The July issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Monday morning, features the articles: "Money Fund Symposium Focus on Rising Yields, Pending Flows," which cites highlights and quotes from our recent Pittsburgh conference; "Federated's Donahue Tells MFS: Be Good Neighbors," which excerpts Federated Investors' CEO Chris Donahue's keynote speech at MFS; and, "Worldwide MF Assets: Chinese MFs Jump, US Drop," which reviews ICI's latest quarterly collection of global fund statistics. We've also updated our Money Fund Wisdom database with June 30, 2018, statistics, and 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 July Money Fund Portfolio Holdings are scheduled to ship on Wednesday, July 11, and our June Bond Fund Intelligence is scheduled to go out Monday, July 16.
MFI's "MF Symposium Recap" article says, "Two weeks ago, Crane Data hosted its 10th annual Money Fund Symposium, which brought together a near-record 565 money fund managers, issuers, dealers, investors and servicers to the $3.0 trillion money market fund industry. The mood overall was warm (thanks in part to an air conditioning issue on the first day) and upbeat, as money market funds celebrated what no doubt will be their best year in a decade. Higher yields, rising assets, the continued gradual recovery in Prime funds, and the potential to take back market share from bank deposits dominated the agenda. We quote from some of the sessions below."
The lead piece continues, "Our 'Major Money Fund Issues 2018,' moderated by Crane Data's Peter Crane, featured Dreyfus's Tracy Hopkins, Goldman Sachs Asset Management's Pat O’Callaghan, and Wells Fargo AM's Jeff Weaver. (Note: Thanks to those who attended and supported our Pittsburgh show. Visit our 'Money Fund Symposium 2018 Download Center' to access the conference materials, and mark your calendars for next year’s show, June 24-26, 2019, at the Boston Renaissance.)"
It tells us, "On the 'Major Issues' panel, Crane first asked about ultra-short issues and whether investors were still interested in this segment. O'Callaghan says, 'Yes, absolutely. I think there are a lot of issues going on right now in the front end.... The Fed being active is drawing people's attention.... If you go back to a couple of years ago -- there wasn't a lot of deviation [between MMFs and ultra-shorts].... Now you have a situation where rates are going higher and spreads are growing wider.... They're not just looking at money funds; they're looking at products across the board, whether it’s ultra-shorts or Treasury funds.... All of that is good for us.'"
MFI's latest Profile reads, "Our recent Money Fund Symposium in Pittsburgh was keynoted by Federated Investors President & CEO J. Christopher Donahue. He addressed a number of topics, including the history of money funds, the effort to roll back recent regulatory reforms and money funds overseas. We excerpt from the speech below."
Donahue comments, "There was one Pittsburgher who wanted to make a difference, and 50 years ago he began his program talking to children. I'm talking about 'Mr. Rogers' Neighborhood.' Interestingly enough, we, my wife and I, live in Mr. Rogers' house in Pittsburgh where he raised his children.... 'What can Mr. Rogers teach us about money market funds?' Far more than we thought."
Mr. Rogers said, "It's the knowing that we can be trusted, that we never have to fear the truth." That is the bedrock of our very being. Peter Crane has also asked me a number of questions, which we will cover in this discussion."
He explains, "We'll begin with a little history to see how whether we can be trusted and see whether we have to fear the truth. A short history, a very neighborly history began in '74, when the SEC decided to grant three funds, Fidelity, Federated, and Dreyfus, effective [orders] for their money market funds.... We wanted the name Federated Cash Management, but the SEC told us, 'You can't have that name because you cannot manage cash.' Glen Johnson [then] chose the name Money Market Management."
Donahue tells us, "Then, a bad neighbor appeared on the scene. The bad neighbor was the Comptroller of the Currency. They said, 'You cannot delegate cash management to a fund. This is a violation of fiduciary duty.' Well, with client support, good legal work, and with Gene Maloney of our company learning how to spell 'fiduciary,' we got [approval] and we were back in business." (See Donahue's full speech in MFI or watch for more excerpts in coming weeks.)
MFI's "Worldwide" article says, "The Investment Company Institute released its "Worldwide Regulated Open-Fund Assets and Flows, First Quarter 2018” late last month. The most recent data collection on mutual funds in other countries (as well as the U.S.) shows that money fund assets globally rose by $198.0 billion, or 3.4%, in Q1’18 to $6.098 trillion, led by big jumps in Chinese and French money funds. Money funds in Korea, India, Ireland, and Mexico also rose. MMF assets worldwide have increased by $940.6 billion, or 18.2%, the past 12 months. The U.S., Luxembourg, and Japan were the only countries showing noticeable decreases in Q1’18. We review the latest Worldwide MMF totals below."
ICI’s release says, "Worldwide regulated open-end fund assets increased 1.5 percent to $50.01 trillion at the end of the first quarter of 2018, excluding funds of funds. Worldwide net cash inflow to all funds was $584 billion in the first quarter, compared with $687 billion of net inflows in the fourth quarter of 2017. The Investment Company Institute compiles worldwide open-end fund statistics on behalf of the International Investment Funds Association, the organization of national fund associations. The collection for the first quarter of 2018 contains statistics from 47 jurisdictions.”
Our July MFI XLS, with June 30, 2018, data, shows total assets decreased $32.6 billion in June to $3.025 trillion, after increasing $63.5 billion in May and $19.9 billion in April, and decreasing $42.9 billion in March. Our broad Crane Money Fund Average 7-Day Yield was up 11 basis points to 1.53% during the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) was up 13 bps to 1.74%.
On a Gross Yield Basis (7-Day) (before expenses were taken out), the Crane MFA rose to 1.98% and the Crane 100 rose to 2.01%. Charged Expenses averaged 0.45% and 0.28% (unchanged), respectively for the Crane MFA and Crane 100. The average WAM (weighted average maturity) for the Crane MFA and Crane 100 were both 29 days, respectively (up one day from last month). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
