News Archives: March, 2025
A press release titled, "ICE and Circle Sign MOU to Explore Product Innovation Based on Circle's USDC and USYC Digital Assets," tells us, "Intercontinental Exchange Inc. (NYSE: ICE), a leading global provider of technology and data, and Circle Internet Group, Inc., a global financial technology company and stablecoin market leader, today announced an agreement whereby ICE plans to explore using Circle's stablecoin USDC, as well as tokenized money market offering US Yield Coin (USYC), to develop new products and solutions for its customers." (Note: Thanks again to those who supported our Bond Fund Symposium in Newport Beach! Attendees and Crane Data subscribers may access the conference binder, Powerpoints and recordings via our "Bond Fund Symposium 2025 Download Center.")
Jeremy Allaire, Co-Founder and CEO of Circle comments, "ICE's reputation and global network across markets offer a unique pathway for Circle to integrate USDC into major new use cases, and we are thrilled for the opportunity to innovate together."
New York Stock Exchange President Lynn Martin, says, "We believe Circle's stablecoins and tokenized digital currencies can play a larger role in capital markets as digital currencies become more trusted by market participants as an acceptable equivalent to the US Dollar. We are excited to explore the potential use cases for USDC and USYC across ICE's markets."
The release explains, "Circle's USDC is a fully reserved stablecoin, otherwise known as a digital dollar, and is designed to maintain price equivalence to the US dollar. According to Circle, as of March 26, 2025, over $60 billion of USDC is in circulation. USDC reserves are backed by highly liquid cash and cash-equivalent assets making USDC redeemable 1:1 for US dollars."
It adds, "The majority of the USDC reserve is invested in the Circle Reserve Fund (USDXX), an SEC-registered 2a-7 government money market fund. Launched in 2018, USDC is now accessible to approximately 600 million end-user wallet products, supporting a range of use cases from crypto capital markets activities to dollar store of value, and payments applications."
Finally, Circle's release states, "Under the MoU, Circle and ICE plan to collaborate to explore applications for using Circle's stablecoins and other product offerings within ICE's derivatives exchanges, clearinghouses, data services, and other markets, to deliver innovation and build new markets and product offerings based on Circle's products."
In other news, ICI's "Month-End Portfolio Holdings" confirms a jump in Repo and a drop in Treasuries last month. Treasury holdings in Taxable money funds remained the largest composition segment last month, they decreased $114.4 billion, or -3.9%, to $2.806 trillion, or 41.0% of holdings. Treasury securities have increased by $394.5 billion, or 16.4%, over the past 12 months. (See our March 12 News, “March Money Fund Portfolio Holdings: Repo Surges, Treasuries Plunge.")
Repurchase Agreements were the second largest composition segment this past month, increasing $185.9 billion, or 7.8%, to $2.571 trillion, or 37.5% of holdings. Repo holdings have increased $341.0 billion, or 15.3%, over the past year. U.S. Government Agency securities were the third largest segment; they decreased $15.0 billion, or -1.8%, to $828.5 billion, or 12.1% of holdings. Agency holdings have increased by $137.6 billion, or 19.9%, over the past 12 months.
Certificates of Deposit (CDs) remained in fourth place, up $439 million, or 0.1%, to $301.0 billion (4.4% of assets). CDs decreased $47.6 billion, or -13.6%, over one year. Commercial Paper was in fifth place; they increased by $1.8 billion, or 0.6%, to $293.9 billion (4.3% of assets). CP held by money funds rose by $37.5 billion, or 14.6%, over 12 months. Other holdings decreased to $21.6 billion (0.3% of assets), while Notes (including Corporate and Bank) decreased to $33.8 billion (0.5% of assets).
The Number of Accounts Outstanding in ICI's series for taxable money funds increased to 77.440 million, while the Number of Funds was unchanged at 217. Over the past 12 months, the number of accounts rose by 11.500 million and the number of funds decreased by 10. The Average Maturity of Portfolios was 36 days, down 2 days from January. Over the past 12 months, WAMs of Taxable money are down 4 days.
ICI published its latest weekly "Money Market Fund Assets" report, as well as its monthly "Trends in Mutual Fund Investing" for February 2025 Thursday. The weekly series shows money fund assets rising $11.8 billion to $7.014 trillion, after falling $21.8 billion the week prior and falling $1.4 billion two weeks ago. Money fund assets have risen in 23 of the last 34, and 34 of the last 49 weeks, increasing by $710.5 billion (or 11.3%) since the Fed cut on 9/18/24 and increasing by $1.037 trillion (or 17.3%) since 4/24/24. MMF assets are up by $973 billion, or 16.1%, in the past 52 weeks (through 3/26/25), with Institutional MMFs up $510 billion, or 14.0% and Retail MMFs up $463 billion, or 19.3%. Year-to-date, MMF assets are up by $164 billion, or 2.4%, with Institutional MMFs up $32 billion, or 0.8% and Retail MMFs up $132 billion, or 4.8%. (Note: Thank you to those who attended and supported our Bond Fund Symposium, which took place Thursday and Friday in Newport Beach! Attendees and Crane Data subscribers may access the conference binder, Powerpoints and recordings (we'll post these Monday) via our "Bond Fund Symposium 2025 Download Center.")
ICI's weekly release says, "Total money market fund assets increased by $11.80 billion to $7.01 trillion for the week ended Wednesday, March 26... Among taxable money market funds, government funds increased by $6.88 billion and prime funds increased by $3.57 billion. Tax-exempt money market funds increased by $1.34 billion.” ICI's stats show Institutional MMFs increasing $11.9 billion and Retail MMFs decreasing $0.1 billion in the latest week. Total Government MMF assets, including Treasury funds, were $5.741 trillion (81.9% of all money funds), while Total Prime MMFs were $1.137 trillion (16.2%). Tax Exempt MMFs totaled $135.4 billion (1.9%).
It explains, "Assets of retail money market funds decreased by $98 million to $2.87 trillion. Among retail funds, government money market fund assets decreased by $3.35 billion to $1.82 trillion, prime money market fund assets increased by $1.91 billion to $923.61 billion, and tax-exempt fund assets increased by $1.35 billion to $124.13 billion." Retail assets account for well over a third of total assets, or 40.9%, and Government Retail assets make up 63.5% of all Retail MMFs.
They add, "Assets of institutional money market funds increased by $11.89 billion to $4.15 trillion. Among institutional funds, government money market fund assets increased by $10.24 billion to $3.92 trillion, prime money market fund assets increased by $1.66 billion to $213.56 billion, and tax-exempt fund assets decreased by $7 million to $11.30 billion." Institutional assets accounted for 59.1% of all MMF assets, with Government Institutional assets making up 94.6% of all institutional MMF totals.
According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets have risen by $44.1 billion in March through 3/26/25, hitting a record high $7.371 trillion two weeks ago (3/11). Assets rose by $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 and $68.8 billion in March 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.
ICI's monthly Trends shows money fund totals rising $99.0 billion, or 1.4%, in February to a record $6.983 trillion. MMFs have increased by $926.5 billion, or 15.3%, over the past 12 months (through 2/28/25). Money funds' February asset increase follows an increase $31.9 billion in January, $139.3 billion in December, $171.5 billion in November, $117.4 billion in October, $158.6 billion in September, $124.8 billion in August, $46.6 billion in July, $13.0 billion in June, $90.9 billion in May and $4.3 billion in April, but decreased $73.0 billion last March. Bond fund assets increased $93.9 billion to $5.201 trillion, and bond ETF assets increased to $1.87 trillion.
The monthly release states, "The combined assets of the nation's mutual funds decreased by $85.08 billion, or 0.3 percent, to $29.02 trillion in February, according to the Investment Company Institute's official survey of the mutual fund industry. In the survey, mutual fund companies report actual assets, sales, and redemptions to ICI.... Bond funds had an inflow of $14.24 billion in February, compared with an inflow of $8.35 billion in January.... Money market funds had an inflow of $85.04 billion in February, compared with an inflow of $18.80 billion in January. In February funds offered primarily to institutions had an inflow of $39.82 billion and funds offered primarily to individuals had an inflow of $45.22 billion."
The Institute's latest statistics show that Taxable MMFs were higher from last month while Tax Exempt MMFs were unchanged. Taxable MMFs increased by $99.0 billion in February to $6.850 trillion. Tax-Exempt MMFs were unchanged at $133.5 billion. Taxable MMF assets increased year-over-year by $912.1 billion (15.4%), and Tax-Exempt funds rose by $14.4 billion over the past year (12.1%). Bond fund assets increased by $93.3 billion (after increasing by $39.3 billion in January) to $5.201 trillion; they've increased by $419.2 billion (8.8%) over the past year.
Money funds represent 24.1% of all mutual fund assets (up 0.4% from the previous month), while bond funds account for 17.9%, according to ICI. The total number of money market funds was 258, unchanged from the prior month and down from 272 a year ago. Taxable money funds numbered 217 funds, and tax-exempt money funds numbered 41 funds.
The Investment Company Institute, the trade group for the mutual fund industry, published a press release entitled, "US Equity Fund Fees Continue to Decline Amid Rising Investor Demand for Lower-Cost Options," along with the report, "Trends in the Expenses and Fees of Funds, 2024." The full report tells us, "On an asset-weighted basis, average expense ratios incurred by mutual fund investors have fallen substantially over the past 28 years.... In 1996, equity mutual fund investors incurred expense ratios of 1.04 percent, on average, or $1.04 for every $100 in assets. By 2024, that average had fallen to 0.40 percent. Average expense ratios of hybrid and bond mutual funds, as well as money market funds, have also declined meaningfully since 1996." (Note: Welcome to those attending our Bond Fund Symposium Thursday and Friday in Newport Beach! Attendees and Crane Data subscribers may access the conference binder, Powerpoints and recordings (after the show) via our "Bond Fund Symposium 2025 Download Center.")
A table, "Average Expense Ratios Incurred by Mutual Fund Investors Have Declined Substantially Since 1996," presents expense ratios by type from 1996 to 2024 and shows bonds fund averages falling from 0.84% to 0.38% over this period and money fund ratios falling from 0.52% to 0.22%. (Note: Crane Data shows the average expense ratio for money market mutual funds at 0.27% as of 2/28/25 as measured by our Crane 100 Money Fund Index.)
It explains, "Like the prices of most goods and services, the expense ratios of individual mutual funds differ considerably across the array of available products. For example, fund size and asset growth play an important role in mutual fund expense ratios. Some fund costs -- such as transfer agency fees, accounting and audit fees, and director fees -- are relatively fixed in dollar terms, regardless of fund size. As a result, when fund assets rise, these relatively fixed costs make up a smaller proportion of a fund's expense ratio."
ICI writes, "Fund expense ratios can also vary by fund type.... For example, bond and money market mutual funds tend to have lower expense ratios than equity and hybrid mutual funds." Another table, "Mutual Fund Expense Ratios Vary Across Investment Objectives," shows bond fund expenses averaging 0.32% at the 10th percentile, 0.70% at the Median, 1.55% at the 90th percentile, 0.38% for the asset-weighted average and 0.82% for the simple average. For money market funds, it shows averages of 0.11% at the 10th percentile, 0.30% at the Median, 0.73% at the 90th percentile, 0.22% for the asset-weighted average and 0.38% for the simple average."
The section on "Money Market Funds," comments, "The average expense ratio for money market funds remained unchanged at 0.22 percent in 2024.... Over the past 16 years, movements in the average money market fund expense ratio have largely been driven by changes in funds’ use of expense waivers."
It continues, "The Federal Reserve reduced short-term interest rates to nearly zero during the 2007–2009 financial crisis and kept them there until the end of 2015. Because gross yields on taxable money market funds (the yield before deducting the fund's expense ratio) closely track short-term interest rates, most money market funds had gross yields that were close to zero. To prevent their net yields (the gross yield minus fund expenses) from falling below zero, most money market funds adopted expense waivers during this period."
ICI writes, "With an expense waiver, a fund's adviser agrees to absorb all or a portion of a fund's fees and expenses. Expense waivers reduce funds' expense ratios and boost their net yields but are costly for fund advisers. Between 2009 and 2015, fund advisers waived $36 billion in money market fund expenses."
The report states, "From March 2022 to mid-2023, the Federal Reserve aggressively raised the federal funds rate from near zero to more than 5 percent to combat high inflation and then maintained it at an elevated level throughout 2024. With short-term interest rates well above zero, money market funds have been able to pare back their use of expense waivers—total money market fund waivers decreased from $8.4 billion in 2021 to just $1.5 billion in 2024.... The percentage of money market funds offering waivers declined from 97 percent at year-end 2021 to 64 percent by year-end 2024. Consequently, the average expense ratio for money market funds increased from 0.11 percent in 2021 to 0.22 percent in 2024."
Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics Tuesday, which track a shifting subset of our monthly Portfolio Holdings collection. The most recent cut (with data as of March 21) includes Holdings information from 67 money funds (up 10 from a week ago), or $3.964 trillion (up from $3.551 trillion) of the $7.355 trillion in total money fund assets (or 53.9%) tracked by Crane Data. (Note: Our Weekly MFPH are e-mail only and aren't available on the website. See our latest Monthly Money Fund Portfolio Holdings here and our March 12 News, "March Money Fund Portfolio Holdings: Repo Surges, Treasuries Plunge.") (Please join us for this week's Bond Fund Symposium, which is March 27-28 in Newport Beach, Calif. We're still taking registrations!)
Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Treasuries totaling $1.833 trillion (up from $1.706 trillion a week ago), or 46.2%; Repurchase Agreements (Repo) totaling $1.372 trillion (up from $1.214 trillion a week ago), or 34.6%, and Government Agency securities totaling $326.0 billion (up from $287.7 billion), or 8.2%. Commercial Paper (CP) totaled $174.1 billion (up from a week ago at $139.2 billion), or 4.4%. Certificates of Deposit (CDs) totaled $101.4 billion (up from $82.1 billion a week ago), or 2.6%. The Other category accounted for $105.9 billion or 2.7%, while VRDNs accounted for $51.4 billion, or 1.3%.
The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.833 trillion (46.2% of total holdings), Fixed Income Clearing Corp with $417.5B (10.5%), the Federal Home Loan Bank with $218.1 billion (5.5%), JP Morgan with $143.3B (3.6%), Citi with $97.2B (2.5%), BNP Paribas with $85.2B (2.1%), RBC with $79.1B (2.0%), Federal Farm Credit Bank with $75.6B (1.9%), Wells Fargo with $61.2B (1.5%) and Bank of America with $51.1B (1.3%).
The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($302.2B), Goldman Sachs FS Govt ($267.3B), JPMorgan 100% US Treas MMkt ($256.9B), Fidelity Inv MM: Govt Port ($232.4B), Morgan Stanley Inst Liq Govt ($180.3B), Federated Hermes Govt ObI ($169.8B), BlackRock Lq FedFund ($166.1B), State Street Inst US Govt ($164.2B), BlackRock Lq Treas Tr ($153.5B) and Fidelity Inv MM: MM Port ($152.3B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary.)
In other news, CoinDesk writes that, "Fidelity Files for Onchain U.S. Treasury Fund, Joining the Asset Tokenization Race." The piece states, "Asset manager Fidelity Investments has filed paperwork to register a blockchain-based, tokenized version of its U.S. dollar money market fund, aiming to join the tokenized asset race. According to a ... filing to the U.S. Securities and Exchange Commission (SEC), the company seeks to register an 'OnChain' share class of its Fidelity Treasury Digital Fund (FYHXX) and use blockchains as transfer agent. FYHXX holds cash and U.S. Treasury securities and was launched late last year."
The piece explains, "The Onchain class of the fund currently uses the Ethereum (ETH) network, and the firm may expand to other blockchains in the future, the filing said. The registration is subject to regulatory approval, with the product expected to become effective on May 30. The filing happened as global banks and asset managers increasingly put traditional financial instruments such as government bonds, credit, and funds on blockchain rails, a process often referred to as tokenization of real-world assets (RWAs). They do so to pursue operational and efficiency gains and faster, around-the-clock settlements."
