Unlike when Money Fund Reforms were implemented in the U.S. in October 2016, the vast majority of European money market funds have opted to remain "Prime" and convert into the new LVNAV, or Limited Volatility NAV, structure. But we learned yesterday that one has chosen to "go Government," changing into the Public Debt CNAV option ahead of the European reform implementation date of January 21, 2019. Charles Schwab Investment Management tells us, "Effective today, January 2, 2019, the Schwab U.S. Dollar Liquid Assets Fund is lowering its Expense ratio from 1.00% to 0.65% and will be classified as a Government Fund as described in Section 6 - Investment objectives & policies section." According to our Money Fund Intelligence International, which tracks money funds domiciled outside the U.S., Schwab US Dollar Liquid Assets is $1.94 billion as of Dec. 31.
Schwab's updated offering document says, "This Prospectus describes Charles Schwab Worldwide Funds plc, an investment company with variable capital incorporated in Ireland as a public limited company. The Company is constituted as an umbrella fund insofar as the share capital of the Company will be divided into different series of Shares with each series of Shares representing a separate investment portfolio of assets. Shares of any Fund may be divided into different classes to accommodate different subscription and/or redemption provisions and/or dividend and/or charges and/or fee arrangements, including different total expense ratios."
It explains, "The Company has currently established one Fund, the Schwab U.S. Dollar Liquid Assets Fund. The Fund is authorised pursuant to the MMF Regulations by the Central Bank as a Public Debt constant NAV (CNAV) money market fund and a short-term money market fund. The Fund seeks to maintain a stable Net Asset Value per Share of U.S. $1.00. There is no assurance that the Fund will be able to maintain a stable Net Asset Value per Share of U.S. $1.00 or otherwise meet its investment objectives."
Schwab adds, "The Fund may, but is not obliged to, seek to maintain a credit rating. Such ratings, if obtained, will be solicited by the Manager and financed by the Manager or the Fund. Details of the current rating for the Fund, if any, can be obtained from the Manager. There is currently one class of Shares available for subscription in the Fund, the Class A Shares. The base currency of the Fund is U.S. dollars."
We continue to watch the announcements and change our MFII product to reflect the new fund types, names and metrics, and we expect more news in the coming weeks. On Dec. 27, we announced that "BNP Splits European MMFs," on Dec. 14, we quoted, "UBS on European MMFR," and on Dec. 4, we published, "JPMorgan Now Live With European Money Fund Reforms." Other recent Crane Data News updates include: "SF Chronicle on Brokerage Sweeps; Bloomberg on Europe Rejecting RDM (11/28/18), "Cash Will Be King in '19 Says GS, JPM; BlackRock on European Reforms (11/26/18), and "JPMorgan on European MMF Reforms; Aviva First to Convert to LVNAV" (9/5/18).
For more on European Money Market Fund Reforms, see these additional Crane Data News stories: SSGA Podcast on European Money Fund Reforms Discusses PM Strategies (8/29/18), Goldman on Repatriation, European Reforms; Federated Plans; Assets (8/24/18), BlackRock Details European Money Fund Reform Plans; Love the LVNAV (8/17/18), SEC Shows Private Liquidity Funds Up in Q4; HSBC's European MF Plans (8/14/18), Morgan Stanley European MMF Reform Plans; Offshore Port Composition (7/17/18), JPMAM European MMFs Plan for Nov 2018 Conversion; MF Assets Plunge (3/16/18), and JP Morgan To Offer All European Fund Options; ICI MMF Holdings Update (11/16/17).
In other news, Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics and summary Wednesday, which tracks a shifting subset of our monthly Portfolio Holdings collection. The latest cut, with data as of Dec. 28, includes Holdings information from 43 money funds (down from 82 on Dec. 21), representing $718.4 billion (down from $1.423 trillion) of the $3.026T (23.7%) in total money fund assets tracked by Crane Data. (For our latest monthly Money Fund Portfolio Holdings numbers, see our Dec. 13 News, "Dec. MF Portfolio Holdings Break 3.0 Tril; T-Bills Up, Repo Breaks 1.0T.")
Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Repurchase Agreements (Repo) totaling $271.0 billion (down from $527.1 billion on Dec. 21), or 37.7% of holdings, Treasury debt totaling $195.4 billion (down from $460.1 billion) or 27.2%, and Government Agency securities totaling $162.0 billion (up from $269.7 billion), or 22.6%. Commercial Paper (CP) totaled $37.3 billion (up from $67.1 billion), or 5.2%, and Certificates of Deposit (CDs) totaled $28.6 billion (up from $44.3 billion), or 4.0%. A total of $13.4 billion or 1.9% was listed in the Other category (primarily Time Deposits), and VRDNs accounted for $10.8 billion, or 1.5%.
The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $195.4 billion (27.2% of total holdings), Federal Home Loan Bank with $114.2B (15.9%), RBC with $41.7 billion (5.8%), Federal Farm Credit Bank with $35.2B (4.9%), Fixed Income Clearing Co with $31.2B (4.3%), BNP Paribas with $16.9B (2.4%), Fidelity $16.7B (2.3%), Mitsubishi UFJ Financial Group Inc with $13.7B (1.9%), Nomura with $11.6B (1.6%) and Credit Agricole with $11.6B (1.6%).
The Ten Largest Funds tracked in our latest Weekly Holdings update include: Fidelity Inv MM: Govt Port ($113.7B), Wells Fargo Govt MMkt ($73.7B), Dreyfus Govt Cash Mgmt ($57.0B), Morgan Stanley Inst Liq Govt ($48.8B) Fidelity Inv MM: MMkt Port ($45.1B), State Street Inst US Govt ($44.0B), First American Govt Oblig ($40.1B), Dreyfus Treas Sec Cash Mg ($31.1B), Fidelity Inv MM: Treasury Port ($25.7B), and Morgan Stanley Inst Liq Trs Sec ($23.0B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary.)
