returns (1-, 3-, 5-, and 10-year), assets, expense ratios, and more.
  • Crane Money Fund Indexes - Our benchmark money market averages by fund type, plus Brokerage Sweep and Bank Indexes.

Whether you're comparing a fund to the competition, benchmarking your cash portfolio to the market, looking for an investment, or looking for new product ideas, Money Fund Intelligence is the answer. E-mail us for the latest issue!

Latest Contents (Feb. 1, 2023)

Money Fund Yields Attracting Attention 1
Federated Q4 Earnings on Record Assets 1
Treasury's OFR Posts Annual Report 1
Money Mkt News, Benchmarks 1
Brokerage Sweep & Bank Saving 8
People, Calendar, Subscription 8
Top Performing Tables, Indexes 9-12
Fund Performance Listings 13-26

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Money Fund Intelligence News

Feb 07
 

The February issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Tuesday morning, features the articles: "Money Fund Yields Attracting More Attention in Early 2023," which reviews the most recent news on MMFs; "Federated Q4 Earnings on Record Assets, No Waivers," which reviews Federated's latest comments on MMFs; and, "Treasury's OFR Posts Annual Report: Money Funds, Risks," which excerpts from OFR's 2022 Annual Report. We also sent out our MFI XLS spreadsheet Tuesday a.m., and we've updated our Money Fund Wisdom database with 1/31/23 data. Our February Money Fund Portfolio Holdings are scheduled to ship on Thursday, Feb. 9, and our February Bond Fund Intelligence is scheduled to go out on Tuesday, Feb. 14.

MFI's "Money Fund Yields Attracting More Attention" article says, "The Wall Street Journal again mentions money market funds in, 'Jittery Investors Turn to Cash in Hunt for Yield.' They explain, 'The dash for cash on Wall Street is back on. Investors have added about $135 billion to global money-market funds over the past four weeks, according to EPFR data through Jan. 18. That is the best stretch since the four-week period ended May 2020, when those funds logged roughly $175 billion in net inflows.'"

The piece continues, "Increased cash allocations are the latest sign of caution among investors who are questioning whether the recent rebound in stocks and bonds will continue after last year's steep selloff. Many expect markets to remain volatile because Federal Reserve officials have repeatedly said they are committed to fighting inflation with higher interest rates. The flows are also an indication that investors are hungry for yield. They shunned cash for years when interest rates were low and returns on money-market funds were meager."

Our "Federated Q4 Earnings" piece states, "Federated Hermes released its Q4'22 earnings and hosted its quarterly earnings call late last week, which discussed record money fund assets and seasonal flows, the end of fee waivers and money funds vs. bank deposits. The earnings press release quotes President & CEO J. Christopher Donahue, 'Federated Hermes' record assets at year-end 2022 were driven by money market asset increases and investor interest in our flagship Total Return Bond Fund and related separate accounts.... In addition, investors valued our investment perspective as they sought haven from market volatility in a diverse range of Federated Hermes products -- from money market funds to low-duration fixed-income options to market neutral and bear market alternative strategies.'"

The release explains, "Federated Hermes' money market assets were a record $476.8 billion at Dec. 31, 2022, up $28.9 billion or 6% from $447.9 billion at Dec. 31, 2021 and up $35.5 billion or 8% from $441.3 billion at Sept. 30, 2022. Money market mutual fund assets were $335.9 billion at Dec. 31, 2022, up $23.1 billion or 7% from $312.8 billion at Dec. 31, 2021 and up $26.0 billion or 8% from $309.9 billion at Sept. 30, 2022. Federated Hermes’ money market separate account assets were $140.9 billion at Dec. 31, 2022, up $5.8 billion or 4% from $135.1 billion at Dec. 31, 2021 and up $9.5 billion or 7% from $131.4 billion at Sept. 30, 2022.'"

Our "Treasury's OFR" piece states, "The U.S. Treasury's Office of Financial Research published 'OFR 2022 Annual Report to Congress,’ which analyzes threats to the financial stability of the U.S. and contains a section discussing money market funds. Under 'Financial Markets and Liquidity, Short-term Funding,' they write, 'Funding markets are relatively stable, but market liquidity remains fragile. Market volatility and the impact of Federal Reserve interest rate increases are magnified in short-term markets. First, a protracted period of low interest rates and the Federal Reserve's quantitative easing facilitated risk taking. Second, investors may have taken market liquidity and low price volatility for granted and underestimated the speed and pace of interest rate increases. Third, the market remains vulnerable to liquidity and maturity transformation mismatches for banks and nonbanks.'"