CoinDesk adds, "Fidelity, with $5.8 trillion in assets under management, is the latest traditional financial heavyweight seeking to enter the fast-growing tokenized U.S. Treasuries space. Blackrock (BLK), in partnership with digital asset firm Securitize, launched a similar tokenized T-bill fund last March called BUIDL and has become the market leader with nearly $1.5 billion of assets, rwa.xyz data shows. Franklin Templeton's fund, which was the first on-chain money market product, gathered $689 million in assets since its 2021 debut. The entire tokenized U.S. Treasury market is currently worth $4.77 billion, growing almost 500% over the past year, per rwa.xyz."
In related news, Coindesk also says, "BlackRock, Securitize Expand $1.7B Tokenized Money Market Fund BUIDL to Solana." It tells us, "BlackRock's tokenized money market fund, BUIDL, has become available on Solana, Securitize announced, marking another step in the asset manager's push into blockchain-based finance. The expansion makes BUIDL available on seven blockchains, including Ethereum, Polygon, Aptos, Arbitrum and Optimism. Only 62 wallets currently hold BUIDL on-chain, however, according to rwa.zyz data."
They write, "The fund, officially the BlackRock USD Institutional Digital Liquidity Fund, combines a short-term yield-bearing portfolio of cash and U.S. Treasuries with the settlement and transfer capabilities of blockchain. Since its introduction on Ethereum in 2023, the fund has drawn in $1.7 billion and is on track to cross $2 billion by early April, according to Securitize."
They quote Carlos Domingo, co-founder and CEO of Securitize, "In the year since BUIDL's launch, we've experienced significant growth in demand for tokenized real-world assets, reinforcing the value of bringing institutional-grade products on-chain. As the market for RWAs and tokenized treasuries gains momentum, expanding BUIDL to Solana -- a blockchain known for its speed, scalability, and cost efficiency -- is a natural next step."
The website RIABiz writes, "Schwab Chases BlackRock Out of the Gate with Money Market ETF." The article states, "Charles Schwab & Co. just filed with the SEC to launch a money market fund (MMF) ETF, which could undercut BlackRock's similar launch six weeks ago -- but not without possibly validating the brazen interloper in the bargain. The Westlake, Texas brokerage is seeking Securities and Exchange Commission (SEC) approval to launch the Schwab Government Money Market ETF (SGVT), by May 28. It's a fairly carbon-copy move of BlackRock's two Feb. 4 ETF releases." (Note: For those attending our Bond Fund Symposium later this week, March 27-28, in Newport Beach, Calif, attendees and Crane Data subscribers may access the BFS Conference Materials here.)
It continues, "Schwab's ETF, following the world's largest asset manager's play for money market assets, makes sense, says Peter Crane, president and CEO of fund data firm Crane Data, in an email exchange. 'Schwab is so big in money markets that they can't afford to ignore BlackRock's experiment in the money market ETF space,' he explains. Yet, Schwab also had plenty of reasons why it might have held fire -- not least that it lends legitimacy to the BlackRock money market funds inside an ETF, according to Zachary Evens, Morningstar analyst for passive strategies."
They write, "Indeed, investors might pose a threat to Schwab by prioritizing ETFs for cash management rather than the classic in-house mutual funds that Schwab offers, according to Matt Apkarian, associate director for product development at Cerulli Associates in Boston. BlackRock's two money market ETFs -- iShares Prime MMF (PMMF) and the iShares Government MMF (GMMF) –- grew by 34% in the past month, managing a combined $174.4 million, up from $130.2 million on Feb. 21.... 'Advisors [could] prefer ETFs so they can consider even cash positions 'equity,' and thus, levy their fees on this portion,' says Crane."
RiaBiz also commentz, "All three of the currently available MMF ETFs, including BlackRock's iShares Prime Money Market ETF (PMMF), its iShares Government Money Market ETF (GMMF), and Texas Capital's Government Money Market ETF (MMKT) charge 0.2%. Both Vanguard Group, which manages $580.7 billion of MMF assets through six funds, and Fidelity Investments, which manages over $1 trillion of MMF assets in 59 funds declined to answer whether they intend to launch their own MMF ETFs."
In related news, Bloomberg writes that, "Fidelity, Schwab Block Orders of BlackRock and Texas Capital ETFs," which tells us, "Fidelity Investments and Charles Schwab Corp. are prohibiting clients from investing in money-market ETFs on their trading platforms, an unusual move for the financial powerhouses who typically permit easy access to funds that already trade on an exchange. The two firms are blocking purchases of three exchange-traded funds offered by BlackRock Inc. and Texas Capital, the first to track money—market securities such as Treasury bills and other government-backed debt in an ETF structure. The new funds serve as a direct challenge to mutual-fund providers, who have long been big, established players in money-market products."
The piece says, "Fidelity and Schwab alone manage trillions of dollars in money-market assets, and this month, Schwab filed plans to launch its own government money-market ETF. A Schwab spokesperson said its decision is consistent with the firm's 'long-standing approach' of only making available Schwab affiliate money-market mutual funds, while a Fidelity spokesperson said this is an extension of the company's policy to 'generally restrict' third-party money-market mutual funds. Yet, the move stands out because trading platforms like Schwab and Fidelity typically don't restrict exchange-traded funds, even if those funds are in competition with existing in-house offerings."
Bloomberg comments, "The restriction underscores how the growth of the ETF and race to put even more novel strategies into the fund is creating more competition throughout the asset management world and introducing wrinkles for issuers seeking to distribute funds.... The ease of listing is changing, though, as ETFs grow. Last year, Fidelity imposed new fees on some ETF firms, in return for listing and maintaining the products on its massive platform. The latest move has taken some investors by surprise."
They add, "A BlackRock spokesperson noted that the firm's iShares money-market ETFs 'unlock access to professional grade cash management strategies in the convenience of the ETF wrapper, providing additional choice and flexibility for investors'.... `Investors have flocked to money markets over the last several years, in large part due to the Federal Reserve's aggressive rate-hiking cycle that sent short-term rates above 5%. While the US central bank has begun to ease monetary policy, these rates are still high enough to keep pulling cash toward money-market funds, which saw their assets rise to an all-time high of more than $7 trillion recently."
For more, see these Crane Data News articles: "Schwab Files for Govt Money Mkt ETF" (3/17/25), "BlackRock Money Market ETFs Go Live; Ondo Finance on Tokenized MMFs" (2/6/25), "VettaFi Discusses Money Market ETFs" (12/11/24), "Dec. MFI: Assets Break $7.0 Tril; Top 10 of 2024; BlackRock MM ETFs" (12/6/24), "BlackRock Debuts First Euro MM ETF" (12/5/24), "FT on BlackRock Money Market ETFs" (11/18/24), "November BFI: Bond Funds Hit by Election; ETF Trends MM Substitutes" (11/15/24), "BlackRock Files for Money Market ETFs" (11/12/24) and "Texas Capital Launches Govt MM ETF" (9/26/24).
In other news, Investment News published the brief, "BNY Pershing's new cash sweep charge to hit RIAs first." They explain, "BNY Pershing's plans to create a new charge on client cash held in accounts of RIAs that custody with Pershing and broker-dealers that use it for clearing are taking shape, with senior industry executives saying the clearing and custody giant is planning to roll out the new charge first to registered investment advisors."
The piece says, "InvestmentNews reported in February that BNY Pershing was evaluating plans to create a new charge, akin to a tax, on cash held by its broker-dealer clients. BNY Pershing was discussing with broker-dealers that use its platform plans to get first dibs on cash -- up to $10,000 -- held in their customers' accounts. In all likelihood, BNY Pershing will introduce the new cash sweep plan initially with registered investment advisors that use its platform and then roll out the charge to broker-dealers at some point in the future, said those industry executives, who spoke confidentially to InvestmentNews about the matter."
It adds, "BNY Pershing's intention is to sweep the first $10,000 held in a broker-dealer or RIA's customer's account into a money market fund or similar cash product that it controls. The interest rate for the customer's cash -- as currently discussed by Pershing -- will be 2.25 percent annually. BNY Pershing, however, would not rebate, meaning share, any additional interest it receives from borrowers when it lends the cash, potentially eating into a broker-dealer's profitability. Clearing firms give broker-dealer rebates for cash sweep accounts in the range of 50 basis points to 100 basis points, which is credited back to the broker-dealer."
Finally, they write, "Toward the end of last year, Fidelity told registered investment advisors it would begin to default all non-retirement cash to an in-house option in 2025. Brokerage firms in particular have been criticized for having low rates in their sweep options while benefiting from margin loans they make and the spreads they retain from that cash. There have been numerous lawsuits filed over the issue, and companies have responded to the pressure by increasing the rates they pay clients for those cash positions."
The Investment Company Institute published, "Worldwide Regulated Open-Fund Assets and Flows, Fourth Quarter 2024," Friday, which shows that money fund assets globally rose by $382.8 billion, or 3.4%, in Q4'24 to a record $11.598 trillion. (The totals would have been $11.871 trillion if Australia and New Zealand had been included.) Increases were led by a sharp jump in money funds in U.S. and Luxembourg, while Ireland and China also rose. Meanwhile, money funds in France and Korea were lower. MMF assets worldwide increased by $1.157 trillion, or 11.1%, in the 12 months through 12/31/24, and money funds in the U.S. now represent 59.1% of worldwide assets. We review the latest Worldwide MMF totals, below. (Note: For those attending our Bond Fund Symposium March 27-28, Attendees and Crane Data Subscribers may access the BFS Conference Materials here.)
ICI's release says, "Worldwide regulated open-end fund assets, excluding assets in funds of funds, decreased 1.5 percent to $73.86 trillion at the end of the fourth quarter of 2024. Worldwide net cash inflows to all funds were $1.3 trillion in the fourth quarter, compared with $912 billion of net inflows in the third quarter of 2024. The Investment Company Institute compiles worldwide regulated open-end fund statistics on behalf of the International Investment Funds Association (IIFA), the organization of national fund associations. The collection for the fourth quarter of 2024 contains statistics from 44 jurisdictions."
It explains, "The growth of total regulated open-end fund assets reported in US dollars was negative because the US dollar appreciated over the fourth quarter of 2024. For example, fund assets in Europe increased in the fourth quarter by 3.3 percent on a euro-denominated basis but decreased by 4.2 percent on a US dollar–denominated basis."
ICI's quarterly continues, "On a US dollar–denominated basis, equity fund assets decreased by 1.0 percent to $35.68 trillion at the end of the fourth quarter of 2024. Bond fund assets decreased by 2.6 percent to $13.77 trillion in the fourth quarter. Balanced/mixed fund assets decreased by 5.9 percent to $7.29 trillion in the fourth quarter, while money market fund assets increased by 3.4 percent globally to $11.60 trillion."
The release also tells us, "At the end of the fourth quarter of 2024, 48% of worldwide regulated open-end fund assets were held in equity funds. The asset share of bond funds was 19% and the asset share of balanced/mixed funds was 10%. Money market fund assets represented 16% of the worldwide total. By region, 58% of worldwide assets were in the Americas in the fourth quarter of 2024, 31% were in Europe, and 11% were in Africa and the Asia-Pacific regions."
ICI adds, "Net sales of regulated open-end funds worldwide were $1.3 trillion in the fourth quarter of 2024.... Globally, bond funds posted an inflow of $315 billion in the fourth quarter of 2024, after recording an inflow of $244 billion in the third quarter.... Money market funds worldwide experienced an inflow of $582 billion in the fourth quarter of 2024 after registering an inflow of $403 billion in the third quarter of 2024."
According to Crane Data's analysis of ICI's "Worldwide" fund data, the U.S. sustained its position as the largest money fund market in Q4'24 with $6.852 trillion, or 59.1% of all global MMF assets. U.S. MMF assets increased by $428.2 billion (6.7%) in Q4'24 and have increased by $933.1 billion (15.8%) in the 12 months through December 31, 2024. China remained in second place among countries overall. China saw assets increase $7.3 billion (0.4%) in Q4 to $1.864 trillion (16.1% of worldwide assets). Over the 12 months through December 31, 2024, Chinese MMF assets have increased by $276.0 billion, or 17.4%.
Ireland remained third among country rankings, ending Q4 with $914.1 billion (7.9% of worldwide assets). Irish MMFs were up $7.4B for the quarter, or 0.8%, and up $107.7B, or 13.4%, over the last 12 months. Luxembourg remained in fourth place with $640.3 billion (5.5% of worldwide assets). Assets there increased $20.0 billion, or 3.2%, in Q4, and were up $69.6 billion, or 12.2%, over one year. France was in fifth place with $450.7B, or 3.9% of the total, down $41.3 billion in Q4 (-8.4%) and down $9.1B (-2.0%) over 12 months.
Australia was listed (by us) in sixth place with $268.7 billion, or 2.3% of worldwide assets. Its MMF data was unavailable for Q4, Q3, Q2 and Q1 so we kept the 2023 Q4 numbers. Mexico was in 7th place with $125.6 billion (1.1%); assets there decreased $4.5 billion (-3.5%) in Q4 and increased by $836 million (0.7%) over 12 months. Korea was the 8th ranked country and saw MMF assets decrease $21.7 billion, or -15.9%, in Q4'24 to $114.6 billion (1.0% of the total); they've decreased $18.7 billion (-14.0%) for the year. Brazil was in 9th place, as assets decreased $15.0 billion, or -12.2%, to $108.0 billion (0.9% of total assets) in Q4. They've decreased $17.0 billion (-13.6%) over the previous 12 months. ICI's statistics show Japan was listed in 10th place with $97.1B, or 0.8% of total assets, down $4.1 billion (-4.1%) for the quarter.
India was in 11th place, increasing $1.9 billion, or 2.4%, to $81.2 billion (0.7% of total assets) in Q4 and increasing $18.5 billion (29.4%) over the previous 12 months. Canada ($59.5B, down $1.2 billion and up $1.6B over the quarter and year, respectively) ranked 12th ahead of Switzerland. ($42.0B, down $7.0B and up $3.4B). Turkey ($35.5B, up $9.5B and up $30.5B) and Chile ($32.8B, down $2.8B and down $433M), rank 14th and 15th, respectively. Argentina, United Kingdom, Chinese Taipei, Spain and South Africa round out the 20 largest countries with money market mutual funds.
ICI's quarterly series shows money fund assets in the Americas total $7.213 trillion, up $407.9 billion in Q4. Asian MMFs decreased by $14.8 billion to $2.197 trillion, and Europe saw its money funds fall $8.8 billion in Q4'24 to $2.165 trillion. Africa saw its money funds decrease $1.4 billion to $22.4 billion.
Note that Ireland and Luxembourg's totals are primarily "offshore" money funds marketed to global multinationals, while most of the other countries in the survey have mainly domestic money fund offerings. Contact us if you'd like our latest "Largest Money Market Funds Markets Worldwide" spreadsheet, based on ICI's data. (Let us know too if you'd like to see our latest Money Fund Intelligence International product, which tracks "offshore" money market funds domiciled in Europe and outside the U.S.)
The U.S. Securities and Exchange Commission published its latest monthly "Money Market Fund Statistics" summary, which shows that total money fund assets rose by $101.8 billion in February 2025 to a record $7.388 trillion. Assets increased $47.9 billion in January, $113.2 billion in December, $197.8 billion in November, $93.3 billion in October, and $166.6 billion in September 2024. The SEC shows Prime MMFs increased $15.4 billion in February to $1.234 trillion, Govt & Treasury funds increased $85.6 billion to $6.015 trillion and Tax Exempt funds increased $0.8 billion to $139.2 billion. Taxable yields continued to decline in February after previous decreases in January and December. The SEC's Division of Investment Management summarizes monthly Form N-MFP data and includes asset totals and averages for yields, liquidity levels, WAMs, WALs, holdings, and other money market fund trends. We review their latest numbers below. (Our MFI XLS monthly shows money fund assets rising $97.9 billion in February 2025 to a record $7.332 trillion. In March month-to-date through 3/19, total money fund assets have increased by $18.1 billion to $7.339 trillion, according to Crane Data's separate, and slightly smaller, MFI Daily series.) (Note: Many of the Powerpoints for next week's Bond Fund Symposium, which is March 27-28 in Newport Beach, Calif., are now available to registered attendees and Crane Data subscribers via the Bond Fund Symposium 2025 Download Center. The recordings will be posted after the show.)
