The November issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Monday morning, features the articles: "Post-Reform MMF Era Begins; Prime Outflows Stabilize," which reviews the Oct. 14 transition and latest flow data; "Deutsche's Sarbinowski & Gibbs Thankful for Change," which profiles Joe Sarbinowski and Geoff Gibbs on Deutsche Asset Management's latest fund lineup; and "Focus Turns to Government Money Funds; A Comparison," which looks at the new largest money fund sector. We have updated our Money Fund Wisdom database query system with Oct. 31, 2016, performance statistics, and we also sent out our MFI XLS spreadsheet Monday a.m. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our November Money Fund Portfolio Holdings are scheduled to ship Wednesday, Nov. 9, and our Nov. Bond Fund Intelligence is scheduled to go out Monday, Nov. 14.
MFI's lead "Post-Reform MMF Era" article says, "Money market mutual funds took a bit of a breather following the October 14 implementation of the final round of reforms. The gigantic shift of assets from Prime and Tax Exempt money funds into Government money funds was finalized in the first half of October, though some money continues to trickle out. The focus now is shifting to whether cash will return to Prime or populate a host of alternatives, and how another hike in rates by the Fed in December will impact MMFs."
It adds, "Apart from the giant shift of assets, the transition to adapt to the SEC's 2014 Money Fund Reforms, with their floating (4-digit) NAV for Prime Institutional funds and emergency gates and fees provisions for all Prime and Municipal money market funds, went surprisingly smooth. Prime outflows have slowed to a trickle, and we've even seen several days, including Thursday, with inflows. Also, spreads between Prime and Govt MMFs have widened slightly, and WAMs, particularly for Prime Retail funds, have lengthened."
Our latest fund interview reads, "This month, Money Fund Intelligence interviews Deutsche Asset Management Managing Director Joe Sarbinowski and Director & PM Geoff Gibbs. We discuss the recent big shift from Prime MMFs into Government funds, and the new frontier of money fund alternatives, including ultra-short bond funds, separate accounts and FDIC insured products. Our discussion follows."
The article asks, "How have you been involved in the cash business?" Sarbinowski says, "Our roots hail back to a couple of different firms including the Scudder Kemper, Alex Brown and the Bankers' Trust franchises. There are some legacy funds from those organizations that have made it all the way to today.... I got involved in the business in 2000, so [I've been here] about 16 years now. Gibbs: I started back in '96 with the Scudder, Stevens & Clark business, and then we went through the few mergers where I ended up here in New York with Deutsche."
The "Government MMF" article explains, "Given the massive growth in the Govt money fund space, we thought we'd examine some of the largest funds and issues here. Total Government fund assets -- which include Crane Data's Treasury Retail, Treasury Inst, Govt Retail and Govt Inst categories -- have more than doubled from $1.0 trillion to $2.1 trillion over the past year. Nine out of 10 of the largest portfolios are now Govt funds, versus 3 out of 10 a year ago."
In a sidebar, we discuss, "AFP Crowd Split on Alts," saying, "This year's Association for Financial Professionals' Annual Conference, which took place 2 weeks ago in Orlando, was surprisingly short on money market fund content this year with just two sessions involving cash investing. The first, "Managing Liquidity in a Post-Reform World," was moderated by Benjamin Campbell of Capital Advisors Group, and included Klas Holmlund of Vertex Pharmaceuticals, Kimberly Kelly-Lippert of American Honda Motor Company, and David Miller of Hunt Companies."
We also do a sidebar on "Federated Earnings," which comments, "Federated Investors, the 4th largest manager of money funds, reported its earnings late last month. Their release, "Federated Investors, Inc. Reports Third Quarter 2016 Earnings," shows that lower fee waivers continue to be a bright spot in the otherwise cloudy and rapidly-changing money fund sector."
Our November MFI XLS, with Oct. 31, 2016, data, shows total assets decreased $10.0 billion in September to $2.592 trillion after decreasing $48.5 billion in September, increasing $19.3 billion in August and $11.6 billion in July, and decreasing $13.8 billion in June. Our broad Crane Money Fund Average 7-Day Yield was up 1 bps to 0.15% for the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) rose 4 bps to 0.28% (7-day).
On a Gross Yield Basis (before expenses were taken out), the Crane MFA inched up to 0.47% and the Crane 100 rose 3 bps to 0.52%. Charged Expenses averaged 0.32% and 0.25% for the Crane MFA and Crane 100, respectively (unchanged). The average WAM (weighted average maturity) for the Crane MFA was 34 days (up 3 days from last month) and for the Crane 100 was 35 days (up 5 days). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