MFI writes, "The OFR tells us, 'To broaden support for the floor of overnight rates, the Federal Reserve uses the Overnight Reverse Repo Facility (ON RRP) to support a floor on short-term rates by providing an alternative investment for nonbank financial institutions such as money market funds (MMFs) and government-sponsored enterprises (GSEs). The ON RRP level is very high at $2.4 trillion as of Sept. 30, 2022, an increase of $846.4 billion since the start of 2022.... Traditionally, ON RRP usage tends to spike around month- and quarter-end reporting dates when some banks shrink their balance sheets.... As a result, eligible money market participants invested substantially in the ON RRP, with prime and government MMFs accounting for up to 92% of the total lending to the ON RRP.'"

MFI also includes the News brief, "Money Fund Assets Hit Record Again." It says, "ICI's <b:>`_ latest weekly 'Money Market Fund Assets' report shows money fund assets bouncing back to record levels following two weeks of modest declines. Money funds saw their biggest weekly increase since April 29, 2020 during the first week of 2023, and they've risen by $237.1 billion (or 5.2%) over the past 13 weeks."

Another News brief, "Fed Hikes Rates 25 bps to 4.50-4.75%," tells us, "A release entitled, 'Federal Reserve issues FOMC statement' tells us, 'The Committee ... decided to raise the target range for the federal funds rate to 4-1/2 to 4-3/4 percent."

A sidebar, "SSGA's '23 Outlook, Reforms," states, "State Street Global Advisors published a 'Global Cash Outlook,' entitled, 'The Year Ahead -- Chaos or Calm?' Will Goldthwait writes, 'The overall theme of 2023 will be confusion. The current geopolitical macro-economic back drop could deliver such a broad array of outcomes that it's anyone's guess where we will be at the end of the year.'"

Another sidebar, "Schwab on Cash Sorting," quotes Schwab CFO Peter Crawford comments in the earnings release, 'Schwab's record financial performance in 2022 highlighted the resiliency of our diversified financial model. Sustained business momentum ... helped drive 12% growth in ... revenues. Net interest revenue reached $10.7 billion, an increase of 33% versus the prior year, as higher interest rates more than offset the impact of balance sheet contraction due to client cash sorting. Lower market valuations throughout the year pushed asset management and administration fees down slightly to $4.2 billion, or 1% year-over-year.'"

Our February MFI XLS, with January 31 data, shows total assets increased $22.5 billion to $5.191 trillion, after increasing $70.2 billion in December, $55.4 billion in November, $42.2 billion in October, $1.7 billion in September, $2.3 billion in August, $26.0 billion in July and $31.9 billion in June. They decreased $10.7 billion in May and $74.3 billion in April. MMFs increased $24.1 billion in March, but decreased $34.6 billion last February.

Our broad Crane Money Fund Average 7-Day Yield was up 15 bps to 4.02%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was up 10 bps to 4.15% in January. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 both were both higher at 4.33% and 4.28%, respectively. Charged Expenses averaged 0.38% and 0.26% for the Crane MFA and the Crane 100. (We'll revise expenses on Wednesday once we upload the SEC's Form N-MFP data for 1/31/23.) The average WAM (weighted average maturity) for the Crane MFA was 17 days (up 1 day from previous month) while the Crane 100 WAM remained the same at 14 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)

Jan 12
 

Crane Data's January Money Fund Portfolio Holdings, with data as of Dec. 31, 2022, show that Repo holdings jumped to a record $2.94 trillion, while everything else declined and Treasuries continued a 10-month slide. Money market securities held by Taxable U.S. money funds (tracked by Crane Data) increased by $72.6 billion to $5.039 trillion in December, after decreasing $24.6 billion in November, but increasing $57.7 billion in October and $15.2 billion in September. Repo remained the largest portfolio segment and hit record levels, while Treasuries remained in the No. 2 spot. The Federal Reserve Bank of New York, which surpassed the U.S. Treasury as the largest "Issuer" seven months ago, saw RRP issuance held by MMFs jump $320.2 billion to a record $2.319 trillion. Agencies were the third largest segment, CP remained fourth, ahead of CDs, Other/Time Deposits and VRDNs. Below, we review our latest Money Fund Portfolio Holdings statistics.