February's asset increase follows a rise of $47.9 billion in January, $113.2 billion in December, $197.8 billion in November, $93.3 billion in October, $166.6 billion in September, $97.8 billion in August, $19.5 billion in July, $21.3 billion in June, and $89.7 billion in May. Assets decreased $17.7 billion in April and $68.5 billion in March. Over the 12 months through 2/28/25, total MMF assets have increased by $1.019 trillion, or 16.0%, according to the SEC's series.
The SEC's stats show that of the $7.388 trillion in assets, $1.234 trillion was in Prime funds, up $15.4 billion in February. Prime assets were up $27.4 billion in January, $4.0 billion in December, $12.9 billion in November, $16.4 billion in October, but down $5.6 billion in September and $25.1 billion in August. They fell $11.5 billion in July and $204.6 billion in June. But assets rose $19.7 billion in May. Assets were down $30.0 billion in April, and up $8.1 billion last March. Prime funds represented 16.7% of total assets at the end of February. They've decreased by $139.2 billion, or -10.1%, over the past 12 months. (Note that the SEC's series includes a number of internal money funds not tracked by ICI, though Crane Data includes most of these assets in its collections.)
Government & Treasury funds totaled $6.015 trillion, or 81.4% of assets. They increased $85.6 billion in February, $23.1 billion in January, $109.5 billion in December, $181.5 billion in November, $73.2 billion in October, $171.2 billion in September, $121.9 billion in August, $31.3 billion in July, $229.2 billion in June, $65.5 billion in May, $9.3 billion in April, but they decreased $78.8 billion last March. Govt & Treasury MMFs are up $1.158 trillion over 12 months, or 23.8%. Tax Exempt Funds increased $0.8 billion to $139.2 billion, or 1.9% of all assets. The number of money funds was 277 in February, up 2 from the previous month and down 14 funds from a year earlier.
Yields for both Taxable and Tax Exempt MMFs continued to decline in February. The Weighted Average Gross 7-Day Yield for Prime Institutional Funds on Feb. 28 was 4.50%, down 3 bps from the prior month. The Weighted Average Gross 7-Day Yield for Prime Retail MMFs was 4.52%, down 3 bps from the previous month. Gross yields were 4.41% for Government Funds, down 3 bps from last month. Gross yields for Treasury Funds were down 2 bps at 4.39%. Gross Yields for Tax Exempt Institutional MMFs were down 28 basis points to 1.94% in February. Gross Yields for Tax Exempt Retail funds were down 21 bps to 2.37%.
The Weighted Average 7-Day Net Yield for Prime Institutional MMFs was 4.39%, down 4 bps from the previous month and down 94 bps from 2/29/24. The Average Net Yield for Prime Retail Funds was 4.25%, down 3 bps from the previous month and down 95 bps since 2/29/24. Net yields were 4.19% for Government Funds, down 3 bps from last month. Net yields for Treasury Funds were down 3 bps from the previous month at 4.17%. Net Yields for Tax Exempt Institutional MMFs were down 27 bps from January to 1.83%. Net Yields for Tax Exempt Retail funds were down 20 bps at 2.14% in February. (Note: These averages are asset-weighted.)
WALs and WAMs were mixed in February. The average Weighted Average Life, or WAL, was 52.8 days (up 2.9 days) for Prime Institutional funds, and 46.2 days for Prime Retail funds (up 0.4 days). Government fund WALs averaged 88.4 days (down 3.2 days) while Treasury fund WALs averaged 90.6 days (down 0.3 days). Tax Exempt Institutional fund WALs were 5.1 days (unchanged), and Tax Exempt Retail MMF WALs averaged 29.2 days (up 1.1 days).
The Weighted Average Maturity, or WAM, was 28.7 days (up 1.0 days from the previous month) for Prime Institutional funds, 29.1 days (up 0.7 days from the previous month) for Prime Retail funds, 33.8 days (down 2.6 days from previous month) for Government funds, and 42.1 days (down 2.8 days from previous month) for Treasury funds. Tax Exempt Inst WAMs were unchanged at 5.1 days, while Tax Exempt Retail WAMs were up 0.4 days from previous month at 28.0 days.
Total Daily Liquid Assets for Prime Institutional funds were 52.8% in February (down 1.0% from the previous month), and DLA for Prime Retail funds was 46.1% (up 0.6% from previous month) as a percent of total assets. The average DLA was 65.0% for Govt MMFs and 93.6% for Treasury MMFs. Total Weekly Liquid Assets was 65.5% (down 1.2% from the previous month) for Prime Institutional MMFs, and 61.1% (up 0.7% from the previous month) for Prime Retail funds. Average WLA was 78.3% for Govt MMFs and 98.8% for Treasury MMFs.
In the SEC's "Prime Holdings of Bank-Related Securities by Country table for February 2025," the largest entries included: the U.S. with $205.2B, Canada with $166.3 billion, Japan with $125.3 billion, France with $97.1 billion, the U.K. with $48.6B, Aust/NZ with $43.0B, the Netherlands with $42.1B, Germany with $26.5B and Switzerland with $2.8B. The gainers among the "Prime MMF Holdings by Country" included: Canada (down $29.0B), the U.S. (up $12.0B), Germany (up $8.1B), and Netherlands (up $25.0B). Decreases were shown by: the U.K. (down $14.4B), Japan (down $4.4B), Aust/NZ (down $4.2B), France (down $1.6B), and Switzerland (down $0.6B).
The SEC's "Prime Holdings of Bank-Related Securities by Region" table shows The Americas had $371.5 billion (up $9.0B), while Eurozone had $191.1B (up $4.4B). Asia Pacific subset had $197.1B (down $5.6B), while Europe (non-Eurozone) had $98.4B (down $20.0B from last month).
The "Prime MMF Aggregate Product Exposures" chart shows that of the $1.218 trillion in Prime MMF Portfolios as of February 28, $477.9B (39.2%) was in Government & Treasury securities (direct and repo) (up from $473.0B), $306.6B (25.2%) was in CDs and Time Deposits (down from $306.8B), $193.6B (15.9%) was in Financial Company CP (down from $196.0B), $153.5B (12.6%) was held in Non-Financial CP and Other securities (up from $152.2B), and $86.4B (7.1%) was in ABCP (up from $80.7B).
The SEC's "Government and Treasury Funds Bank Repo Counterparties by Country" table shows the U.S. with $572.4 billion, Canada with $213.2 billion, France with $220.7 billion, the U.K. with $110.0 billion, Germany with $27.8 billion, Japan with $147.5 billion and Other with $44.4 billion. All MMF Repo with the Federal Reserve was up $53.3 billion in February to $201.4 billion.
Finally, a "Percent of Securities with Greater than 179 Days to Maturity" table shows Prime Inst MMFs 10.6%, Prime Retail MMFs with 6.2%, Tax Exempt Inst MMFs with 0.0%, Tax Exempt Retail MMFs with 3.7%, Govt MMFs with 14.7% and Treasury MMFs with 13.9%.
J.P. Morgan writes in a new "Mid-Week US Short Duration Update" that "Low-duration bond funds see strong inflows to start the year." They explain, "Low-duration bond funds have had a strong start to the year, both in terms of inflows and returns. According to the funds we track, collective inflows over the first two months have reached nearly $25bn, marking a 3% increase from December's month-end levels, with total balances now at $850bn. The majority of these inflows occurred in February, which saw a significant increase of $15bn, the largest monthly inflow since early 2021. During this month, all strategies experienced growth in balances, with short term credit funds witnessing the most inflows, amounting to about $4bn. This was closely followed by ultra-short multi-asset funds and ultra-short credit, each attracting $3bn, along with short-term multi-asset and short-term government funds, which each received $2bn." (Note: J.P. Morgan's Teresa Ho, who authored this piece, will lead the keynote address at next week's Bond Fund Symposium, March 27-28 in Newport Beach, Calif. She will be joined by PIMCO's Jerome Schneider and J.P. Morgan Asset Management's Dave Martucci. We're still taking registrations!)
The update continues, "February also marked a period where low-duration bond funds achieved their strongest returns over the past four months, partly due to the rally in rates.... In the short end of the curve, the 2-year Treasury yield declined by 24bp during February, pushing the yield to 3.99% at month-end and driving the 1m2y yield curve to -25bp, compared to about flat at the start of the month. This trend is consistent with what we observed last year, where bond fund flows closely mirrored changes in front-end yields, which in turn can impact bond fund returns."
JPM states, "Comparatively, short-term bond funds, with an average effective duration of 1.5-3.5 years, have consistently outperformed their ultra-short counterparts, which typically have a duration of 0.5-1.5 years. Over the past month, these short-term funds have maintained a spread advantage of up to 54bp compared to similar ultra-short fund strategies. This outperformance is even more pronounced over a 1-year period, with short-term funds achieving a yield pickup of as much as 73bp over ultra-short funds."
The brief adds, "It's also worth noting that low-duration funds have generally outperformed both government and prime MMFs across 1-month to 1-year returns. Overall, investors appear to be drawn to the low-duration bond fund space due to these strong returns. Plus, a recent article has suggested that inflows may be linked to recessionary concerns.... Given these factors, we wouldn't be surprised if low-duration funds continue to gain traction throughout the year."
In other news, a press release, "Public Trust Advisors, LLC and the PMA Companies Have Combined to Create an Integrated Financial Services Firm," says, "Public Trust Advisors, LLC and the PMA Companies have combined to create an integrated financial services firm serving over 12,000 local governments and other public entities across 26 states. The combined company, PTMA Financial Solutions (PTMA), which is led by Todd Alton, will honor the rich history of the merging companies, reflecting the values and traditions that have shaped their journey together."
The release explains, "Public Trust Advisors, LLC (Public Trust), founded in 2011 to manage the investment needs of local governments across the nation, and the PMA Companies (PMA), founded in 1984 to provide customized, integrated financial solutions to the public sector and other institutions, announced the completion of a transaction to combine the firms. Together, Public Trust and PMA offer a wide array of financial products and services that aim to strengthen communities from coast to coast, including local government investment pool administration, investment advisory services, term investments, cashflow analysis, bond proceeds management, and public finance services for public entities, plus stable deposit funding solutions for financial institutions."
It continues, "The combined firm works with clients across 26 states to provide customized financial solutions to over 12,000 local governments and other public entities. The organization also partners with over 1,000 financial institutions to offer competitive deposit rates to public entities.... Todd Alton, former CEO of Public Trust, will lead the new firm as CEO, with Jim Davis, former CEO of PMA, serving as Executive Chairman of the Board of Directors.... The terms of the transaction were not disclosed. Public Trust's investment partners remain majority owners, with employees owning a substantial minority."
Finally, the `Investment Company Institute published, "Retirement Assets Total $42.3 Trillion in Fourth Quarter 2024," which includes data tables showing that money market funds held in retirement accounts jumped to $880 billion (up from $843 billion) in the latest quarter, accounting for 13% of the total $6.852 trillion in money funds. MMFs represent just 6.7% of the total $13.2 trillion of mutual funds in retirement accounts.
This release says, "Total US retirement assets were $42.3 trillion as of December 31, 2024, about unchanged from September and up 10.2 percent for the year. Retirement assets accounted for 33 percent of all household financial assets in the United States at the end of December 2024. Assets in individual retirement accounts (IRAs) totaled $15.2 trillion at the end of the fourth quarter of 2024, a decrease of 0.2 percent from the end of the third quarter of 2024."
It continues, "Defined contribution (DC) plan assets were $12.4 trillion at the end of the fourth quarter, down 0.3 percent from September 30, 2024. Government defined benefit (DB) plans—including federal, state, and local government plans -- held $8.9 trillion in assets as of the end of December 2024, a 1.5 percent increase from the end of September 2024. Private-sector DB plans held $3.3 trillion in assets at the end of the fourth quarter of 2024, and annuity reserves outside of retirement accounts accounted for another $2.5 trillion."
The ICI tables also show money funds accounting for $660 billion, or 10%, of the $6.533 trillion in IRA mutual fund assets and $220 billion, or 3%, of the $6.660 trillion in defined contribution plan holdings. (Money funds in 401k plans totaled $147 billion, or 3% of the $5.291 trillion of mutual funds in 401k's.)
Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics Tuesday, which track a shifting subset of our monthly Portfolio Holdings collection. The most recent cut (with data as of March 14) includes Holdings information from 57 money funds (up 2 from two weeks ago), or $3.551 trillion (up from $3.133 trillion) of the $7.326 trillion in total money fund assets (or 48.5%) tracked by Crane Data. (Note: Our Weekly MFPH are e-mail only and aren't available on the website. See our latest Monthly Money Fund Portfolio Holdings here and our March 12 News, "March Money Fund Portfolio Holdings: Repo Surges, Treasuries Plunge.") (Please join us for next week's Bond Fund Symposium, which is March 27-28 in Newport Beach, Calif.)
Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Treasuries totaling $1.706 trillion (up from $1.466 trillion two weeks ago), or 48.0%; Repurchase Agreements (Repo) totaling $1.214 trillion (up from $1.140 trillion two weeks ago), or 34.2%, and Government Agency securities totaling $287.7 billion (up from $284.3 billion), or 8.1%. Commercial Paper (CP) totaled $139.2 billion (up from two weeks ago at $110.8 billion), or 3.9%. Certificates of Deposit (CDs) totaled $82.1 billion (up from $54.5 billion two weeks ago), or 2.3%. The Other category accounted for $86.6 billion or 2.4%, while VRDNs accounted for $36.0 billion, or 1.0%.
The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.706 trillion (48.0% of total holdings), Fixed Income Clearing Corp with $332.8B (9.4%), the Federal Home Loan Bank with $187.7 billion (5.3%), JP Morgan with $121.0B (3.4%), Citi with $86.9B (2.4%), BNP Paribas with $81.7B (2.3%), RBC with $66.7B (1.9%), Federal Farm Credit Bank with $66.2B (1.9%), Wells Fargo with $62.0B (1.7%) and Bank of America with $46.3B (1.3%).
The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($299.3B), Goldman Sachs FS Govt ($276.4B), JPMorgan 100% US Treas MMkt ($259.3B), Fidelity Inv MM: Govt Port ($232.2B), Morgan Stanley Inst Liq Govt ($179.4B), BlackRock Lq FedFund ($171.3B), State Street Inst US Govt ($165.8B), BlackRock Lq Treas Tr ($154.0B), Fidelity Inv MM: MM Port ($153.1B) and Dreyfus Govt Cash Mgmt ($129.0B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary.)
In related news, ICI also released its latest monthly "Money Market Fund Holdings" summary, which reviews the aggregate daily and weekly liquid assets, regional exposure, and maturities (WAM and WAL) for Prime and Government money market funds. It tells us, "The Investment Company Institute (ICI) reports that, as of the final Friday in February, prime money market funds held 45.0 percent of their portfolios in daily liquid assets and 60.8 percent in weekly liquid assets, while government money market funds held 76.3 percent of their portfolios in daily liquid assets and 87.3 percent in weekly liquid assets.." Prime DLA was up from 44.5% in January, and Prime WLA was up from 60.4%. Govt MMFs' DLA fell from 77.4% and Govt WLA was down from 88.0% for the previous month.
