Today, we excerpt again from our June Money Fund Intelligence "profile," "Yields Still Brewing At Marshall Money Market Funds." We asked Marshall Prime Money Market Fund Portfolio Manager Rich Rokus whether asset flows are as important as security selection. He responds, "You better believe they are. Money funds, with a few very public exceptions, have been able to keep a dollar. It's difficult to keep a buck going if half of your fund leaves. So from that standpoint, you need to know your shareholders. You need to develop a viable business model -- relying purely upon hot money can kill you in the end."
Rokus tells MFI, "We, like many other money market funds with top-ranked performance, were solicited all the time to participate in portals and organizations that, in essence, wanted you to 'drink from the fire hose.' We have said all along that's not the business that we're designed for. We have a stable base of client assets that we want to service the best way that we can. Taking in a lot of money that is going to come in fast and leave just as fast at the wrong time is something that we consciously avoided."
He continues, "The discussions that we had with portals were in essence, 'Maybe we will work with you, but it will be in a very controlled fashion. We're going to limit the amount of dollars that we'll take, and we're going to ask that you call us every day that you're going to have a significant cash movement.' It seemed that was a foreign conversation to many of them."
Finally, Rokus says, "They had never been constrained that way from a fund family. They thought we should be anxious to take any dollar that they could deliver. We said, 'No, that's not the way that we want to work with you.' Instead, we focused on a very few with broad, stable customer bases who were willing to work with us in a controlled, fully transparent fashion. We have a nice working relationship with those few, but we have had no significant amounts from any of them."
For a copy of the most recent issue of Money Fund Intelligence, e-mail stork@cranedata.us and include "Request MFI" in the Subject line.