Among taxable money funds, Repurchase Agreements (repo) increased $253.2 billion (9.4%) to $2.940 trillion, or 58.3% of holdings, in December, after decreasing $24.4 billion in November and $6.0 billion in October, but increasing $74.4 billion in September. Treasury securities fell $77.5 billion (-6.8%) to $1.069 trillion, or 21.2% of holdings, after decreasing $65.0 billion in November, $41.8 billion in October and $84.8 billion in September. Government Agency Debt was down $24.5 billion, or -4.2%, to $562.2 billion, or 11.2% of holdings, after increasing $53.6 billion in November, $55.0 billion in October and $35.9 billion in September. Repo, Treasuries and Agency holdings now total $4.571 trillion, representing a massive 90.7% of all taxable holdings.

Money fund holdings of CP and CDs dropped in December. Commercial Paper (CP) decreased $16.9 billion (-6.4%) to $245.8 billion, or 4.9% of holdings, after increasing $7.7 billion in November and $19.3 billion in October, but decreasing $7.8 billion in September. Certificates of Deposit (CDs) decreased $4.3 billion (-2.8%) to $149.5 billion, or 3.0% of taxable assets, after increasing $4.4 billion in November and $15.5 billion in October, but decreasing $1.6 billion in September. Other holdings, primarily Time Deposits, decreased $57.0 billion (-47.2%) to $63.8 billion, or 1.3% of holdings, after decreasing $1.0 billion in November, increasing $16.0 billion in October, and decreasing $1.1 billion in September. VRDNs fell to $9.5 billion, or 0.2% of assets. (Note: This total is VRDNs for taxable funds only. We will post our Tax Exempt MMF holdings separately Thursday around noon.)

Prime money fund assets tracked by Crane Data jumped to $1.029 trillion, or 20.4% of taxable money funds' $5.039 trillion total. Among Prime money funds, CDs represent 14.5% (down from 15.1% a month ago), while Commercial Paper accounted for 24.0% (down from 25.8% in November). The CP totals are comprised of: Financial Company CP, which makes up 16.6% of total holdings, Asset-Backed CP, which accounts for 4.2%, and Non-Financial Company CP, which makes up 3.2%. Prime funds also hold 6.2% in US Govt Agency Debt, 2.7% in US Treasury Debt, 36.7% in US Treasury Repo, 0.4% in Other Instruments, 4.0% in Non-Negotiable Time Deposits, 4.8% in Other Repo, 4.6% in US Government Agency Repo and 0.6% in VRDNs.

Government money fund portfolios totaled $2.722 trillion (54.0% of all MMF assets), up from $2.713 trillion in November, while Treasury money fund assets totaled another $1.288 trillion (25.6%), up from $1.234 trillion the prior month. Government money fund portfolios were made up of 18.3% US Govt Agency Debt, 10.1% US Government Agency Repo, 12.6% US Treasury Debt, 58.8% in US Treasury Repo, 0.1% in Other Instruments. Treasury money funds were comprised of 54.2% US Treasury Debt and 45.7% in US Treasury Repo. Government and Treasury funds combined now total $4.010 trillion, or 79.6% of all taxable money fund assets.

European-affiliated holdings (including repo) decreased by $105.4 billion in December to $324.4 billion; their share of holdings dropped to 6.4% from last month's 8.7%. Eurozone-affiliated holdings decreased to $211.4 billion from last month's $266.7 billion; they account for 4.2% of overall taxable money fund holdings. Asia & Pacific related holdings dropped to $189.3 billion (3.8% of the total) from last month's $215.4 billion. Americas related holdings rose to $4.523 trillion from last month's $4.317 trillion, and now represent 89.8% of holdings.

The overall taxable fund Repo totals were made up of: US Treasury Repurchase Agreements (up $268.1 billion, or 11.7%, to $2.566 trillion, or 50.9% of assets); US Government Agency Repurchase Agreements (down $19.2 billion, or -5.6%, to $324.3 billion, or 6.4% of total holdings), and Other Repurchase Agreements (up $4.3 billion, or 9.4%, from last month to $49.6 billion, or 1.0% of holdings). The Commercial Paper totals were comprised of Financial Company Commercial Paper (down $7.5 billion to $170.5 billion, or 3.4% of assets), Asset Backed Commercial Paper (up $2.7 billion to $42.8 billion, or 0.8%), and Non-Financial Company Commercial Paper (down $12.1 billion to $32.5 billion, or 0.6%).