ICI explains, "At the end of February, prime funds had a weighted average maturity (WAM) of 30 days and a weighted average life (WAL) of 50 days. Average WAMs and WALs are asset-weighted. Government money market funds had a WAM of 37 days and a WAL of 91 days.” Prime WAMs and WALs were unchanged from the previous month. Govt WAMs were 3 days shorter and WALs were 2 days shorter from January.
Regarding Holdings by Region of Issuer, the release tells us, "Prime money market funds' holdings attributable to the Americas rose from $580.55 billion in January to $597.94 billion in February. Government money market funds' holdings attributable to the Americas rose from $5,228.15 billion in January to $5,232.25 billion in February."
The Prime Money Market Funds by Region of Issuer table shows Americas-related holdings at $597.9 billion, or 54.0%; Asia and Pacific at $186.6 billion, or 16.8%; Europe at $292.2 billion, or 26.4%; and, Other (including Supranational) at $30.5 billion, or 2.7%. The Government Money Market Funds by Region of Issuer table shows Americas at $5.232 trillion, or 91.0%; Asia and Pacific at $132.4 billion, or 2.3%; Europe at $363.2 billion, 6.3%, and Other (Including Supranational) at $22.3 billion, or 0.4%.
Finally, Bloomberg writes, "JPMorgan Sued Over Stable Value Fund in $44 Billion 401(k)," which says, "JPMorgan Chase Bank NA was sued Friday by a former employee who says the bank's $44 billion 401(k) plan improperly offers an in-house stable value fund that underperforms competitors. The lawsuit takes aim at the JPMorgan Stable Value Fund, which plaintiff Alexandro Gonzalez says provided significantly lower rates of return than similar options available from other companies while exposing workers to greater risk."
Crane Data's latest Money Fund Intelligence International shows that assets in European or "offshore" money market mutual funds inched higher again over the past 30 days to a record $1.499 trillion, while yields continued lower. Assets for USD MMFs rose over the past month while EUR and GBP moved down. Like U.S. money fund assets, European MMFs have repeatedly hit record highs in 2023, 2024 and early in 2025. These U.S.-style money funds, domiciled in Ireland or Luxembourg and denominated in US Dollars, Pound Sterling and Euros, increased by $9.8 billion over the 30 days through 3/14. The totals are up $66.9 billion (4.7%) year-to-date for 2025, they were up $235.3 billion (19.7%) for 2024 and up $166.9 billion (16.2%) for the year 2023. (Note that currency moves in the U.S. dollar cause Euro and Sterling totals to shift when they're translated back into totals in U.S. dollars. See our latest MFI International for more on the "offshore" money fund marketplace. These funds are only available to qualified, non-U.S. investors and are almost entirely institutional.)
Offshore US Dollar money funds increased $25.6 billion over the last 30 days and are up $45.0 billion YTD to $788.6 billion; they increased $94.1 billion in 2024. Euro funds decreased E11.2 billion over the past month. YTD, they're up E2.7 billion to E320.5 billion, for 2024, they increased by E82.9 billion. GBP money funds decreased L2.6 million over 30 days, and they're up L14.2 billion YTD at L268.9B, for 2024, they rose L19.3 billion. U.S. Dollar (USD) money funds (260) account for over half (52.6%) of the "European" money fund total, while Euro (EUR) money funds (181) make up 23.6% and Pound Sterling (GBP) funds (171) total 23.8%. We summarize our latest "offshore" money fund statistics and our Money Fund Intelligence International Portfolio Holdings (which went out to subscribers Friday), below.
Offshore USD MMFs yield 4.27% (7-Day) on average (as of 3/13/25), down 3 basis points from a month earlier. Yields averaged 4.20% on 12/30/22 and 0.03% on 12/31/21. EUR MMFs, which left negative yield territory in the second half of 2022, yield 2.56% on average, down 11 bps from a month ago and up from 1.48% on 12/30/22 and -0.80% on 12/31/21. Meanwhile, GBP MMFs broke above the 5.0% barrier 19 months ago, but they broke back below 5.0% 8 months ago. They now yield 4.45%, down 5 bps from a month ago, but up from 3.17% on 12/30/22. Sterling yields were 0.01% on 12/31/21.
Crane's March MFI International Portfolio Holdings, with data as of 2/28/25, show that European-domiciled US Dollar MMFs, on average, consist of 25% in Commercial Paper (CP), 17% in Certificates of Deposit (CDs), 23% in Repo, 20% in Treasury securities, 14% in Other securities (primarily Time Deposits) and 1% in Government Agency securities. USD funds have on average 48.1% of their portfolios maturing Overnight, 5.3% maturing in 2-7 Days, 6.9% maturing in 8-30 Days, 10.5% maturing in 31-60 Days, 10.3% maturing in 61-90 Days, 12.1% maturing in 91-180 Days and 6.8% maturing beyond 181 Days. USD holdings are affiliated with the following countries: the US (37.9%), France (10.9%), Japan (9.9%), Canada (9.8%), Australia (5.4%), Germany (4.1%), Sweden (3.9%), the U.K. (3.4%), the Netherlands (2.8%) and Finland (2.6%).
The 10 Largest Issuers to "offshore" USD money funds include: the US Treasury with $155.3 billion (19.9% of total assets), Fixed Income Clearing Corp with $45.0B (5.8%), JP Morgan with $25.7B (3.3%), Credit Agricole with $24.4B (3.1%), Nordea Bank with $19.2B (2.5%), RBC with $18.5B (2.4%), Mizuho Corporate Bank Ltd with $18.4B (2.4%), Australia & New Zealand Banking Group Ltd with $18.1B (2.3%), Sumitomo Mitsui Banking Corp with $17.1B (2.2%) and BNP Paribas with $16.6B (2.1%).
Euro MMFs tracked by Crane Data contain, on average 39% in CP, 22% in CDs, 17% in Other (primarily Time Deposits), 20% in Repo, 2% in Treasuries and 0% in Agency securities. EUR funds have on average 34.1% of their portfolios maturing Overnight, 12.7% maturing in 2-7 Days, 8.5% maturing in 8-30 Days, 13.2% maturing in 31-60 Days, 9.2% maturing in 61-90 Days, 13.1% maturing in 91-180 Days and 9.1% maturing beyond 181 Days. EUR MMF holdings are affiliated with the following countries: France (31.0%), Japan (10.8%), the U.S. (9.4%), Canada (8.6%), Germany (6.5%), the Netherlands (5.9%), the U.K. (5.0%), Spain (3.9%), Australia (3.2%) and Sweden (3.1%).
The 10 Largest Issuers to "offshore" EUR money funds include: Credit Agricole with E22.9B (7.1%), BNP Paribas with E17.5B (5.4%), JP Morgan with E14.3B (4.4%), Societe Generale with E12.8B (3.9%), Republic of France with E12.0B (3.7%), Sumitomo Mitsui Banking Corp with E10.3B (3.2%), DZ Bank AG with E8.6B (2.6%), ING Bank with E8.3B (2.6%), Credit Mutuel with E7.9B (2.4%) and BPCE SA with E7.8B (2.4%).
The GBP funds tracked by MFI International contain, on average (as of 2/28/25): 39% in CDs, 19% in CP, 20% in Other (Time Deposits), 18% in Repo, 3% in Treasury and 1% in Agency. Sterling funds have on average 35.1% of their portfolios maturing Overnight, 6.6% maturing in 2-7 Days, 7.4% maturing in 8-30 Days, 13.0% maturing in 31-60 Days, 14.0% maturing in 61-90 Days, 15.0% maturing in 91-180 Days and 9.1% maturing beyond 181 Days. GBP MMF holdings are affiliated with the following countries: France (15.4%), Japan (14.8%), the U.K. (12.6%), Canada (11.9%), the U.S. (10.4%), Australia (10.1%), the Netherlands (4.1%), Singapore (3.5%), Germany (3.0%), and Finland (3.0%).
The 10 Largest Issuers to "offshore" GBP money funds include: UK Treasury with L16.2B (6.6%), BNP Paribas with L11.7B (4.7%), Mizuho Corporate Bank Ltd with L9.6B (3.9%), Sumitomo Mitsui Banking Corp with L8.9B (3.6%), Mitsubishi UFJ Financial Group Inc with L8.5B (3.5%), Toronto-Dominion Bank with L8.5B (3.5%), RBC with L8.5B (3.4%), JP Morgan with L8.3B (3.4%), Commonwealth Bank of Australia with L8.0B (3.3%) and Goldman Sachs with L7.5B (3.0%).
The March issue of our Bond Fund Intelligence, which was sent to subscribers Saturday, features the stories, "EFAMA Says 2024 Record Year for ETFs, MMFs; Bond Funds," which covers a recent press release from EFAMA, and "Vanguard Examines Bond Index Fund Tracking Costs," which excerpts from a recent Vanguard research paper. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns up again in February while yields were slightly lower. We excerpt from the new issue below. (Contact us if you'd like to see our latest Bond Fund Intelligence and BFI XLS spreadsheet, or our Bond Fund Portfolio Holdings data, and join us for our upcoming Bond Fund Symposium, which is March 27-28 in Newport Beach, Calif.)
BFI's lead article states, "EFAMA, the European Fund and Asset Management Association, published a press release titled, '2024 was a record year for ETFs and MMFs,' which tells us, 'In our latest Monthly Statistical Release, we show the main developments for the European investment fund market in December 2024 and include a first overview and analysis of the full year 2024.'"
It continues, "They quote Bernard Delbecque, Senior Director for Economics and Research at EFAMA, who comments, 'Equity UCITS inflows rebounded in 2024, driven by strong stock market performance. Meanwhile, other UCITS categories followed similar trends to 2023: sustained demand for bond UCITS as interest rates declined, record-breaking net sales of both ETFs and MMFs, and continued net outflows from multi-asset UCITS.'"
Our "Profile" article states, "Vanguard published a paper titled, 'A bond index fund's balancing act: Tracking error and cost.' It tells us, 'Index funds aim to mirror the returns of a market benchmark. For most market capitalization-weighted equity index funds, this is typically achieved by holding all benchmark securities at their respective weights. However, this approach can be impractical for many bond index funds because of the breadth of the bond market and the limited liquidity in certain bonds. This has led to the misconception that if a bond index fund doesn’t fully replicate its benchmark, it can’t track it successfully.'"
It continues, "A section on ‘Managing bond index funds: An art and science,' comments, 'Broad bond benchmarks may contain thousands of bonds; for example, the Bloomberg U.S. Aggregate Bond Index contained more than 13,000 securities at year-end 2024. Yet, matching the return of a broad bond benchmark isn’t simply a function of holding more bonds.'"
Our first News brief, "Returns Up Again, Yields Dip in Feb. Bond fund returns were higher in February after rising in January," says, "Our BFI Total Index rose 1.23% over 1-month and rose just 6.11% over 12 months. (Money funds rose 4.91% over 1-year as measured by our Crane 100 Index.) The BFI 100 increased 1.51% in Feb. and rose 6.42% over 12 mos. Our BFI Conservative Ultra- Short Index was up 0.42% over 1-month and 5.57% for 1-year; Ultra-Shorts rose 0.52% and 5.92%. Short-Term returned 0.86% and 6.37%, and Intm-Term rose 2.00% in Feb. and rose 6.37%. BFI’s Long- Term Index was up 2.33% and up 6.27%. High Yield returned 0.54% in Feb. and 8.50% over 12 mos."
A second News brief, "Barron's on, 'What a Top Bond Fund Manager Is Buying Now.' They write, 'High-quality bonds are on sale, and Pimco Income (PONAX) fund manager Daniel Ivascyn is loading up on them. Ivascyn isn't just any ordinary manager, and the $180 billion Pimco Income is no ordinary bond fund. In the past 15 years under Ivascyn and his two co-managers' stewardship, the fund's retail share class—PONAX—has beaten 97% of its peers in Morningstar's Multisector Bond fund category, with a 6.3% annualized return, also dusting the popular iShares Core U.S. Aggregate Bond (AGG).'"
Our next News brief, "Investment News'. 'Fixed Income ETFs Set Record Pace in February with $42B Inflows' comments, 'Exchange-traded funds attracted $111 billion in net inflows in February, putting ETFs on pace for an unprecedented $1.5 trillion haul in 2025, according to a report from State Street Global Advisors. The month was marked by record flows into fixed-income ETFs, a shift in sector sentiment, and a resurgence in thematic investing.'"
A BFI sidebar, "American Funds' BFofA," states, "Morningstar tells us, 'Why This Fund Is a Top Option for Core Bond Exposure.' They explain, ‘American Funds Bond Fund of America (RBFGX) is leaning into what it does best. This mutual fund’s excellence within the intermediate core bond Morningstar Category has been due to its willingness to fine-tune its balance between incentivizing its managers to pursue a straightforward core bond approach while granting them the flexibility to draw on their respective areas of expertise and broader firm resources. [The fund] collectively mirrors the exposures of the Bloomberg US Aggregate Bond Index. [Principal investment officer Pramod] Atluri has sought to nudge the overall fund portfolio’s risk profile away from interest rates and toward yield spreads, which is more in line with the benchmark’s risk factors.'"
Finally, another sidebar, "ICI Study on 401(k) Options," says, "A new study, 'BrightScope/ICI Defined Contribution Plan Profile: A Close Look at401(k) Plans, 2022,' tells us, 'In 2022, the average large 401(k) plan offered 29 investment options, of which about 13 were equity funds, three were bond funds, and nine were target date funds. Nearly all plans offered at least one domestic equity fund, international equity fund, and domestic bond fund. CITs held 43% of large private-sector 401(k) plan assets in the sample in 2022. Mutual funds held 35% of assets, guaranteed investment contracts (GICs) held 6%, separate accounts held 3%, and the remaining 12% were invested in individual stocks (including company stock), individual bonds, brokerage, and other investments.'"
The Federal Reserve released its latest quarterly "Z.1 Financial Accounts of the United States" statistical survey (a.k.a. "Flow of Funds") yesterday, and among the 4 tables it includes on money market mutual funds, the Fourth Quarter 2024 edition shows that Total MMF Assets increased by $404 billion to $7.243 trillion in Q4'24. The Household Sector, by far the largest investor segment with $4.600 trillion, saw the biggest asset increase in Q4, followed by Nonfinancial Corporate Businesses. The Fed's latest Z.1 numbers, which contain one of the few looks at money fund investor segments available, also showed noticeable increases for the Other Financial Business (formerly Funding Corps) and Rest of the World categories in Q4 2024. (Note: For those attending our upcoming Bond Fund Symposium, which is March 27-28, 2025 in Newport Beach, Calif., we look forward to seeing you! See you in two weeks!)
Rest of World, State & Local Governments, Exchange-traded funds, Life Insurance Companies and Nonfin Noncorporate Business categories saw small asset increases in Q4, while the Mutual funds and Private Pension Funds categories saw the only asset decreases last quarter. Over the past 12 months, the Household Sector, Nonfinancial Corporate Business, Other Financial Business and Rest of World categories showed the biggest asset increases, while Mutual funds and Private Pension Funds saw the biggest asset decreases.
The Fed's "Table L.206," "Money Market Mutual Fund Shares," shows that total assets increased by $404 billion, or 5.9%, in the fourth quarter to $7.243 trillion. The largest segment, the Household sector, totals $4.600 trillion, or 63.5% of assets. The Household Sector increased by $275 billion, or 6.4%, in the quarter. Over the past 12 months through December 31, 2024, Household assets were up $596 billion, or 14.9%.
Nonfinancial Corporate Businesses, the second-largest segment according to the Fed's data series, held $1.036 trillion, or 14.3% of the total. Assets here increased by $65 billion in the quarter, or 6.7%, and they've increased by $141 billion, or 15.8%, over the past year. Other Financial Business was the third-largest investor segment with $544 billion, or 7.5% of money fund shares. This category jumped $46 billion, or 9.2%, in the latest quarter. Other Financial Business, which we believe includes Securities Lending, has increased by $92 billion, or 20.4%, over the previous 12 months.
