TD Asset Management, the 28th largest money fund manager with $7.8 billion, issued a press release detailing its plans to maintain a full roster of Prime Retail, Prime Institutional, Tax-Exempt Retail, Tax-Exempt Inst MMFs, and Govt MMFs in its post-reform money fund lineup. The statement, entitled, "TD Asset Management Announces Product Strategy for Money Market Funds," says, "TD Asset Management today announced plans to adjust its money fund lineup to address regulatory changes adopted by the U.S. Securities and Exchange Commission in July 2014. The adjustments are summarized below and will take effect on October 14, 2016. Throughout this process, our primary goal is to provide investors with a broad spectrum of product choices for liquidity management with little to no disruption." We also review the ICI's latest monthly "Trends in Mutual Fund Investing" and "Month-End Portfolio Holdings of Taxable Money Funds." (See our March 11 News, "March Portfolio Holdings: Treasuries Jump; TDs, CDs, Agencies Gain.")
TDAM's says of its lineup of Government funds, "In the government money market fund category, the following products will be offered: TDAM U.S. Government Portfolio; TDAM Institutional U.S. Government Fund; and TDAM Institutional Treasury Obligations Money Market Fund. Under the SEC's new rules, a government money market fund must invest at least 99.5% of its total assets in U.S. government securities, cash, or repurchase agreements collateralized by U.S. government securities or cash. Historically, TDAM has managed its government and Treasury funds consistent with this new requirement and will continue to do so. Government and Treasury money market funds are exempt from new requirements for liquidity fees and redemption gates, although they could voluntarily adopt fees and/or gates in the future upon prior notice to shareholders. TDAM does not intend to impose liquidity fees or redemption gates on any of its government or Treasury funds. Finally, government funds will continue to use the amortized cost method of valuation to transact at a stable net asset value (NAV) of $1.00 per share."
On its Retail funds, they explain, "In the retail money market fund category, the following products will be offered: TDAM Money Market Portfolio; TDAM Municipal Portfolio; TDAM California Municipal Portfolio; and TDAM New York Municipal Portfolio. Retail money market funds are defined under the new rules as funds that have policies and procedures reasonably designed to limit all beneficial owners to natural persons, whether investing directly or through an omnibus account held at a custodian. Retail money market funds will continue to transact at a stable NAV of $1.00 per share, but will be subject to liquidity fees and redemption gates."
Finally, on its Institutional funds, TDAM comments, "Prime and municipal money market funds that are available to institutional investors must transact at a floating NAV and will be subject to liquidity fees and redemption gates. TDAM will offer the following floating NAV products: Institutional Money Market Fund; and TDAM Institutional Municipal Money Market Fund. Many of the changes set out above will require approval from the funds' board of directors and disclosure in the funds' registration statements. Therefore, the changes will not take effect until the necessary approvals have been obtained and the disclosures have been filed. TDAM's plan announced today should help investors move ahead with their liquidity planning solutions."
ICI's "Trends in Mutual Fund Investing: February 2016" shows a sizable increase in MMF assets in February, up $38.2 billion, or 1.4%, to $2.774 trillion. Assets have averaged declines of about $23 billion in February since 2008; this is the first time since 2011 that MMF assets have increased in February. MMFs decreased $19.0 billion in January, increased $35.3 billion in December, rose $4.8 billion in November, and climbed $45.2 billion in October.
The release says, "The combined assets of the nation's mutual funds increased by $3.57 billion to $15.08 trillion in February, according to the Investment Company Institute's official survey of the mutual fund industry.... Bond funds had an inflow of $710 million in February, compared with an outflow of $5.16 billion in January.... Money market funds had an inflow of $37.28 billion in February, compared with an outflow of $20.25 billion in January. In February funds offered primarily to institutions had an inflow of $41.83 billion and funds offered primarily to individuals had an outflow of $4.55 billion." Money funds now represent 18.4% of all mutual fund assets, while bond funds represent 22.7%. The total number of money market funds decreased to 479 in February, from 483 the previous month.
ICI's latest "Month-End Portfolio Holdings of Taxable Money Fund" summary shows that most MMF composition segments increased in February, including Treasuries, CDs, Repo, Agencies, and Commercial Paper. CDs (including Eurodollar CDs) remained the largest portfolio sector, increasing $14.9 billion, or 2.6%, in February to $591.8 billion, representing 23.3% of taxable MMF holdings. (ICI's CD totals likely include Time Deposits, which Crane Data and the SEC categorize as "Other" -- we reported an increase in Other/TDs in February.) Repurchase agreements stayed in second place, increasing $4.6 billion, or 0.9%, in February to $542.0 billion (21.4% of assets).
Treasury Bills & Securities held on to third place among composition segments, rising $38.2 billion, 8.0%, in February to $514.4 billion (19.3% of assets). U.S. Government Agency Securities increased by $4.4 billion, or 0.9%, to $476.3 billion (18.8% of assets), remaining fourth among portfolio segments. Commercial Paper was fifth, increasing $1.9B, or 0.9%, to $313.1 billion (12.4% of assets). Notes (including Corporate and Bank) fell $5.9 billion, or 7.7%, to $70.5 billion (2.8% of assets), while Other holdings (including Cash Reserves) dropped $12.4 billion to $26.6 billion.
The Number of Accounts Outstanding in ICI's series for taxable money funds decreased by 30.0 thousand to 22.723 million, while the Number of Funds decreased by 3 to 336. Over the past 12 months, the number of accounts fell by 485.1 thousand, or 2.1%, and the number of funds declined by 27. The Average Maturity of Portfolios increased by 2 days to 39 days in February. Over the past 12 months, WAMs of Taxable money funds have declined by 4 days. Note: Crane Data updated its March MFI XLS last week to reflect 2/29/16 Portfolio Composition and Maturity Breakout data for the entire fund universe. (Visit our Content Center and the latest Money Fund Portfolio Holdings download page to access our March Money Fund Portfolio Holdings and the latest files.)