The 20 largest Issuers to taxable money market funds as of Dec. 31, 2022, include: the Federal Reserve Bank of New York ($2.319T, 46.0%), US Treasury ($1.069T, 21.2%), Federal Home Loan Bank ($454.0B, 9.0%), Fixed Income Clearing Corp ($109.5B, 2.2%), RBC ($98.8B, 2.0%), Federal Farm Credit Bank ($98.1B, 1.9%), JP Morgan ($63.2B, 1.3%), BNP Paribas ($47.1B, 0.9%), Mitsubishi UFJ Financial Group Inc ($41.1B, 0.8%), Citi ($40.6B, 0.8%), Barclays ($38.3B, 0.8%), Sumitomo Mitsui Banking Corp ($38.2B, 0.8%), Toronto-Dominion Bank ($34.8B, 0.7%), Bank of America ($32.7B, 0.6%), Nomura ($30.3B, 0.6%), Bank of Montreal ($28.8B, 0.6%), Canadian Imperial Bank of Commerce ($27.7B, 0.5%), Mizuho Corporate Bank Ltd ($26.9B, 0.5%), Bank of Nova Scotia ($23.9B, 0.5%) and Credit Agricole ($20.9B, 0.4%).

In the repo space, the 10 largest Repo counterparties (dealers) with the amount of repo outstanding and market share (among the money funds we track) include: Federal Reserve Bank of New York ($2.319T, 78.9%), Fixed Income Clearing Corp ($109.5, 3.7%), RBC ($70.4, 2.4%), JP Morgan ($56.1, 1.9%), BNP Paribas ($38.8, 1.3%), Nomura ($30.3, 1.0%), Bank of America ($28.2, 1.0%), Barclays ($25.5, 0.9%), Citi ($23.9, 0.8%) and Sumitomo Mitsui Banking Corp ($22.3, 0.8%). The largest users of the $2.319 trillion in Fed RRP include: Goldman Sachs FS Govt ($142.3B), Fidelity Govt Money Market ($136.2B), Vanguard Federal MM Fund ($128.2B), Fidelity Govt Cash Reserves ($125.7B), JPMorgan US Govt MM ($118.1B), Federated Hermes Govt ObI ($83.3B), Dreyfus Govt Cash Mgmt ($82.0B), Morgan Stanley Inst Liq Govt ($74.8B), Fidelity Inv MM: Govt Port ($69.1B) and BlackRock Lq FedFund ($59.0B).

The 10 largest issuers of "credit" -- CDs, CP and Other securities (including Time Deposits and Notes) combined -- include: RBC ($28.3B, 7.0%), Toronto-Dominion Bank ($23.6B, 5.8%), Mizuho Corporate Bank Ltd ($20.8B, 5.1%), Mitsubishi UFJ Financial Group Inc ($20.6B, 5.1%), Bank of Nova Scotia ($17.7B, 4.4%), Citi ($16.7B, 4.1%), Sumitomo Mitsui Banking Corp ($15.9B, 3.9%), Australia & New Zealand Banking Group Ltd ($15.4B, 3.8%), Barclays ($12.8B, 3.1%) and Bank of Montreal ($12.7B, 3.1%).

The 10 largest CD issuers include: Mitsubishi UFJ Financial Group Inc ($13.7B, 9.2%), Sumitomo Mitsui Banking Corp ($13.3B, 8.9%), Mizuho Corporate Bank Ltd ($11.3B, 7.5%), Citi ($10.5B, 7.0%), Toronto-Dominion Bank ($10.1B, 6.7%), Canadian Imperial Bank of Commerce ($7.7B, 5.1%), Bank of Nova Scotia ($6.9B, 4.6%), Sumitomo Mitsui Trust Bank ($6.9B, 4.6%), Credit Agricole ($6.0B, 4.0%) and RBC ($5.9B, 3.9%).

The 10 largest CP issuers (we include affiliated ABCP programs) include: RBC ($15.5B, 7.1%), Toronto-Dominion Bank ($12.5B, 5.7%), Bank of Nova Scotia ($10.3B, 4.7%), Bank of Montreal ($8.7B, 4.0%), National Australia Bank ($8.5B, 3.9%), Barclays ($7.8B, 3.6%), Australia & New Zealand Banking Group ($7.6B, 3.5%), JP Morgan ($7.0B, 3.2%), Societe Generale ($6.6B, 3.0%) and UBS AG ($6.4B, 2.9%).