The fourth-largest segment, Mutual Funds (a recent addition to the tables), held $217 billion (3.0%). The Rest of World stayed in fifth place in market share among investor segments with 2.9%, or $213 billion, Private Pension Funds was the 6th largest category with 2.6% of money fund assets ($192 billion); it was down $2 billion for the quarter and down $4 billion, or -2.2% over the last 12 months. while Nonfinancial Noncorporate Business held $142 billion (2.0%), Life Insurance Companies held $106 billion (1.5%), State & Local Governments held $83 billion (1.2%), Property-Casualty Insurance held $49 billion (0.7%), Exchange-traded Funds held $38 billion (0.5%), and State & Local Govt Retirement held $23 billion (0.3%) according to the Fed's Z.1 breakout.
The Fed's "Flow of Funds" Table L.121 shows "Money Market Mutual Funds" largely invested in “Security Repurchase Agreements” with $2.620 trillion, or 36.2% and "Debt Securities," or Credit Market Instruments, with $4.327 trillion, or 59.7% of the total. Debt securities includes: Open market paper ($299 billion, or 4.1%; we assume this is CP), Treasury securities ($2.995 trillion, or 41.3%), Agency and GSE-backed securities ($886 billion, or 12.2%), Municipal securities ($139 billion, or 1.9%) and Corporate and foreign bonds ($8 billion, or 0.1%).
Another large MMF position in the Fed's series includes `Time and savings deposits ($264 billion, or 3.6%). Money funds also hold minor positions in Miscellaneous assets ($29 billion, or 0.4%) and Foreign deposits ($4 billion, 0.1%). Note: The Fed also lists "Variable Annuity Money Funds," which currently total $47 billion.
During Q4, Debt Securities were up $439 billion. This subtotal included: Open Market Paper (up $6 billion), Treasury Securities (up $335 billion), Agency- and GSE-backed Securities (up $93 billion), Corporate and Foreign Bonds (down $2 billion) and Municipal Securities (up $7 billion). In the fourth quarter of 2024, Security Repurchase Agreements were down $68 billion, Foreign Deposits were up $1 billion, Time and Savings Deposits were down by $50 billion, and Miscellaneous Assets were up $82 billion.
Over the 12 months through 12/31/24, Debt Securities were up $912 billion, which included Open Market Paper (down $3B), Treasury Securities (up $725B), Agencies (up $178B), Municipal Securities (up $9B), and Corporate and Foreign Bonds (up $2B). Foreign Deposits (down $2 billion), Time and Savings Deposits were down $25B, Securities repurchase agreements were down $46 billion and Miscellaneous Assets were up $46B.
The L.121 table shows `Stable NAV money market funds with $6,905 billion, or 95.3% of the total (up $412.5B or 6.4% in Q4 and up $1.177 trillion or 20.6% over 1-year), and Floating NAV money market funds with $338 billion, or 4.7% (down $8.4B or -2.4% in Q4 and down $292B or -46.3% over 1-year). Government money market funds total $5.911 trillion, or 81.6% (up $364B or 6.6% in Q4 and up $991B or 20.1% over 1-year), Prime money market funds total $1.191 trillion, or 16.4% (up $33.2B or 2.9% in Q4 and down $115B or -8.8% over 1-year) and Tax-exempt money market funds $141B, or 1.9% (up $6.9B or 5.1% in Q4 and up $10B or 7.5% last year).
Note that the Federal Reserve made some changes to its Z.1 tables several years ago. Describing a "Money market funds sector data source change," the report says, "The money market mutual funds (MMF) sector (tables F.121 and L.121) has been revised beginning 2010:Q4 to reflect a change in data source to Securities and Exchange Commission Form NMFP. The level of assets and shares outstanding of the sector have increased due to the inclusion of private placement MMFs in the source data. Changes in the level due to changes in the data source in 2010:Q4 are recorded as other volume changes in the Financial Accounts."
On "Mutual funds sector holdings of money market funds," Z.1 tells us, "The mutual funds sector (tables F.122 and L.122) has been revised beginning 2010:Q4 to reflect holdings of money market funds not previously reported on the tables. In addition, holdings of repurchase agreements, commercial paper, corporate bonds, and miscellaneous assets have been revised. Additional and revised holdings are estimated using data from Morningstar and Investment Company Institute.... The exchange-traded funds sector (tables F.124 and L.124) has been revised beginning 2010:Q4 to reflect holdings of money market funds not previously reported on the tables."
Last week, J.P. Morgan Securities published a brief titled, "Taking a closer look at the ABCP market." They tell us, "After nearly a decade of stagnation, the ABCP market is experiencing somewhat of a resurgence in activity. For years, market outstandings bounced around $200-$250bn, but since 2021 they have been steadily on the rise, registering $425bn as of February month-end.... Notably, fueling the growth of this sector has not been the traditional bank sponsored, multi-seller conduits. Instead, it has been driven by collateral-backed ABCP programs such as independent sponsored ABCP and bank sponsored CCP programs." (Note: Please join us for our upcoming Bond Fund Symposium, which is March 27-28 in Newport Beach, Calif!)
The piece explains, "Based on DTCC data, we estimate the former has grown from ~$40bn in early 2019 to now $140bn, increasing their share of the ABCP market to 33%.... The latter has also seen growth, albeit to a smaller extent: bank sponsored CCP program outstandings have grown from ~$30bn to ~$80bn over the same time frame. Meanwhile, bank-sponsored multi-seller programs have grown by only $40bn to ~$190bn, and Funding Agreement-backed (FA) programs have remained relatively stable."
JPM writes, "As we have previously noted, the rise in independent sponsored ABCP outstandings have been predominately driven by dealers looking for alternative financing to help fund both fixed income (mainly Treasuries) and equity collateral.... Given their off-balance sheet treatment and the ability to tap a pool of liquidity and duration beyond the usual fixed income repo or TRS investors, these programs not only provide a cheaper source of financing but also diversification benefits."
They state, "To that end, not only have outstandings of these programs grown, but so have the number of independent sponsor programs as both domestic and foreign dealers look to independent sponsors to help fund collateral on their balance sheets. By our count, there are currently 49 independent sponsor programs available, a significant increase from 17 just a couple of years ago. Each independent sponsor ABCP program is usually linked to a single-seller (i.e., one dealer) and sometimes one type of collateral."
JPM asks, "Who are the buyers of these programs?" They reply, "Prime MMFs buy a decent amount. They have steadily increased their allocations to ABCP over the past couple of years and now hold nearly 20% of the total ABCP market.... As of the end of January, prime funds held $81bn in ABCP, up significantly higher than the $43bn two years ago. More notably, they have shifted more of their ABCP holdings towards independent sponsor programs, now allocating nearly 40% to these programs compared to 28% last year.... `There has also been a slight uptick in bank-sponsored CCPs, which now make up 21% of their ABCP holdings, up from 12% in January 2024. These shifts have been offset by a decline in bank sponsored multi-seller programs, which now account for just 40% of the total ABCP held by prime funds, down from nearly 60% last January."
They comment, "Transparency into other buyer types are unavailable, `though we suspect the buyer base is similar to CP in general: state and local governments, securities lenders, SMAs, and low duration bond funds. We would note, however, that the investor base across repo, ABCP, and CP more broadly is quite similar, as well as the underlying credit exposures to banks/dealers, so the additional funding capacity these investors might provide to banks/dealers might be more incremental than substantial."
Finally, they add, "From a pricing perspective, ABCP trades cheap to unsecured bank CP/CDs by about 5bp.... It's worth mentioning that despite the spread tightening observed in the unsecured bank CP market, ABCP has not experienced the same degree of tightening. With ABCP supply expected to continue to increase slightly further, this should keep ABCP spreads firmer on a relative basis in the near term."
In other news, Bloomberg writes "Short-Term Bond ETFs Rake In Billions Amid Recession Alarm Bells." The article explains, "Investors looking for a safe place to hide are shoveling money into ultra-short bond exchange-traded funds as Donald Trump's economic policies stoke recessionary concerns and a stock-market rout. The cohort has taken in more than $16 billion so far this year, led by products such as the iShares 0-3 Month Treasury Bond ETF (SGOV), which has seen more than $7 billion come in. The fund took in $1.4 billion last week alone, its largest inflow on record, data compiled by Bloomberg show."
It continues, "And investors have added $3.2 billion to the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL), about half of which came in last week in what is its biggest inflow since November 2023. Other funds focused on ultra-short-term debt have also taken in massive amounts of cash. The JPMorgan Ultra-Short Income ETF (JPST) has seen inflows of $3 billion this year."
The piece adds, "Inflows into bond ETFs with short durations tend to accelerate during periods of stock-market turbulence, according to an analysis by Bloomberg Intelligence. Data going back to 2013 show that flows into the category during down months for the S&P 500 averaged $2.7 billion, compared with $440 million in months when it gained. The flows can be seen as a 'useful measure of market sentiment' given that ETF investors tend to react quickly to market-moving events, wrote BI's Athanasios Psarofagis in a recent note."
Crane Data's March Money Fund Portfolio Holdings, with data as of Feb. 28, 2025, show that holdings of Repo jumped sharply last month while Treasuries plummeted. Money market securities held by Taxable U.S. money funds (tracked by Crane Data) increased by $53.7 billion to $7.227 trillion in February, after increasing $84.1 billion in January, $88.0 billion in December, $190.8 billion in November, $82.8 billion in October, $233.8 billion in September, $57.2 billion in August and $90.4 billion in July. Taxable holdings decreased by $0.4 billion in June, increased $105.6 billion in May, and decreased $61.4 billion in April. Treasuries, still the largest segment, decreased $118.3 billion in February after increasing $92.1 billion in January and decreasing $69.5 billion in December. Repo, the second largest portfolio composition segment, increased by $173.9 billion. Agencies were the third largest segment, CP remained fourth, ahead of CDs, Other/Time Deposits and VRDNs. Below, we review our latest Money Fund Portfolio Holdings statistics. (Visit our Content center to download, or contact us to request our latest Portfolio Holdings reports.)
Among taxable money funds, Repurchase Agreements (repo) increased $173.9 billion (6.8%) to $2.718 trillion, or 37.6% of holdings, in February, after decreasing $67.8 billion in January but increasing $211.3 billion in December. MMFs decreased $26.3 billion in November and $242.8 billion in October. Treasury securities decreased $118.3 billion (-3.9%) to $2.959 trillion, or 40.9% of holdings, after increasing $92.1 billion in January and decreasing $69.5 billion in December. T-bills increased $188.3 billion in November and $236.2 billion in October. Government Agency Debt was down $6.5 billion, or -0.7%, to $880.5 billion, or 12.2% of holdings. Agencies increased $7.1 billion in January and $33.0 billion in December. Agencies decreased $2.4 billion in November, but increased $70.3 billion in October. Repo, Treasuries and Agency holdings now total $6.558 trillion, representing a massive 90.7% of all taxable holdings.
Money fund holdings of Other (Time Deposits) and CP rose in February while CDs fell. Commercial Paper (CP) increased $4.4 billion (1.5%) to $304.9 billion, or 4.2% of holdings. CP holdings increased $11.4 billion in January, decreased $7.3 billion in December, but increased $2.6 billion in November. Certificates of Deposit (CDs) decreased $5.0 billion (-2.6%) to $190.4 billion, or 2.6% of taxable assets. CDs increased $2.8 billion in January, $4.9 billion in December and $0.5 billion in November. Other holdings, primarily Time Deposits, increased $5.0 billion (3.3%) to $159.0 billion, or 2.2% of holdings, after increasing $38.9 billion in January, decreasing $84.6 billion in December, and increasing $27.6 billion in November. VRDNs increased to $14.5 billion, or 0.2% of assets. (Note: This total is VRDNs for taxable funds only. We will post our Tax Exempt MMF holdings separately Wednesday around noon.)
Prime money fund assets tracked by Crane Data increased to $1.219 trillion, or 16.9% of taxable money funds' $7.227 trillion total. Among Prime money funds, CDs represent 15.6% (down from 16.2% a month ago), while Commercial Paper accounted for 25.0% (up from 24.8% a month ago). The CP totals are comprised of: Financial Company CP, which makes up 15.9% of total holdings, Asset-Backed CP, which accounts for 7.0%, and Non-Financial Company CP, which makes up 2.1%. Prime funds also hold 0.4% in US Govt Agency Debt, 6.7% in US Treasury Debt, 21.1% in US Treasury Repo, 1.1% in Other Instruments, 9.6% in Non-Negotiable Time Deposits, 8.3% in Other Repo, 11.1% in US Government Agency Repo and 1.0% in VRDNs.
Government money fund portfolios totaled $3.943 trillion (54.6% of all MMF assets), up from $3.921 trillion in January, while Treasury money fund assets totaled another $2.065 trillion (28.6%), up from $2.043 trillion the prior month. Government money fund portfolios were made up of 22.2% US Govt Agency Debt, 17.6% US Government Agency Repo, 33.4% US Treasury Debt, 26.1% in US Treasury Repo, 0.5% in Other Instruments. Treasury money funds were comprised of 75.6% US Treasury Debt and 24.3% in US Treasury Repo. Government and Treasury funds combined now total $6.008 trillion, or 83.1% of all taxable money fund assets.
European-affiliated holdings (including repo) decreased by $8.2 billion in February to $741.5 billion; their share of holdings fell to 10.3% from last month's 10.5%. Eurozone-affiliated holdings increased to $519.6 billion from last month's $504.0 billion; they account for 7.2% of overall taxable money fund holdings. Asia & Pacific related holdings rose to $311.9 billion (4.3% of the total) from last month's $294.9 billion. Americas related holdings rose to $6.164 trillion from last month's $6.120 trillion, and now represent 85.3% of holdings.
The overall taxable fund Repo totals were made up of: US Treasury Repurchase Agreements (up $95.2 billion, or 5.6%, to $1.788 trillion, or 24.7% of assets); US Government Agency Repurchase Agreements (up $86.3 billion, or 11.6%, to $827.8 billion, or 11.5% of total holdings), and Other Repurchase Agreements (down $7.6 billion, or -6.9%, from last month to $102.2 billion, or 1.4% of holdings). The Commercial Paper totals were comprised of Financial Company Commercial Paper (down $2.2 billion to $193.8 billion, or 2.7% of assets), Asset Backed Commercial Paper (up $5.4 billion at $85.6 billion, or 1.2%), and Non-Financial Company Commercial Paper (up $1.3 billion to $25.5 billion, or 0.4%).
The 20 largest Issuers to taxable money market funds as of Feb. 28, 2025, include: the US Treasury ($2.959T, 42.0%), Fixed Income Clearing Corp ($871.0B, 12.4%), Federal Home Loan Bank ($649.0B, 9.2%), JP Morgan ($276.7B, 3.9%), the Federal Reserve Bank of New York ($201.7B, or 2.9%), RBC ($180.0B, 2.6%), Citi ($173.5B, 2.5%), Federal Farm Credit Bank ($158.7B, 2.3%), BNP Paribas ($152.0B, 2.2%), Bank of America ($126.9B, 1.8%), Goldman Sachs ($97.8B, 1.4%), Barclays ($92.5B, 1.3%), Wells Fargo ($91.5B, 1.3%), Sumitomo Mitsui Banking Corp ($71.0B, 1.0%), Credit Agricole ($70.4B, 1.0%), Mitsubishi UFJ Financial Group ($69.0B, 1.0%), Canadian Imperial Bank of Commerce ($60.1B, 0.9%), Toronto-Dominion Bank ($51.5B, 0.7%), Bank of Montreal ($51.4B, 0.7%), and Societe Generale ($51.2B, 0.7%).
In the repo space, the 10 largest Repo counterparties (dealers) with the amount of repo outstanding and market share (among the money funds we track) include: Fixed Income Clearing Corp ($847.6B, 31.2%), JP Morgan ($264.9B, 9.7%), the Federal Reserve Bank of New York ($201.7B, 7.4%), Citi ($161.2B, 5.9%), RBC ($145.4B, 5.3%), BNP Paribas ($142.2B, 5.2%), Bank of America ($105.6B, 3.9%), Goldman Sachs ($97.1B, 3.6%), Wells Fargo ($91.1B, 3.4%), and Barclays PLC ($79.2B, 2.9%).
