Daily Links Archives: May, 2025
Yields Higher in Latest Week
Money fund yields (7-day, annualized, simple, net) rose 2 bps to 4.14% on average during the week ended Friday, May 2 (as measured by our Crane 100 Money Fund Index), after falling 1 bp the previ-ous two weeks. Fund yields should remain relatively flat until the Fed moves rates again. They've de-clined by 92 bps since the Fed first cut its Fed funds target rate by 50 bps on Sept. 18, 2024, and they've declined by 49 bps since the Fed cut rates by 1/4 point on 11/7. Yields were 4.14% on 3/31/25, 4.16% on 2/28/25, 4.19% on 1/31/25, 4.28% on average on 12/31/24, 4.45% on 11/30/24, 4.65% on 10/31, 4.75% on 9/30, 5.10% on 8/31, 5.13% on 7/31 and 6/28, 5.14% on 3/31 and 5.20% on 12/31/23. The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 684), shows a 7-day yield of 4.03%, up one bp in the week through Friday. Prime Inst money fund yields were unchanged at 4.26% in the latest week. Government Inst MFs were up 2 bps to 4.14%. Treasury Inst MFs were up 1 bp at 4.08%. Treasury Retail MFs currently yield 3.84%, Government Retail MFs yield 3.85%, and Prime Retail MFs yield 4.04%, Tax-exempt MF 7-day yields were down 64 bps to 2.65%. Assets of money market funds rose by $24.1 billion last week to $7.313 trillion, according to Crane Data's Money Fund Intelligence Daily. For the month of May (MTD), MMF assets have increased by $13.3 billion, after decreasing $24.4 billion in April, increasing by $2.8 billion in March, $94.2 billion in Febru-ary, $52.8 billion in January, $110.9 billion in December, $200.5 billion in November, $97.5 billion in October and $149.8 billion in September. Weighted average maturities were at 35 days for the Crane MFA and 35 days the Crane 100 Money Fund Index. According to Monday's Money Fund Intelligence Daily, with data as of Friday (5/2), 104 money funds (out of 796 total) yield under 3.0% with $120.5 billion in assets, or 1.6%; 246 funds yield between 3.00% and 3.99% ($1.329 trillion, or 18.2%), 446 funds yield between 4.0% and 4.99% ($5.863 trillion, or 80.2%) and following the recent rate cut there continue to be zero funds yielding 5.0% or more. Our Brokerage Sweep Intelligence Index, an average of FDIC-insured cash options from major brokerages, was unchanged at 0.41%. The latest Brokerage Sweep Intelligence, with data as of May 2, shows no changes over the past week. Three of the 10 major brokerages tracked by our BSI still offer rates of 0.01% for balances of $100K (and lower tiers). These include: E*Trade, Merrill Lynch and Morgan Stanley.
WSJ Hits Money Funds on Expenses
The Wall Street Journal's Jason Zweig claims, "Your Money-Market Fund Is Ripping You Off. He writes, "Cash is king. If only you didn't have to pay a king’s ransom to hold it. Ever since President Trump's tariff bombshells went off on April 2, cash has reasserted itself as a valuable shelter for investors. Money-market mutual funds -- the most convenient form of cash for most investors -- have stayed stable while providing steady income that has cushioned the damage in other markets. Yet money-market funds are surprisingly expensive, and a recent attempt to make them cheaper has been stymied. If you're like most investors, you probably pay close attention to your stock and bond funds, and little if any to your cash. But you're probably getting ripped off on your money-market funds -- and it's one of the biggest heists on Wall Street." The piece comments, "That stunning decline in costs has barely touched money-market funds. Since 2015, taxable and tax-free money-market mutual funds have grown by more than 150%, to $6.91 trillion from $2.75 trillion, according to the Investment Company Institute. Over the same period, stock mutual funds (including international and balanced portfolios) grew less than 70%, to $16 trillion from $9.48 trillion. Yet the average expense ratio at U.S. stock mutual funds fell to 0.33% annually from 0.54%, according to Morningstar -- a 39% decline. Meanwhile, annual expenses at money funds rose slightly to 0.21% from 0.19% -- even though their assets boomed. (All these figures are weighted by the size of the funds.)" The Journal column adds, "Fund investors are supposed to benefit from economies of scale, since fixed costs get spread over much larger pools of assets. `Why hasn't that happened with money-market funds? Blame big brokers that are gouging you on cash. For most of the period between 2008 and 2021, the Federal Reserve kept short-term interest rates so low that money funds would have yielded less than zero after expenses. So the managers waived more than $50 billion in fees. With short-term rates back above 4%, $1 trillion has poured into money funds over the past year and fund companies can charge full freight again. The managers are 'rolling in money now,' says Peter Crane, president of Crane Data, a firm that tracks cash accounts, 'but they don't want to hear about cutting expenses because they just spent 10 years waiving fees.' Also, nobody had tried running a money-market fund as an ETF. So the mutual funds faced no competition from dirt-cheap ETFs. `Only last September did Dallas-based Texas Capital Bank Private Wealth Advisors succeed in launching the first money-market ETF. It quickly grew to $40 million, thanks to low fees and high yields. BlackRock's iShares followed this February with two money-market ETFs of its own."