The largest increases among Issuers include: Federal Reserve Bank of New York (up $320.2B to $2,319.0 trillion), RBC (up $11.3B to $98.8B), Bank of New York Mellon (up $5.0B to $5.0B), UOB Group (up $4.8B to $4.8B), Westpac Banking Corp (up $4.7B to $4.7B), Federal Home Loan Mortgage Corp (up $4.6B to $4.6B), Bank of Montreal (up $4.4B to $28.8B), Macquarie Bank Limited (up $4.1B to $4.1B), Toronto-Dominion Bank (up $3.9B to $34.8B) and First Republic Bank (up $3.4B to $5.1B).

The largest decreases among Issuers of money market securities (including Repo) in December were shown by: US Treasury (down $77.5B to $1.069T), Federal Home Loan Bank (down $25.1B to $454.0B), Barclays PLC (down $23.8B to $38.3B), Fixed Income Clearing Corp (down $15.5B to $109.5B), ING Bank (down $13.3B to $12.2B), Skandinaviska Enskilda Banken AB (down $12.7B to $9.0B), Mizuho Corporate Bank Ltd (down $9.7B to $26.9B), Citi (down $8.3B to $40.6B), BNP Paribas (down $8.2B to $47.1B) and Sumitomo Mitsui Banking Corp (down $7.9B to $38.2B).

The United States remained the largest segment of country-affiliations; it represents 85.2% of holdings, or $4.293 trillion. Canada (4.6%, $229.7B) was in second place, while Japan (3.4%, $173.3B) was No. 3. France (2.2%, $109.1B) occupied fourth place. The United Kingdom (1.4%, $69.0B) remained in fifth place. Australia (0.8%, $39.8B) was in sixth place, followed by Sweden (0.6%, $28.8B) Netherlands (0.6%, $27.7B), Germany (0.5%, $23.1B), and Singapore (0.2%, $11.9B). (Note: Crane Data attributes Treasury and Government repo to the dealer's parent country of origin, though money funds themselves "look-through" and consider these U.S. government securities. All money market securities must be U.S. dollar-denominated.)

As of Dec. 31, 2022, Taxable money funds held 8.5% (down from 70.7%) of their assets in securities maturing Overnight, and another 71.4% maturing in 2-7 days (up from 6.4%). Thus, 79.9% in total matures in 1-7 days. Another 5.5% matures in 8-30 days, while 7.6% matures in 31-60 days. Note that over three-quarters, or 93.0% of securities, mature in 60 days or less, the dividing line for use of amortized cost accounting under SEC regulations. The next bucket, 61-90 days, holds 3.4% of taxable securities, while 3.0% matures in 91-180 days, and just 0.7% matures beyond 181 days. (Visit our Content center to download, or contact us to request our latest Portfolio Holdings reports.)

Jan 09
 

The January issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Monday morning, features the articles: "Money Fund Assets Hit Record $5.2 Trillion, Break 2020 High," which reviews the recent surge in MMFs; "Worldwide MF Assets Plunge in Q3'22, Led by China, France," which reviews ICI's latest global money fund asset data; and, "Top Money Funds of 2022; 14th Annual MFI Awards," which covers the highest performing money funds this past year. We also sent out our MFI XLS spreadsheet Monday a.m., and we've updated our Money Fund Wisdom database with 12/31/22 data. Our January Money Fund Portfolio Holdings are scheduled to ship on Wednesday, Jan. 11, and our January Bond Fund Intelligence is scheduled to go out on Friday, Jan. 13.

MFI's "Assets Hit Record" article says, "Money market mutual fund assets jumped to record levels in December and early January. Our Money Fund Intelligence XLS shows assets rising by $70.2 billion last month to an all-time high of $5.184 trillion, and our MFI Daily shows total money fund assets rising by $40.2 billion more in January 2023 (through 1/5) to $5.231 trillion. The latest asset surge breaks May 2020's and December 2021's previous record highs."

It continues, "Assets increased by $47.7 billion in November and by $34.9 billion in October. But according to our MFI XLS, money fund assets increased by just $12.3 billion, or 0.2%, in 2022 (after being in negative territory for most of the year). Taxable Retail MFs increased by $156.2 billion (10.8%) to $1.598 trillion, Taxable Institutional MFs fell by $168.9 billion (-4.6%) to $3.466 trillion, and Tax-Exempt money fund assets rose by $25.0 billion (26.6%) to $119.2 billion."

