Wells' PM Update; Drops Advantage
Wells Fargo Money Market Funds released its monthly "Overview, Strategy, and Outlook" portfolio manager commentary. In a segment entitled, "All eyes on the Fed," they write, "After a year of listening to the Federal Reserve (Fed) say that it may be appropriate to begin the process of normalizing monetary policy by raising interest rates in 2015, here we are just a few short days ahead of the last Federal Open Market Committee (FOMC) meeting of the year. In terms of expectations, market participants certainly believe that we are on the verge of liftoff. And, unlike the buildup to the September FOMC meeting, at which the Fed left interest rates unchanged, the narrative surrounding the likelihood of liftoff occurring at the December meeting has shifted very slightly and very subtly." It continues, "`While the unemployment and inflation rates may not be quite at the levels the Fed is seeking, there are compelling reasons why liftoff prior to meeting those goals may be preferable. One reason is to acknowledge that we are no longer in a crisis situation, and so the appropriate level of interest rates is no longer zero. That doesn't mean accommodative policy will be removed immediately, because it won't be. Even after a 25 basis-point (bp; 100 bps equals 1.00%) hike, yields will still be extremely low by historical standards. More important, the Fed has repeatedly stated that it wants the future path of normalization to be gradual, and maybe even bordering on predictable. The last thing the Fed wants to happen is to start tightening too late, after inflation or the economy heats up, which may, in turn, require larger and more frequent rate increases." In other news, Wells Fargo Funds officially drops the name "Advantage" from its funds today (Dec. 15). (See our Sept 2 News, "Crane Adds Daily Liquid Assets, WLA; Wells Rebrands; Cap Adv on FNAV." A Wells Fargo spokesman told us at the time, "Because fund names are often abbreviated in database listings, longer fund names can make it difficult for investors to identify a specific fund. We believe this change will help alleviate confusion and will allow us to more clearly communicate our product names."