ICI: Money Fund Assets Inch Lower
ICI published its latest weekly "Money Market Fund Assets" report Thursday. The weekly series shows money fund assets falling $4.1 billion to $6.908 trillion, after rising $31.7 billion the week prior and falling $125.4 billion two weeks ago (these massive tax outflows were the largest weekly outflow in history). Money fund assets have still risen in 25 of the last 39, and 36 of the last 54 weeks, increasing by $604.9 billion (or 9.6%) since the Fed cut on 9/18/24 and increasing by $931.0 billion (or 15.6%) since 4/24/24. MMF assets are up by $907 billion, or 15.1%, in the past 52 weeks (through 4/30/25), with Institutional MMFs up $470 billion, or 13.1% and Retail MMFs up $437 billion, or 18.1%. Year-to-date, MMF assets are still up by $58 billion, or 0.8%, with Institutional MMFs down $57 billion, or -1.4% and Retail MMFs up $115 billion, or 4.2%. ICI's weekly release says, "Total money market fund assets decreased by $4.12 billion to $6.91 trillion for the week ended Wednesday, April 30.... Among taxable money market funds, government funds decreased by $6.11 billion and prime funds decreased by $1.55 billion. Tax-exempt money market funds increased by $3.54 billion." ICI's stats show Institutional MMFs decreasing $0.2 billion and Retail MMFs decreasing $3.9 billion in the latest week. Total Government MMF assets, including Treasury funds, were $5.637 trillion (81.6% of all money funds), while Total Prime MMFs were $1.131 trillion (16.4%). Tax Exempt MMFs totaled $140.6 billion (2.0%). It explains, "Assets of retail money market funds decreased by $3.92 billion to $2.85 trillion. Among retail funds, government money market fund assets decreased by $7.90 billion to $1.80 trillion, prime money market fund assets increased by $732 million to $920.84 billion, and tax-exempt fund assets increased by $3.24 billion to $128.57 billion." Retail assets account for well over a third of total assets, or 41.3%, and Government Retail assets make up 63.2% of all Retail MMFs. They add, "Assets of institutional money market funds decreased by $194 million to $4.06 trillion. Among institutional funds, government money market fund assets increased by $1.79 billion to $3.84 trillion, prime money market fund assets decreased by $2.28 billion to $210.22 billion, and tax-exempt fund assets increased by $299 million to $11.99 billion." Institutional assets accounted for 58.7% of all MMF assets, with Government Institutional assets making up 94.5% of all institutional MMF totals. According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets have fallen by $24.4 billion in April (through 4/30/25) to $7.299 trillion, hitting a record high of $7.384 trillion on April 3. Assets rose by $2.8 trillion in March, $94.2 billion in February, $52.8 billion in January, $110.9 billion in December, $200.5 trillion in November, $97.5 billion in October, $149.8 billion in September, $109.7 billion in August, $16.6 billion in July, $15.7 billion in June and $91.4 billion in May. They declined by $15.8 billion in April 2024. Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're over $330 billion lower than Crane's asset series.
BlackRock Files for Blockchain Shares
A website CryptoSlate posted an article titled, "BlackRock unveils blockchain-enabled shares for $150B money market fund." It says, "BlackRock, the world's largest asset manager, has made additional moves to incorporate blockchain technology into its traditional finance operations. According to an April 28 filing with the US Securities and Exchange Commission (SEC), the firm seeks approval to introduce a blockchain-enabled share class, referred to as 'DLT Shares,' tied to its $150 billion [BlackRock Liquidity Funds: Treasury Trust] money market fund." According to the filing, The Bank of New York Mellon (BNY Mellon) will manage the sale of these shares and maintain a mirrored record of ownership using blockchain technology." The filing states, "DLT Shares may also be purchased by BlackRock Advisors, LLC or its affiliates. Although the Fund does not currently employ blockchain technology or invest in crypto assets, DLT Shares are expected to be purchased and held through BNY, which intends to use blockchain technology to maintain a mirror record of share ownership for its customers." The CryptoSlate piece continues, "Meanwhile, the minimum investment for this new share class is $3 million. The fund will allocate its assets across US Treasury securities, including bills, notes, and similar obligations. It will focus on short-term investments, maintaining a dollar-weighted average maturity of no more than 60 days and an average life of under 120 days." It adds, "BlackRock's latest move reflects its increasing interest in blockchain technology, especially following the success of its Bitcoin and Ethereum exchange-traded funds (ETFs) and BUIDL fund. Notably, BlackRock is already utilizing these ideas through its blockchain-native BUIDL fund, which was launched in partnership with Securitize in 2024. The fund manages over $2.5 billion in tokenized assets and has expanded operations to several blockchain networks, including Solana, Avalanche, and Ethereum layer-2 networks like Optimism."