Our "Worldwide" piece states, "The Investment Company Institute's 'Worldwide Regulated Open-Fund Assets and Flows, Third Quarter 2022' shows that money fund assets globally fell by $176.8 billion, or -2.1%, in Q3’22 to $8.305 trillion. The decreases were led by sharp drops in money funds in China, France, Luxembourg and Ireland. Meanwhile, money funds in the U.S. and Mexico increased. MMF assets worldwide decreased by $145.3 billion, or -1.7%, in the 12 months through 9/30/22, and money funds in the U.S. now represent 55.0% of worldwide assets."

It continues, "ICI's release says, 'Worldwide regulated open-end fund assets decreased 6.1% to $56.19 trillion at the end of the third quarter of 2022, excluding funds of funds. Worldwide net cash outflow to all funds was $33 billion in the third quarter, compared with $146 billion of net outflows in the second quarter of 2022. The Investment Company Institute compiles worldwide regulated open-end fund statistics on behalf of the International Investment Funds Association (IIFA), the organization of national fund associations. The collection for the second quarter of 2022 contains statistics from 46 jurisdictions.'"

Our "Top Money Funds" piece states, "This issue recognizes the top performing money funds, ranked by total returns, for calendar year 2022, as well as the top funds for the past 5‐year and 10‐year periods. We present the funds below with our annual Money Fund Intelligence Awards. These are given to the No. 1‐ranked funds based on 1‐year, 5‐year and 10‐year returns, through Dec. 31, 2022, in each of our major fund categories -- Prime Institutional, Government Institutional, Treasury Institutional, Prime Retail, Government Retail, Treasury Retail and Tax‐Exempt."

MFI writes, "The Top-Performing Prime Institutional fund (and fund overall) was BlackRock Cash Inst MMF SL (BRC01), which returned 1.79%. Excluding private and internal funds, the best performer in 2022 was Allspring Heritage Select (WFJXX) with a return of 1.76%. Among Prime Retail funds, Allspring Money Market Fund Premier (WMPXX) had the best return in 2022 (1.75%)."

MFI also includes the News brief, "Bloomberg on 'Starving for Yield? Check Out Money-Market Funds.'" It says, "If you think high-yield savings accounts offer juicy rates to park some cash, wait until you see what money-market funds are paying. Yields ... spiked from 0.02% earlier this year to more than 3.6% as of early December, according to Crane Data's 100 money-market fund index. After this week’s rate increase by the Federal Reserve, money-market fund yields are poised to soar even higher."

Another News brief, "Federated Hermes' Deborah Cunningham Writes, 'Sweet Spot: Cash Should Still Reign.' She says, 'The liquidity industry's gain from stock and bond investor pain should continue in 2023. In particular, with yields rising with each Federal Reserve hike, money markets should retain their status as an in-demand asset class. Money funds in particular should hit a sweet spot even when hikes cease because they are able to invest further out the yield curve to seek higher yields.'"

A sidebar, "MMF Yields Break 4.0%," states, "Money fund yields jumped higher again last month; our Crane 100 Money Fund Index (7-Day Yield) rose 48 basis points to 4.05% in December. Yields are up from 3.59% on Nov. 30, up from 2.88% on Oct. 31 and up from 2.​68% on Sept. 30. Yields should be flat or inch higher for a few weeks, then jump again after another expected Feb. 1 hike. The top-yielding money market funds have broken above 4.50% should push towards 5% in 2023."

Another sidebar, "Fed Z.1: Household MFs Jump," says, "The Federal Reserve's latest quarterly 'Z.1 Financial Accounts of the United States' statistical survey shows that Total MMF Assets increased by $52 billion to $5.084 trillion in Q3'22. The Household Sector, by far the largest investor segment with $2.781 trillion, saw an asset increase in Q3. The second largest segment, Nonfinancial Corporate Businesses, also experienced a jump in assets. The Fed's latest Z.1 numbers, which contain one of the few looks at money fund investor segments available, also shows asset decreases in MMF holdings for the Other Financial Business and Mutual Funds categories in Q3 2022."

Our January MFI XLS, with December 31 data, shows total assets increased $70.2 billion to $5.184 trillion, after increasing $55.4 billion in November, $42.2 billion in October, $1.7 billion in September, $2.3 billion in August, $26.0 billion in July and $31.9 billion in June. They decreased $10.7 billion in May and $74.3 billion in April. MMFs increased $24.1 billion in March, decreased $34.6 billion in February and decreased $128.1 billion in January.