The largest users of the $201.7 billion in Fed RRP include: Fidelity Cash Central Fund ($38.6B), Vanguard Federal Money Mkt Fund ($33.6B), Fidelity Sec Lending Cash Central Fund ($19.3B), JPMorgan US Govt MM ($15.0B), Vanguard Market Liquidity Fund ($10.8B), Fidelity Inv MM: Treas Port ($8.9B), JPMorgan Liquid Assets ($8.0B), JPMorgan Prime MM ($7.2B), Vanguard Cash Reserves Federal MM ($7.0B) and Fidelity Treasury Fund ($6.9B).
The 10 largest issuers of "credit" -- CDs, CP and Other securities (including Time Deposits and Notes) combined -- include: RBC ($34.6B, 5.9%), Toronto-Dominion Bank ($33.3B, 5.7%), Mitsubishi UFJ Financial Group Inc ($27.2B, 4.6%), Mizuho Corporate Bank Ltd ($24.4B, 4.2%), ING Bank ($23.4B, 4.0%), Fixed Income Clearing Corp ($23.3B, 4.0%), Bank of America ($21.3B, 3.6%), Australia & New Zealand Banking Group Ltd ($20.9B, 3.5%), Canadian Imperial Bank of Commerce ($20.8B, 3.5%) and Bank of Montreal ($19.8B, 3.4%).
The 10 largest CD issuers include: Mitsubishi UFJ Financial Group Inc ($17.0B, 8.9%), Sumitomo Mitsui Banking Corp ($15.4B, 8.1%), Sumitomo Mitsui Trust Bank ($14.1B, 7.4%), Credit Agricole ($14.0B, 7.4%), Bank of America ($13.5B, 7.1%), Mizuho Corporate Bank Ltd ($13.1B, 6.9%), Toronto-Dominion Bank ($11.8B, 6.2%), Canadian Imperial Bank of Commerce ($10.2B, 5.3%), Mitsubishi UFJ Trust and Banking Corporation ($9.0B, 4.8%) and Bank of Nova Scotia ($5.8B, 3.0%).
The 10 largest CP issuers (we include affiliated ABCP programs) include: Toronto-Dominion Bank ($21.0B, 7.5%), RBC ($20.3B, 7.3%), Bank of Montreal ($15.4B, 5.5%), BPCE SA ($12.1B, 4.3%), JP Morgan ($11.8B, 4.2%), Barclays PLC ($11.2B, 4.0%), Northcross Capital Management ($9.3B, 3.4%), Citi ($8.7B, 3.1%), National Australia Bank Ltd ($8.6B, 3.1%) and ING Bank ($8.3B, 3.0%).
The largest increases among Issuers include: the Federal Reserve Bank of New York (up $53.6B to $201.7B), RBC (up $51.3B to $180.0B), JP Morgan (up $34.3B to $276.7B), Bank of America (up $20.0B to $126.9B), Wells Fargo (up $19.1B to $91.5B), Sumitomo Mitsui Banking Corp (up $9.8B to $71.0B), Citi (up $9.2B to $173.5B), Bank of Montreal (up $8.9B to $51.4B), BNP Paribas (up $5.8B to $152.0B) and Credit Agricole (up $5.7B to $70.4B).
The largest decreases among Issuers of money market securities (including Repo) in February were shown by: US Treasury (down $118.3B to $2.959T), Fixed Income Clearing Corp (down $30.7B to $871.0B), Barclays PLC (down $17.5B to $92.5B), Federal Home Loan Bank (down $11.4B to $649.0B), Toronto-Dominion Bank (down $3.0B to $51.5B), Australia & New Zealand Banking Group Ltd (down $3.0B to $31.9B), Goldman Sachs (down $2.4B to $97.8B), RBS (down $1.8B to $9.2B), Mizuho Corporate Bank Ltd (down $1.7B to $40.7B) and HSBC (down $1.2B to $29.3B).
The United States remained the largest segment of country-affiliations; it represents 80.0% of holdings, or $5.779 trillion. Canada (5.3%, $384.3B) was in second place, while France (4.5%, $324.7B) was No. 3. Japan (3.9%, $280.8B) occupied fourth place. The United Kingdom (2.4%, $170.4B) remained in fifth place. Australia (0.8%, $55.8B) was in sixth place, followed by Netherlands (0.8%, $55.5B), Germany (0.7%, $51.7B), Sweden (0.5%, $35.3B), and Spain (0.4%, $28.2B). (Note: Crane Data attributes Treasury and Government repo to the dealer's parent country of origin, though money funds themselves "look-through" and consider these U.S. government securities. All money market securities must be U.S. dollar-denominated.)
As of Feb. 28, 2025, Taxable money funds held 47.1% (up from 44.6%) of their assets in securities maturing Overnight, and another 11.8% maturing in 2-7 days (down from 11.8%). Thus, 58.9% in total matures in 1-7 days. Another 9.9% matures in 8-30 days, while 12.5% matures in 31-60 days. Note that over three-quarters, or 81.3% of securities, mature in 60 days or less, the dividing line for use of amortized cost accounting under SEC regulations. The next bucket, 61-90 days, holds 7.5% of taxable securities, while 7.0% matures in 91-180 days, and just 4.1% matures beyond 181 days.
Crane Data's latest monthly Money Fund Portfolio Holdings statistics will be sent out Tuesday, and we'll be writing our regular monthly update on the new February data for Wednesday's News. But we also already uploaded a separate and broader Portfolio Holdings data set based on the SEC's Form N-MFP filings on Monday. (We continue to merge the two series, and the N-MFP version is now available via our Portfolio Holdings file listings to Money Fund Wisdom subscribers.) Our new N-MFP summary, with data as of February 28, includes holdings information from 989 money funds (up 6 from last month), representing assets of $7.388 trillion (up from $7.250 trillion 2 months ago). Prime MMFs rose to $1.107 trillion (up from $1.065 trillion), or 15.0% of the total. We review the new N-MFP data, and we also look at our revised MMF expense data, which shows charged expenses were mostly flat and money fund revenues rose to $19.4 billion (annualized) in February. (Note: Please join us for our upcoming Bond Fund Symposium, which is March 27-28 in Newport Beach, Calif!)
Our latest Form N-MFP Summary for All Funds (taxable and tax-exempt) shows Treasuries and Repurchase Agreements (Repo) remain the largest types of portfolio holdings in money market funds. Treasury holdings in money market funds now total $2.967 trillion (up from $2.993 trillion), or 40.2% of all assets, while Repo holdings rose to $2.729 trillion (up from $2.619 billion), or 36.9% of all holdings. Government Agency securities total $885.7 billion (up from $885.6 billion), or 12.0%. Holdings of Treasuries, Government agencies and Repo (almost all of which is backed by Treasuries and agencies) combined total $6.581 trillion, or a massive 89.1% of all holdings.
The Other category (primarily Time Deposits) totals $166.2 billion (up from $122.1 billion), or 2.3%, and Commercial paper (CP) totals $315.2 billion (up from $298.9 billion), or 4.3% of all holdings. Certificates of Deposit (CDs) total $189.9 billion (down from $192.4 billion), 2.6%, and VRDNs account for $135.4 billion (down from $138.5 billion), or 1.8% of money fund securities.
Broken out into the SEC's more detailed categories, the CP totals were comprised of: $193.6 billion, or 2.6%, in Financial Company Commercial Paper; $85.9 billion or 1.2%, in Asset Backed Commercial Paper; and, $35.7 billion, or 0.5%, in Non-Financial Company Commercial Paper. The Repo totals were made up of: U.S. Treasury Repo ($1.802 trillion, or 24.4%), U.S. Govt Agency Repo ($819.1B, or 11.1%) and Other Repo ($106.9B, or 1.4%).
The N-MFP Holdings summary for the Prime Money Market Funds shows: CP holdings of $273.0 billion (up from $254.8 billion), or 24.6%; Repo holdings of $460.7 billion (down from $513.8 billion), or 41.6%; Treasury holdings of $78.8 billion (up from $36.3 billion), or 7.1%; CD holdings of $166.3 billion (down from $167.0 billion), or 15.0%; Other (primarily Time Deposits) holdings of $113.6 billion (up from $77.7 billion), or 10.3%; Government Agency holdings of $5.0 billion (up from $4.9 billion), or 0.5% and VRDN holdings of $10.4 billion (up from $10.2 billion), or 0.9%.
The SEC's more detailed categories show CP in Prime MMFs made up of: $174.0 billion (down from $176.1 billion), or 15.7%, in Financial Company Commercial Paper; $75.3 billion (up from $63.0 billion), or 6.8%, in Asset Backed Commercial Paper; and $23.8 billion (up from $15.8 billion), or 2.1%, in Non-Financial Company Commercial Paper. The Repo totals include: U.S. Treasury Repo ($241.9 billion, or 21.8%), U.S. Govt Agency Repo ($129.8 billion, or 11.7%), and Other Repo ($89.1 billion, or 8.0%).
In related news, money fund charged expense ratios (Exp%) were mostly flat in February. Our Crane 100 Money Fund Index and Crane Money Fund Average were 0.27% and 0.38%, respectively, as of Jan. 31, 2025. Crane Data revises its monthly expense data and gross yield information after the SEC updates its latest Form N-MFP data the morning of the 6th business day of the new month. (They posted this info Monday morning, so we revised our monthly MFI XLS spreadsheet and historical craneindexes.xlsx averages file to reflect the latest expenses, gross yields, portfolio composition and maturity breakout.) Visit our "Content" page for the latest files.
Our Crane 100 Money Fund Index, a simple average of the 100 largest taxable money funds, shows an average charged expense ratio of 0.27%, unchanged from last month's level (also 19 bps higher than 12/31/21's 0.08%). The Crane Money Fund Average, a simple average of all taxable MMFs, showed a charged expense ratio of 0.38% as of Feb. 28, 2025, up one bp from the month prior but slightly below the 0.40% at year-end 2019.
Prime Inst MFs expense ratios (annualized) average 0.23% (unchanged from last month), Government Inst MFs expenses average 0.26% (up 1 bp from last month), Treasury Inst MFs expenses average 0.29% (unchanged from last month). Treasury Retail MFs expenses currently sit at 0.52%, (unchanged from last month), Government Retail MFs expenses yield 0.55% (unchanged from last month). Prime Retail MF expenses averaged 0.50% (unchanged from last month). Tax-exempt expenses were unchanged at 0.40% on average.
Gross 7-day yields were slightly lower during the month ended February 28, 2025. The Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 727), shows a 7-day gross yield of 4.42%, down 3 bps from the prior month. The Crane Money Fund Average was 1.72% at the end of 2019, 0.15% at the end of 2020 and 0.09% at the end of 2021. Our Crane 100's 7-day gross yield was also down 3 bps, ending the month at 4.43%.
According to our revised MFI XLS and Crane Index numbers, we now estimate that annualized revenue for all money funds is $19.723 billion (as of 2/28/25), a new record high. Our estimated annualized revenue totals increased from $19.437B last month and $19.293B seen two months ago. Revenue levels are more than six times larger than May's 2021's record-low $2.927B level. Charged expenses and gross yields are driven by a number of variables, but revenues should continue their climb higher as inflows resume to money funds following a pause around April 15.
Crane Data's latest monthly Money Fund Market Share rankings show assets increasing again among most of the largest U.S. money fund complexes in February, after rising in January, December, November, October, September, August, July, June and May. Assets fell in March and April. Money market fund assets rose by $90.5 billion, or 1.3%, last month to a record $7.322 trillion. Total MMF assets have increased by $253.9 billion, or 3.6%, over the past 3 months, and they've increased by $850.2 billion, or 13.1%, over the past 12 months. The largest increases among the 25 largest managers last month were seen by Schwab, BlackRock, Fidelity, Vanguard and American Funds, which grew assets by $14.5 billion, $13.8B, $12.4B, $11.2B and $10.2B, respectively. Declines in February were seen by Dreyfus, Northern, HSBC and DWS, which decreased by $5.7 billion, $4.5B, $1.2B and $392M, respectively. Our domestic U.S. "Family" rankings are available in our MFI XLS product, our global rankings are available in our MFI International product. The combined "Family & Global Rankings" are available to Money Fund Wisdom subscribers. We review the latest market share totals, and look at money fund yields, which were slightly lower in February.
Over the past year through Feb. 28, 2025, Fidelity (up $185.2B, or 14.2%), JPMorgan (up $120.8B, or 18.2%), Schwab (up $120.6B, or 23.9%), BlackRock (up $101.1B, or 19.8%) and Vanguard (up $77.0B, or 13.2%) were the `largest gainers. Fidelity, JPMorgan, Schwab, Invesco and Federated Hermes had the largest asset increases over the past 3 months, rising by $54.7B, $49.7B, $39.3B, $22.7B and $22.1B, respectively. The largest declines over 12 months were seen by: American Funds (down $15.8B), DWS (down $6.0B), PGIM (down $2.5B), Columbia (down $1.3B) and RBC (down $787M). The largest declines over 3 months included: DWS (down $5.1B), American Funds (down $2.6B) and SSGA (down $2.0B).
Our latest domestic U.S. Money Fund Family Rankings show that Fidelity Investments remains the largest money fund manager with $1.493 trillion, or 20.4% of all assets. Fidelity was up $12.4B in February, up $54.7 billion over 3 mos., and up $185.2B over 12 months. JPMorgan ranked second with $786.0 billion, or 10.7% market share (up $2.1B, up $49.7B and up $120.8B for the past 1-month, 3-mos. and 12-mos., respectively). Vanguard ranked in third place with $659.1 billion, or 9.0% of assets (up $11.2B, up $15.0B and up $77.0B). Schwab ranked fourth with $625.0 billion, or 8.5% market share (up $14.5B, up $39.3B and up $120.6B), while BlackRock was the fifth largest MMF manager with $611.6 billion, or 8.4% of assets (up $13.8B, down $18M and up $101.1B for the past 1-month, 3-mos. and 12-mos.).
Federated Hermes was in sixth place with $485.6 billion, or 6.6% (up $2.3B, up $22.1B and up $33.3B), while Goldman Sachs was in seventh place with $455.1 billion, or 6.2% of assets (up $6.9B, up $18.0B and up $64.4B). Morgan Stanley ($299.7B, or 4.1%) was in eighth place (up $4.9B, up $14.2B and up $53.5B), followed by Dreyfus ($294.2B, or 4.0%; down $5.7B, up $4.5B and up $11.4B). SSGA was in 10th place ($255.3B, or 3.5%; up $1.9B, down $2.0B and up $8.7B).
The 11th through 20th-largest U.S. money fund managers (in order) include: Allspring (formerly Wells Fargo) ($213.7B, or 2.9%), Northern ($178.3B, or 2.4%), First American ($171.5B, or 2.3%), Invesco ($158.2B, or 2.2%), American Funds ($148.8B, or 2.0%), UBS ($114.8B, or 1.6%), T. Rowe Price ($50.4B, or 0.7%), HSBC ($49.0B, or 0.7%), DWS ($39.4B, or 0.5%) and Western ($34.8B, or 0.5%). Crane Data currently tracks 61 U.S. MMF managers, unchanged from last month.
When European and "offshore" money fund assets -- those domiciled in places like Ireland, Luxembourg and the Cayman Islands -- are included, the top 10 managers are the same as the domestic list, except: BlackRock moves up to the No. 3 spot, Vanguard moves down to No. 4 and Schwab moves down to the No. 5 spot. Goldman Sachs moves up to the No. 6 spot, while Federated Hermes moves down to the No. 7 spot. Global Money Fund Manager Rankings include the combined market share assets of our MFI XLS (domestic U.S.) and our MFI International ("offshore") products.
