P&I Says Investors Leaving MMFs
Pensions & Investments writes, "Investors leaving money market safe havens." The piece claims, "As market volatility has eased, institutional investors are moving away from the safety of U.S. money market funds and moving back to more return-seeking investments. Data from Morningstar Inc. show that investors are taking initial steps away from money market funds, with assets in U.S.-domiciled funds dropping to $4.6 trillion at end of June from $4.75 trillion at the end of May. The trend is nascent. Money market balances remain higher than they were before the coronavirus pandemic took hold in the U.S. in mid-March. But industry sources said the decline shows that asset owners are growing more comfortable with risk. Meanwhile, money managers are waiving fees on their money market funds to maintain investors' yields above zero. The largest institutional money market funds in the U.S. are offering a seven-day yield in the 0.24% to 0.35% range, according to data provider Crane Data LLC." The article explains, "Sources said now some investors could be concerned about the possibility of negative rates in the U.S. and in the U.K. later this year with some investors rotating into higher-yielding fixed-income investments.... Investors said they are watching whether negative rates on money market funds could emerge later this year and whether any shift in rates would alter their cash management preferences.... Meanwhile, money market fund managers are trying to keep investors in their cash strategies. Dennis Gepp, managing director and CIO of cash at Federated Hermes Inc. in London said: 'I have to admit I was surprised — given where we stand with COVID — and the relatively long-term period of uncertainty ... how quickly a number of markets saw cash flow back to them.'"