Our broad Crane Money Fund Average 7-Day Yield was up 40 bps to 3.87%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was up 47 bps to 4.05% in December. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 both were both higher at 4.19% and 4.19%, respectively. Charged Expenses averaged 0.39% and 0.27% for the Crane MFA and the Crane 100. (We'll revise expenses on Tuesday once we upload the SEC's Form N-MFP data for 12/31/22.) The average WAM (weighted average maturity) for the Crane MFA was 16 days (unchanged from previous month) while the Crane 100 WAM was lower by one day at 14 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)

Dec 07
 

The December issue of our flagship Money Fund Intelligence newsletter, which will be sent out to subscribers Wednesday morning, features the articles: "Top 10 Stories of 2022: Rising Yields, Reform Reactions, D&I," which highlights Crane Data's biggest News pieces of the past year; "J.P. Morgan's 2023 Outlook: Supply-Demand Gap Narrows," which reviews the outlook for money markets in the coming year; and, "BlackRock's Circle Reserve Fund USDC Stablecoin," which covers the new money market fund used by the USDC stablecoin. We will also send out our MFI XLS spreadsheet Wednesday a.m., and we've updated our Money Fund Wisdom database with 11/30/22 data. Our December Money Fund Portfolio Holdings are scheduled to ship on Friday, Dec. 9, and our December Bond Fund Intelligence is scheduled to go out on Wednesday, Dec. 14. (Note: Our MFI, MFI XLS and Crane Index products are all available to subscribers via our Content center. Note too: Register ASAP for our Money Fund University, Dec. 15-16 in Boston, Mass, at the Hyatt Regency. Clients are welcome to stop by Crane Data's Holiday Cocktail Party at MFU on 12/15 from 5-7pm!)

MFI's "Top 10 Stories" article says, "After almost two years of zero interest rates, money fund yields skyrocketed in 2022, rising from 0.02% to 3.60% (Crane 100 MF Index). While this was the biggest story of the year, money funds also spent time discussing the SEC's Money Fund Reform Proposal from December 2021. (We're still waiting for the final rules to come out any day now.) Other major themes of the past year included: the pivot of ESG money funds towards Social MMFs, carnage in the stock and bond fund markets and asset outflows from ultra-shorts, the increase in yields in European and worldwide markets, and the end of fee waivers. Below, we excerpt from a number of our biggest stories to highlight the major trends of 2022."

It continues, "Crane Data's Top 10 Stories of 2022 include (in chronological order): 'Rolling w/Reform Changes IV: Recap of '21 Exits & Entries, ESG & News' (1/4/22); 'ESMA Proposes Reforms to European Money Market Fund Regulations' (2/22/22); 'Dreyfus Announces New BOLD D&I Share Class with Howard University' (3/1/22); 'BlackRock: Redemption Fee Simpler Than Swing Pricing; Sliding Scale' (4/21/22); 'Money Fund Yields Break 0.50%; Fidelity Hikes Sweep Rate; ICI Holdings' (5/17/22); 'AFP's 2022 Liquidity Shows Deposits, MMFs, T-Bills Still Kings of Cash' (6/17/22); 'Schwab CFO Crawford Discusses Cash 'Sorting,' End of Fee Waivers in Q2' (8/3/22); 'Third 75's a Charm for Fed, Rates Head to 3%; Money Funds in the News' (9/22/22); 'European MMFs Jump on Sterling Surge, Euro Yields Positive; MFII Holds' (10/18/22); 'Money Funds Hot and Getting Hotter: Barron’s, and, WSJ, FT Feature Articles' (10/24/22). (As a bonus #11, see too: 'Fed Hikes 6th Time; Rates Head to 4%; Prime Over $1 Tril.; More Swing (11/3/22).'"

Our "2023 Outlook" piece states, "J.P. Morgan published its 'Short-Term Fixed Income 2023 Outlook' last week, and titled it, 'More supply and higher yields, what's not to like?' Authors Teresa Ho, Pankaj Vohra and Holly Cunningham tell us, 'The sharp rise in rates this year was a welcome relief for the US money markets -- markets that were plagued by the Fed's zero interest rate policy for at least two years. Even so, it was not all good news, as high inflation and tight labor markets pushed the Fed to embark on one of the most aggressive tightening cycles in modern history. In response, liquidity investors significantly shortened duration at a time when the supply-and-demand mismatch in the money markets was substantial.'"

It Continues, "They say, '[T]his pushed short-dated T-bills and SOFR to trade meaningfully through RRP.... All told, balances at the Fed's ON RRP continued to grow, increasing from $1.5tn ... to $2.1tn, as investors used the facility as a source of backstop supply, to shorten duration, and/or to [support] their yields.'"