The largest Global money market fund families include: Fidelity ($1.513 trillion), JP Morgan ($1.062 trillion), BlackRock ($938.8B), Vanguard ($659.1B) and Schwab ($625.0B). Goldman Sachs ($610.3B) was in sixth, Federated Hermes ($497.1B) was seventh, followed by Morgan Stanley ($402.8B), Dreyfus/BNY ($320.5B) and SSGA ($306.5B), which round out the top 10. These totals include "offshore" U.S. Dollar money funds, as well as Euro and Pound Sterling (GBP) funds converted into U.S. dollar totals.
The March issue of our Money Fund Intelligence and MFI XLS, with data as of 2/28/25, shows that yields were lower in February across all the Crane Money Fund Indexes. The Crane Money Fund Average, which includes all taxable funds covered by Crane Data (currently 727), was 4.05% (down 3 bps) for the 7-Day Yield (annualized, net) Average, the 30-Day Yield was down 2 bps to 4.06%. The MFA's Gross 7-Day Yield was at 4.43% (down 3 bps), and the Gross 30-Day Yield was down 2 bps at 4.44%. (Gross yields will be revised once we download the SEC's Form N-MFP data for 2/28/25 on Monday.)
Our Crane 100 Money Fund Index shows an average 7-Day (Net) Yield of 4.16% (down 3 bps) and an average 30-Day Yield at 4.17% (down 2 bps). The Crane 100 shows a Gross 7-Day Yield of 4.43% (down 3 bps), and a Gross 30-Day Yield of 4.44% (down 2 bps). Our Prime Institutional MF Index (7-day) yielded 4.29% (down 2 bps) as of Feb. 28. The Crane Govt Inst Index was at 4.17% (down 2 bps) and the Treasury Inst Index was at 4.12% (down 2 bps). Thus, the spread between Prime funds and Treasury funds is 17 basis points, and the spread between Prime funds and Govt funds is 12 basis points. The Crane Prime Retail Index yielded 4.03% (down 4 bps), while the Govt Retail Index was 3.86% (down 3 bps), the Treasury Retail Index was 3.88% (down 2 bps from the month prior). The Crane Tax Exempt MF Index yielded 1.97% (down 24 bps) at the end of February.
Gross 7-Day Yields for these indexes to end February were: Prime Inst 4.52% (down 2 bps), Govt Inst 4.42% (down 2 bps), Treasury Inst 4.40% (down 2 bps), Prime Retail 4.53% (down 3 bps), Govt Retail 4.40% (down 3 bps) and Treasury Retail 4.40% (down 3 bps). The Crane Tax Exempt Index fell to 2.37% (down 24 bps). The Crane 100 MF Index returned on average 0.33% over 1-month, 1.06% over 3-months, 0.69% YTD, 4.91% over the past 1-year, 3.99% over 3-years annualized), 2.41% over 5-years, and 1.68% over 10-years.
The total number of funds, including taxable and tax-exempt, was up 3 in February to 840. There are currently 727 taxable funds, up 3 from the previous month, and 113 tax-exempt money funds (unchanged from last month). (Contact us if you'd like to see our latest MFI XLS, Crane Indexes or Market Share report.)
The March issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Friday morning, features the articles: "MF Assets Break $7.3 Trillion After Pause; ICI Tops $7.0 Tril," which discusses the recent resurgence in MMF flows; "ICI: SEC's MMF Reforms Push $309 Billion from Prime Inst," which looks at a paper on last year's rule changes; and, "Stablecoin Battle Heats Up, as Tokenization Launces Spread" which reviews the latest news on stablecoins and tokenized MMFs. We also sent out our MFI XLS spreadsheet Friday a.m., and we've updated our Money Fund Wisdom database with 2/28/24 data. Our March Money Fund Portfolio Holdings are scheduled to ship on Tuesday, March 12, and our March Bond Fund Intelligence is scheduled to go out on Monday, March 17.
MFI's "$7.3 Trillion" article says, "After treading water for much of January and February 2025, money market mutual fund assets recently surged higher, rising $90.4 billion in February to a record $7.325 trillion. In March month-to-date through 3/5, total money fund assets have increased by another $35.7 billion to $7.357 trillion, according to Crane Data's MFI Daily. Our MFI XLS monthly shows money fund assets rising $851.2 billion, or 13.1%, over 12 months through 2/28."
It continues, "Money fund assets rose by $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 and $68.8 billion in March 2024."
We write in our ICI on SEC Reforms article, "Last month, ICI published 'Sold Under False Pretenses: The SEC's Money Market Fund Reform is Causing Damage,' which explains, 'In response to pandemic-induced stress in money markets three years earlier, the Securities and Exchange Commission (SEC) adopted rule amendments in July 2023 that required significant changes to prime money market funds (MMFs). While strengthening the resiliency of MMFs was a worthy objective, the SEC adopted these amendments without seeking public input on specific elements of the amendments' most consequential change: the imposition of a first-ever mandatory liquidity fee on prime institutional funds."
ICI says, "MMFs serve as an attractive cash management option and have surged in popularity as investors have taken advantage of higher yields in recent years. But the prime institutional segment of the MMF market has experienced significant consolidation and reduced competition as a direct consequence of the SEC's flawed rule."
Our "Stablecoin Battle" piece says, "A recent Wall Street Journal article, 'The Titans Battling for Control of the Crypto Future,' discusses the competition between stablecoins Tether and Circle USDC. It tells us, 'Tether is the clear industry leader -- its stablecoin is used in four out of five cryptocurrency transactions. Tether's holding company ... said it earned $13 billion in profit last year, double that of BlackRock and mostly generated from the pile of supersafe Treasury bills that Tether owns to back its currency 1-to-1 with the dollar. [But Circle Founder Jeremy] Allaire has regularly testified in Congress to call for greater regulation that would benefit Circle at Tether's expense.... WSJ reported in October that the Justice and Treasury Departments were investigating Tether for possibly violating financial crime laws.'"
The piece continues, "The article tells us, 'In letters to authorities in the U.S. and elsewhere, Circle raised the alarm about how unregulated stablecoins could harm consumers. Circle that July flagged to the Financial Stability Board ... an incident that happened two years earlier in which tether temporarily lost its dollar peg because authorities seized a chunk of its reserves as part of a money-laundering investigation. Circle said this showed how such stablecoins could potentially fail, wiping out consumers' crypto holdings."
MFI also includes the News brief, "Crane 100 Index Inches Lower to 4.16%," which says, "Money fund yields were down 3 bps to 4.16% on average during the month ended Feb. 28 (as measured by our Crane 100 Money Fund Index). Fund yields should remain roughly flat until and if the Fed moves rates again."
Another News brief, "EFAMA: '2024 was a record year for ETFs and MMFs,'" tells us, "The European group says, 'Money market funds (MMFs) achieved a record-breaking year, with net inflows reaching an all-time high of EUR 223 billion. The surge was largely driven by an inverted yield curve, which persisted for much of 2024.'"
A third News brief, "Investment News Writes 'Pershing Discussing Move to Control Portion of Broker-Dealers' Cash," states, "The financial advice industry's skirmish over cash sweep accounts is taking another turn, with clearing giant Pershing evaluating plans to create a new charge, akin to a tax, on cash held by its broker-dealer clients. Pershing is discussing with broker-dealers that use its platform plans to get first dibs on cash -- up to $10,000 -- held in their customers' accounts."
A sidebar, "Federated 10-K Talks Regs," summarizes, "Federated Hermes' latest '10-K Annual Report' tells us, 'Of the 176 Federated Hermes Funds, Federated Hermes' ... managed as of Dec. 31, 2024, 22 money market funds with $461.7 billion.' On the 'Current Regulatory Environment,' they write, 'Regarding deregulation, the investment management industry is expected to request the SEC to repeal or modify certain regulatory requirements previously promulgated by the SEC and to adopt more investor- and industry-friendly regulatory requirements."
Our March MFI XLS, with Feb. 28 data, shows total assets increased $90.4 billion to a record $7.325 trillion, after increasing $47.9 billion in January, $113.0 billion in December, $196.1 billion in November, $89.9 billion in October, $155.2 billion in September, $105.6 billion in August, $19.7 billion in July, $11.8 billion in June and $79.7 billion in May. They decreased $17.6 billion in April and $66.7 billion in March.
Our broad Crane Money Fund Average 7-Day Yield was down 4 bps at 4.05%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was down 3 bps at 4.16% in January. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 averaged 4.43% and 4.43%. Charged Expenses averaged 0.37% and 0.27% for the Crane MFA and the Crane 100. (We'll revise expenses once we upload the SEC's Form N-MFP data for 2/28/25 on Monday, 3/10.) The average WAM (weighted average maturity) for the Crane MFA was 35 days (down 2 days) and the Crane 100 WAM was down 2 days from the previous month at 36 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
With money market fund assets continuing to hit record levels (assets broke $7.3 trillion last week), our next Money Fund Symposium, seems destined to break well over our record of 585 attendees set in Pittsburgh last year. Money Fund Symposium 2025 is scheduled for June 23-25, 2025 at The Renaissance Boston Seaport, in Boston, Mass. The full agenda for the largest gathering of money market fund managers and cash investors in the world is available and registrations are being taken. Money Fund Symposium attracts money fund managers, marketers and servicers, cash investors, money market securities dealers, issuers, and regulators. We review our latest agenda, as well as Crane Data's other 2025 conferences, below. (Note: We look forward to seeing those of you attending our Bond Fund Symposium at the end of March in Newport Beach! Registrations are still being taken for the show, which is March 27-28. Attendees and Crane Data subscribers may access the conference binder, Powerpoints and recordings (after the show) in coming weeks via our "Bond Fund Symposium 2025 Download Center.")
Our Money Fund Symposium Agenda kicks off on Monday, June 23 with a "Keynote: Money Market Funds, Bigger Than Ever" featuring Yie-Hsin Hung of State Street Global Advisors. The rest of the Day 1 Agenda includes: "Tokenized MMFs, Stablecoins & MM ETFs" with Teresa Ho of J.P. Morgan Securities, Adam Ackermann of Paxos and a BlackRock speaker TBD; "Repo, Fed RRP & Treasury Clearing Issues," with Travis Keltner of State Street, Dina Marchioni of Federal Reserve Bank of NY and Nathaniel Wuerffel of BNY Mellon; and, a "Major Money Fund Issues 2025" panel with moderator Peter Crane of Crane Data, Laurie Brignac of Invesco, Kevin Gaffney of Fidelity Investments and Dan LaRocco of Northern Trust A.M.. The evening's reception is sponsored by State Street.
Day 2 of Money Fund Symposium 2025 begins with "Strategists Speak '25: Fed, Rates & More Repo," with Joseph Abate of Barclays, Mark Cabana of BofA Securities and Gennadiy Goldberg of TD Securities; followed by a "Senior Portfolio Manager Perspectives" panel featuring, Doris Grillo of J.P. Morgan Asset Mgmt., John Tobin of Dreyfus, and Nafis Smith of Vanguard. Next up is "Treasury & Government Money Fund Issues," with Tom Katzenbach of US Dept of Treasury and Lynn Paschen of Schwab Asset Mgmt. The morning concludes with a "Muni & Tax Exempt Money Fund Update," featuring Cameron Ullyatt of Charles Schwab Inv. Mgmt., John Vetter of Fidelity Investments and David Elmquist of J.P. Morgan Securities.
The Afternoon of Day 2 (after a Dreyfus-sponsored lunch) features the segments: "Dealer's Choice: Supply, New Securities & CP" moderated by Rob Sabatino of UBS A.M. with Rob Crowe of Citi Global Markets, Stewart Cutler of Barclays and John Kodweis of J.P. Morgan Securities; "Local Government Investment Pool Briefing" with Laura Glenn of RBC, Marty Margolis of Public Funds Investment Institute and Jeffrey Rowe of PFM Asset Management; "Deposits, Brokerage Sweeps & Retail Cash," with Michael Berkowitz of Citi Treasury & Trade Solutions and Chris Melin of Ameriprise Financial. The day's wrap-up presentation is a "Investors, Portals & Distribution Topics" involving Greg Fortuna of State Street Fund Connect and Vanessa McMichael of Wells Fargo Securities. (The Day 2 reception is sponsored by Barclays.)
The third day of the Symposium features the sessions: "Regulations: Money Fund Reforms, Aftermath," with Brenden Carroll of Dechert LLP, Jon-Luc Dupuy of K&L Gates LLP and Jamie Gershkow of Stradley Ronon; "Ratings Agency Outlook & Trend Review," which features Robert Callagy of Moody's Ratings, Peter Gargiulo of Fitch Ratings and Michael Masih of S&P Global Ratings; "State of the Money Market Fund Industry" with Peter Crane of Crane Data and Pia McCusker <p:>`_ of State Street Global Advisors; and, "Money Fund Wisdom Demo & Training" with Peter Crane of Crane Data.
We'd like to thank our sponsors and exhibitors so far -- Barclays, BMO, BNY, Dreyfus, Fidelity, J.P. Morgan Securities, State Street, First American Funds, TD Securities, Goldman Sachs, Invesco, Moody's Ratings, J.P. Morgan Asset Management, Nearwater Capital, Credit Agricole CIB, Daiwa, Invesco, Moody's Ratings, Mizuho, Nomura, Bank of America, RBC Capital Markets, Federated Hermes, Fitch Ratings, Deutsche Bank, Allspring, Siebert Williams, Citi, Natixis, BlackRock, Mayer & Brown, Northern Trust A.M., IntraFi, Tradeweb, Toyota, Morgan Stanley, UBS, S&P Global Ratings, Seelaus, Mischler, Lummis, ICD, Stradley Ronon, Buckler Securities and Bloomberg -- for their support. E-mail us for more details.
Visit the Money Fund Symposium website at www.moneyfundsymposium.com for more information. Registration is $1,000, and discounted hotel reservations <i:https://www.cranesmfsymposium.com/hotel-and-travel>`_are available. `We hope you'll join us in Boston in June! Note that the agenda is still being tweaked, so watch for minor changes in coming weeks. E-mail us at info@cranedata.com to request the full brochure.)
Crane Data is also making final preparations for our eighth annual `ultra-short bond fund event, Bond Fund Symposium, which will take place in just 3 weeks, March 27-28, at the Hyatt Regency in Newport Beach, Calif. Crane's Bond Fund Symposium offers a concentrated and affordable educational experience, as well as an excellent networking venue, for bond fund and fixed-income professionals. Registrations are still being accepted ($1,000) and comp or discounted tickets are available to advisors and corporate or government investors.
See the latest agenda here and details below. Portfolio managers, analysts, investors, issuers, service providers, and anyone interested in expanding their knowledge of bond funds and fixed-income investing will benefit from our comprehensive program. A block of rooms has been reserved at the Hyatt Regency.
We're also making plans for our next European Money Fund Symposium, which is scheduled for Sept. 25-26, 2025, in Dublin, Ireland. Our 2024 event in London attracted a record 210 attendees, so we expect our 2025 event to be even bigger. Watch for the draft agenda to be posted in coming weeks and registration ($1000 to attend) is now live. European Money Fund Symposium offers "offshore" money fund portfolio managers, and money market investors, issuers, dealers and service providers a concentrated and affordable educational experience, as well as an excellent and informal networking venue.
Finally, mark your calendars for our next Money Fund University "basic training" event, scheduled for Dec. 18-19, 2025, in Pittsburgh, Pa. Let us know if you'd like more details on any of our events, and we hope to see you in Newport Beach this month, in Boston in June, in Dublin in September or in Pittsburgh in December!
