The December issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers on Friday, features the articles: "Money Funds Beat Bond Funds; First Time in Decade," which looks at returns and asset flows of bonds vs. MMFs; "JPMorgan Live w/European Reform Lineup; New VNAVs," a review of JPMAM's new VNAV fund ratings; and, "Asset Whiplash from Wed.; WAMs at Record Lows in '18," which reviews a huge drop then spike in assets this week, and fund WAMs. We've also updated our Money Fund Wisdom database with Nov. 30 statistics, and sent out our MFI XLS spreadsheet Friday a.m. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our December Money Fund Portfolio Holdings are scheduled to ship on Tuesday, December 11, and our Dec. Bond Fund Intelligence is scheduled to go out Friday, December 14.
MFI's "MFs Beat Bond Funds" article says, "While money funds have slowly but surely been enjoying the benefits of higher rates since the end of 2015, it hasn't been until late in 2018 that they've started to benefit from pain in the bond and stock markets. Money funds will likely outperform both bond funds and stock funds in 2018, and many strategists are calling for cash to look even better in 2019."
It continues, "Through Nov. 30, 2018, money funds have returned 1.45% year-to-date and 1.55% over 1-year, as measured by our Crane 100 Money Fund Index, versus bond fund returns of -0.70% YTD and -0.36% over 12 months, as measured by our Crane 100 Bond Fund Index. Our broader Crane Money Fund Average shows returns of 1.29% YTD and 1.38% over 1-year vs. the Crane BFI Total Index, which shows returns -0.64% and -0.29%, respectively. (Note that our bond fund return numbers aren’t complete, so our preliminary estimates.)"
Our "JPM European Update" reads, "Last weekend, J.P. Morgan became the first major manager of European money market funds become fully compliant with the new European Money Fund Reforms, which go live on Jan. 21, 2019. J.P. Morgan Global Liquidity posted a brief, 'Important announcement for Global Liquidity clients: European Money Market Fund Regulations,' which tells us, 'J.P. Morgan Global Liquidity's implementation of the European Money Market Funds Regulations is now complete on the Luxembourg domiciled Global Liquidity funds. J.P. Morgan Global Liquidity is committed to ensuring that investors have the best experience."
It adds, "As a global leader in the liquidity space, J.P. Morgan Asset Management's Global Liquidity group manages USD 597.6 billion in asset under management (as of 30 Sept., 2018). The team is made up of 132 dedicated global liquidity professionals with 21 average years of portfolio management and credit research industry experience in 7 countries and 5 global service centers ensuring 24 hour coverage."
MFI's "Shortest Ever" piece says, "Though the Federal Reserve may slow or stop raising interest rates in 2019, money market funds continue to stay super short and liquid. Weighted average maturities, or WAMs, of taxable money funds hit a record low in November. The average WAM for our Crane Money Fund Average, the simple average of the 753 taxable money funds tracked by Crane Data, inched down to 27 days, the lowest level since we started tracking funds in 2006.
It tells us, "Money fund WAMs used to be much longer too, since the SEC reduced the maximum WAM funds could have from 120 days to 90 days in the early 1990's and again reduced the maximum from 90 days to 60 days in 2011."
Also, MFI includes a sidebar, "American Funds Files to Launch Internal MMF," which says "Capital Research and Management Company, manager of the American Funds filed to launch Capital Group Central Cash, an internal money market fund open only to other funds in the American Funds Group. The filing says, 'The fund is an institutional money market fund. The net asset value of the fund's shares will 'float,' fluctuating with changes in the value of the fund's portfolio securities. Shares of the fund are primarily purchased by other funds and investment vehicles managed by the fund's investment adviser and its affiliates and are not available to the public."
Our December MFI XLS, with Nov. 30, 2018, data, shows total assets rising $64.3 billion in November to $3.171 trillion, after increasing $34.5 billion in October, $1.6 billion in Sept., and $29.2 billion in August. Our broad Crane Money Fund Average 7-Day Yield rose 8 bps to 1.88% during the month, while our Crane 100 Money Fund Index (the 100 largest taxable funds) was up 5 bps to 2.06% (its highest level since Oct. 2008).
On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA rose 7 bps to 2.32% and the Crane 100 rose to 2.33%. Charged Expenses averaged 0.43% (down 2 bps) and 0.27% (unchanged), respectively for the Crane MFA and Crane 100. The average WAM (weighted average maturity) for the Crane MFA and Crane 100 was 27 and 29 days, respectively (down 1 day). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