Our "Circle Reserves" piece states, "BlackRock recently launched a new Treasury (and repo) money market fund, Circle Reserve Fund, exclusively for Circle Internet Financial, which offers one of the largest stablecoins, USDC. The fund, with ticker USDXX (for its Institutional Shares), was launched on November 3, and has already grown to a hefty $15.9 billion. It has an expense ratio of 0.21% (0.17% after waivers), a minimum initial investment of $2 billion, a WAM (weighted average maturity) of 41 days and a 7-day yield of 3.86% (as of 11/30). BlackRock is the Manager and Distributor, while BNY Mellon is the Custodian and Accounting Services Provider, according to the fund's N-1A registration filing. USDC is approximately $43.9 billion in size, while the largest stablecoin, Tether, is $65.9 billion (though the latter has been decreasing of late)."

MFI writes, "An article from Coindesk, entitled, 'Circle Begins Putting Reserves Into New BlackRock Fund,' explains, 'Circle Internet Financial has begun moving the reserves for its USDC stablecoin into a dedicated fund set up by BlackRock and registered with the U.S. Securities and Exchange Commission, the company disclosed.... The Circle Reserve Fund -- a government money market fund managed by BlackRock Advisors -- has been in the works for months after BlackRock initially sought to register it in May. Circle will be its only eligible investor, and the stablecoin issuer has already started putting its reserves there, expecting to be 'fully transitioned' by the end of March.'"

MFI also includes the News brief, "Crane 100 Money Fund Index Hits 3.60%, Top MFs Break 4.0%." It says, "Money fund yields jumped again last month; our Crane 100 (7-Day Yield) rose 72 bps to 3.57% in Nov. (and has risen to 3.61% since). Eight money funds are yielding 4.0% or higher. Sweep rates also continue inching up, as Fidelity hiked its FDIC insured rates to 1.94%. Brokerage Sweeps average 0.43%."

Another News brief, "Retail MMFs Hit Record, Total Poised to Break," explains, "Crane Data's totals show assets rising $55.4 billion in November to $5.121 trillion, just below May 2020's record $5.163 trillion. ICI's latest weekly 'Money Market Fund Assets' report shows money fund assets jumping over the past week, the 4th increase in the past 5 weeks. Retail money fund assets hit a record $1.6 trillion recently."

Also, a sidebar, "NY Fed Blog: Deposit Betas," states, "The Federal Reserve Bank of New York's 'Liberty Street Economics' asks, 'How Do Deposit Rates Respond to Monetary Policy?' It tells us, 'When the Federal Open Market Committee (FOMC) wants to raise the target range for the fed funds rate, it raises the interest on reserve balances (IORB) paid to banks, the primary credit rate offered to banks, and the award rate paid to participants that in- vest in the overnight reverse repo (ON RRP) market to keep the fed funds rate within the target range.'"

Another sidebar, "MFs Bigger Than Bond Funds," says, "The Investment Company Institute's latest monthly 'Trends in Mutual Fund Investing' shows that money fund assets increased $36.8 billion in October to $4.607 trillion. Meanwhile, bond fund assets continued their steep decline, falling by $88.1 billion to $4.445 trillion. Money fund assets surpassed bond fund assets last month for the first time since 2010; bond funds have declined by over $1.1 trillion year-to-date in 2022. (The bond fund totals don't include bond ETFs, which total $1.204 trillion as of 10/31, according to ICI.)"

Our December MFI XLS, with November 30 data, shows total assets increased $55.4 billion to $5.121 trillion, after increasing $42.2 billion in October, $1.7 billion in September, $2.3 billion in August, $26.0 billion in July and $31.9 billion in June. They decreased $10.7 billion in May and $74.3 billion in April. MMFs increased $24.1 billion in March, decreased $34.6 billion in February and decreased $128.1 billion in January. Assets increased $104.6 billion in December and $49.7 billion in November. Our broad Crane Money Fund Average 7-Day Yield was up 63 bps to 3.37%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was up 72 bps to 3.57% in November.

On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 both were both higher at 3.69% and 3.73%, respectively. Charged Expenses averaged 0.38% and 0.26% for the Crane MFA and the Crane 100. (We'll revise expenses on Thursday once we upload the SEC's Form N-MFP data for 11/30/22.) The average WAM (weighted average maturity) for the Crane MFA was 16 days (up one day from previous month and the first increase in 11 months) while the Crane 100 WAM was also higher by one day at 15 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)