EFAMA, the European Fund and Asset Management Association, published a press release titled, "2024 was a record year for ETFs and MMFs," which tells us, "In our latest Monthly Statistical Release, we show the main developments for the European investment fund market in December 2024 and include a first overview and analysis of the full year 2024." They quote Bernard Delbecque, Senior Director for Economics and Research at EFAMA, who comments, "Equity UCITS inflows rebounded in 2024, driven by strong stock market performance. Meanwhile, other UCITS categories followed similar trends to 2023: sustained demand for bond UCITS as interest rates declined, record-breaking net sales of both ETFs and MMFs, and continued net outflows from multi-asset UCITS." (Note: Please join us for our upcoming Bond Fund Symposium, which is March 27-28 in Newport Beach. We hope to see you later this month in Southern California!)
Thomas Tilley, Senior Economist at EFAMA, comments on the December 2024 figures, "Despite global stock markets edging lower, net sales of equity UCITS rose to a new 44-month high in December 2024. This was thanks to strong net inflows into equity ETFs, in addition to non-ETF equity funds returning to positive territory after being negative for most of the year."
The release explains, "The main developments in 2024 can be summarised as follows: UCITS and AIFs experienced net inflows of EUR 665 billion in 2024, marking a substantial increase from net sales of EUR 237 billion in 2023. The net assets of European investment funds grew by 13.2%, reaching a new record high of EUR 23.5 trillion. UCITS registered net sales of EUR 618 billion in 2024, more than tripling from EUR 183 billion in 2023."
It continues, "Net sales of equity UCITS rebounded strongly in 2024, driven by record inflows into equity ETFs. After muted net sales of just EUR 5 billion in 2023, net sales surged to EUR 141 billion, supported by the strong performance of global stock markets, particularly in the US. However, similar to the previous year, investors clearly preferred ETFs when investing in equity funds. Equity ETFs attracted a record EUR 192 billion in net new money, while non-ETF equity funds experienced net outflows of EUR 51 billion."
EFAMA writes, "Investors poured into bond UCITS as interest rates began to decline. Several major central banks cut rates in 2024, with markets anticipating further easing. This fueled annual net inflows of EUR 275 billion, nearly doubling the EUR 144 billion recorded in 2023 and marking the highest level since 2019. In contrast to equity UCITS, non-ETF bond UCITS dominated inflows, attracting EUR 223 billion, while bond ETFs saw net sales of EUR 52 billion."
They state, "Money market funds (MMFs) achieved a record-breaking year, with net inflows reaching an all-time high of EUR 223 billion. The surge was largely driven by an inverted yield curve, which persisted for much of 2024 and made short-term assets more attractive. Additionally, strong inflows suggest that some investors opted for MMFs as a cash alternative, maintaining a wait-and-see approach in uncertain market conditions."
EFAMA also says, "2024 marked another record year for ETFs. Net ETF sales soared to EUR 261 billion, far surpassing the previous record of EUR 169 billion in 2023. ETFs are increasingly the preferred investment vehicle for investors seeking exposure to US and global stock markets. AIFs saw modest but positive net inflows. Net sales totalled EUR 47 billion, slightly below the EUR 54 billion recorded in 2023. Unlike UCITS, AIFs follow a different sales pattern due to their distinct investor base. Bond AIFs led net sales with EUR 39 billion, followed by multi-asset AIFs at EUR 37 billion."
They summarize, "Analysing the data for December 2024, EFAMA highlighted the following: Net sales of UCITS and AIFs totalled EUR 80 billion, down from EUR 95 billion in November 2024. UCITS recorded net inflows of EUR 78 billion, compared to EUR 82 billion in November 2024. Long-term UCITS (UCITS excluding money market funds) recorded EUR 64 billion of net sales, up from EUR 33 billion in November 2024. Of these, ETF UCITS saw net inflows of EUR 32 billion, slightly higher than the EUR 31 billion recorded in November. Equity funds registered net inflows of EUR 41 billion, up from EUR 20 billion in November 2024. Net sales of bond funds amounted to EUR 22 billion, compared to EUR 17 billion in November 2024. Multi-asset funds recorded net outflows of EUR 0.3 billion, compared to net outflows of EUR 5 billion in November 2024. UCITS money market funds attracted net inflows of EUR 14 billion, down from EUR 49 billion in November 2024."
Another press release, "ICI and ISS MI BrightScope Report 401(k) Plan Participants Continue to Benefit from Employer Contributions and Falling Fees" explains, "401(k) plans that use automatic enrollment mechanisms and/or employer contributions are critical to encourage workers to save and to invest for retirement, according to The BrightScope/ICI Defined Contribution Plan Profile: A Close Look at 401(k) Plans, 2022. More than one-third of large 401(k) plans have automatic enrollment, and nearly 90 percent make employer contributions."
The study says, "In 2022, the average large 401(k) plan offered 29 investment options, of which about 13 were equity funds, three were bond funds, and nine were target date funds. Nearly all plans offered at least one domestic equity fund, international equity fund, and domestic bond fund. CITs held 43 percent of large private-sector 401(k) plan assets in the sample in 2022. Mutual funds held 35 percent of assets, guaranteed investment contracts (GICs) held 6 percent, separate accounts held 3 percent, and the remaining 12 percent were invested in individual stocks (including company stock), individual bonds, brokerage, and other investments. However, mutual funds accounted for the largest share of assets in all but the very largest plans, where a larger share of assets was held in CITs."
ICI writes, "In 2022, 40 percent of large 401(k) plan assets were held in equity funds, 33 percent were held in balanced funds (with most of that being held in target date funds), and 7 percent were held in bond funds. GICs and money funds accounted for 8 percent of assets. Domestic equity funds, international equity funds, and domestic bond funds -- all of which include both index and actively managed funds -- were the most likely investment options to be offered in large 401(k) plans in 2022.... Forty-six percent of large 401(k) plans offered money funds, and 72 percent offered guaranteed investment contracts (GICs)."
They continue, "For most investment types, availability by plan size did not vary much. However, larger plans were more likely to offer other investments (which include company stock), GICs, and money funds.... Similarly, 33.4 percent of plans with less than $1 million in plan assets offered money funds in 2022, compared with 75.9 percent of plans with more than $1 billion.”
The survey states, "In 2022, large 401(k) plans included three bond funds (mostly domestic, including both index and actively managed funds) in their investment lineups, on average.... Plans also offered money funds, GICs, and other options. These investments were not offered as widely ... and were often included as the single choice in that investment type."
Finally, discussing expenses, the survey adds, "The average expense ratio for bond mutual funds in the BrightScope database was 0.29 percent, compared with 0.22 percent in the ICI database, and the expense ratio for money market mutual funds was 0.10 percent in the BrightScope database compared with 0.13 percent in the ICI database.... Money market mutual funds had the lowest expense ratio of any of the asset classes with an asset-weighted average expense ratio of 0.10 percent of assets in 2022 for money market mutual funds in large 401(k) plans."
Money fund yields (7-day, annualized, simple, net) were unchanged at 4.16% on average during the week ended Friday, Feb. 28 (as measured by our Crane 100 Money Fund Index), after falling 1 bp the week prior and falling 1 bp two weeks prior. Fund yields have digested almost all of the Federal Reserve's 25 basis point cut from December 18, though they may inch down a basis point or 2 lower in coming days. They've declined by 90 bps since the Fed first cut its Fed funds target rate by 50 bps percent on Sept. 18, and they've declined by 47 bps since the Fed cut rates by 1/4 point on 11/7. Yields were 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. (Note: Register and make hotel reservations soon for Bond Fund Symposium, Crane Data's ultra-short bond fund conference, which will take place March 27-28 in Newport Beach.)
The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 679), shows a 7-day yield of 4.06%, unchanged in the week through Friday. Prime Inst money fund yields were up 1 bp at 4.29% in the latest week. Government Inst MFs were unchanged at 4.17%. Treasury Inst MFs were unchanged at 4.11%. Treasury Retail MFs currently yield 3.87%, Government Retail MFs yield 3.86%, and Prime Retail MFs yield 4.06%, Tax-exempt MF 7-day yields were down 68 bps at 1.97%.
Assets of money market funds rose by $54.1 billion last week to $7.321 trillion, according to Crane Data's Money Fund Intelligence Daily. For the month of February, MMF assets have rose by $94.2 billion, after increasing by $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 down 1 day at 35 days for the Crane MFA and 1 day shorter at 36 days the Crane 100 Money Fund Index.
According to Monday's Money Fund Intelligence Daily, with data as of Friday (2/28), 116 money funds (out of 791 total) yield under 3.0% with $140.2 billion in assets, or 1.9%; 213 funds yield between 3.00% and 3.99% ($846.8 billion, or 11.6%), 462 funds yield between 4.0% and 4.99% ($6.334 trillion, or 86.5%) 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%, after rising 1 bp six weeks prior. The latest Brokerage Sweep Intelligence, with data as of Feb. 28, 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.
In other news, Federated Hermes' latest monthly commentary from Debbie Cunnigham, titled, "We SECond this change," is subtitled, "Market intervention should subside under the new SEC leadership." She comments, "Perhaps because the SEC appears to impact the public less than other US agencies, its cost-cutting efforts mandated by the Trump administration have largely been overshadowed. But the Commission is in the midst of a sea change beyond the trimming of staff, and we welcome it. Recall its mission is, 'to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.' Going after Ponzi schemes, scammers and fraudsters is critical, as is maintaining a level playing field. At their best, regulations safeguard the financial system from the repercussions of intentional or unintentional activity. But under Chair Gary Gensler, the SEC exceeded its mission. Instead of using wrenches to fine tune the machine, his staff often tossed them into its gears. Particularly frustrating was that they frequently limited time for public feedback, even for controversial proposals."
Cunningham continues, "We are biased, of course, but among the most detrimental interventions have been the bevy of anti-money market 'reforms.' The new rules implemented in 2024 again targeted prime institutional money market funds, popular investment options seeking higher yields than typically found in other liquidity vehicles, let alone FDIC-insured deposit products. The Investment Company Institute (ICI) reports that since the implementation of the mandatory liquidity fee for prime institutional money funds, industry assets have decreased by more than half. That's a shame. Institutions serve real people, and many now miss out on returns. The good news is that, industry-wide, these funds are collectively seeing inflows this year."
She states, "That brings us to today. Acting SEC Chair Mark Uyeda has announced several high-profile changes, such as the creation of a crypto task force and the layoff of regional office directors. But on a fundamental level, he and Trump's nominee for chair, Paul Atkins, are no fan of regulations. Expect fewer new rules and for some to be delayed in implementation. Others, such as the climate disclosure rule, are likely to be rolled back. We obviously would like the SEC to revisit the recent money fund amendments, but there seems to be little industry appetite for that at present. That won't stop us from making the case. Furthermore, our belief in the utility of prime means we will continue to develop alternative venues for investors of all types to have access to all its attractive features."
The commentary continues, "Speaking of appeal, it seems yields of most liquidity products will stay around present levels as the Federal Reserve likely won't cut rates this month. The January PCE report showed modest annualized improvement, but the monthly readings of headline and core growth were essentially unchanged. This likely means inflation remains too hot for the Fed, though we do anticipate two quarter-point cuts this year. The updated Summary of Economic Projections released at the FOMC meeting on March 19 should make that clearer. But we are just as interested in what it might reveal about the terminal rate. Once thought to be around 3%, we now think it could end up near 4% as the Fed may want to extend restrictive monetary policy to keep the lid on inflation. That would be great news for cash managers and investors."
Cunnigham concludes, "Once the nonsense of the debt-ceiling situation is resolved, the Fed may continue to taper, but probably not for much longer. Chair Jerome Powell and company aren't attempting to empty the shelves, but rather right-size its holdings in relation to the markets. We think that number will still be enormous, probably around $6 trillion. But with the uncertainty in fiscal policy, trade and geopolitics, the Fed is surely not interested in pushing its luck by excessively decreasing its holdings."
Federated Hermes filed its latest "10-K Annual Report" with the SEC Friday, and the 100-page document contains a wealth of information on money market mutual funds, including lengthy discussions on "Regulatory Matters". The report tells us, "Federated Hermes ... is a global leader in active, responsible investing with $757.6 billion in assets under management (AUM or managed assets) at Dec. 31, 2023.... Federated Hermes has been in the investment management business since 1955 and is one of the largest investment managers in the United States.... Federated Hermes provides investment advisory services to 176 Federated Hermes Funds as of Dec. 31, 2024.... Of the 176 Federated Hermes Funds, Federated Hermes' investment advisory subsidiaries managed as of December 31, 2024, 22 money market funds with $461.7 billion in AUM, 45 equity funds with $43.8 billion in AUM, 54 fixed-income funds with $45.6 billion in AUM, 50 alternative/private markets funds with $11.5 billion in AUM and five multi-asset funds with $2.8 billion in AUM. As of Dec. 31, 2024, Federated Hermes provided investment strategies to $264.3 billion in Separate Account assets. These Separate Accounts represent assets of government entities, high-net-worth individuals, pension and other employee benefit plans, corporations, trusts, foundations, endowments, sub-advised funds and other accounts or offerings owned or sponsored by third parties." (Note: Register and make hotel reservations soon for Bond Fund Symposium, Crane Data's ultra-short bond fund conference, which will take place March 27-28 in Newport Beach. We hope to see you next month in Calif.!)
It explains, "Federated Hermes, which began selling money market fund offerings to institutions in 1974, is one of the largest U.S. managers of money market assets, with $630.3 billion in AUM at Dec. 31, 2024. Federated Hermes has developed expertise in managing cash for institutions, which typically have strict requirements for regulatory compliance, relative safety, liquidity and competitive yields. Federated Hermes also manages retail money market offerings that are typically distributed through broker/dealers and other financial intermediary customers. At Dec. 31, 2024, Federated Hermes managed money market assets across a wide range of categories: government ($394.3 billion); prime ($219.5 billion); and municipal (or tax-exempt) ($16.5 billion)."
The filing says, "As of Dec. 31, 2024, managed assets in the U.S. financial intermediary market included $446.9 billion in money market assets, $56.1 billion in equity assets, $45.8 billion in fixed-income assets, $2.5 billion in multi-asset and $0.8 billion in alternative/private markets assets.... As of Dec. 31, 2024, managed assets in the U.S. institutional market included $164.0 billion in money market assets, $48.7 billion in fixed-income assets, $3.1 billion in equity assets, $1.1 billion in alternative/private markets assets and $0.4 billion in multi-asset.... As of Dec. 31, 2024, managed assets in the international market included $20.2 billion in equity assets, $19.4 billion in money market assets, $16.9 billion in alternative/private markets assets and $3.5 billion in fixed-income assets."
On the "Current Regulatory Environment, they write, "Regarding deregulation, the investment management industry is expected to request the SEC to repeal or modify certain regulatory requirements previously promulgated by the SEC and to adopt more investor- and industry-friendly regulatory requirements. For example, among other topics, Federated Hermes intends to discuss with the SEC's Commissioners and Staff, either directly or through an industry trade group: (1) repealing the mandatory redemption fee requirement applicable to registered institutional prime and municipal (or tax-exempt) money market funds; ... (3) permitting a new or existing registered fund to offer both mutual fund and exchange-traded share classes."
The section continues, "Federated Hermes also intends to continue efforts to have legislation introduced in Congress that, if enacted, would permit the use of amortized cost valuation by money market funds and override the floating net asset value (NAV) and certain other requirements imposed under prior money market fund rule amendments and related guidance that became effective in 2016 for institutional prime and municipal (or tax exempt) money market funds. Regarding the pace of new SEC proposals and final regulations, given the results of the Presidential election in November 2024 and the 2024 judicial decisions that overturned the Chevron Doctrine and made it easier to challenge new regulation, during the fourth quarter of 2024, the SEC did not issue any new proposed rules."
It comments, "On Dec. 6, 2024, the Financial Stability Oversight Council (FSOC) issued its 2024 Annual Report. Among other topics, the FSOC addressed in its 2024 Annual Report risks to financial services companies related to: (1) cybersecurity; (2) the use of artificial intelligence; (3) third party service providers and outsourcing; (4) crypto assets; and (5) climate change. The FSOC also addressed investment funds, including money market funds, other open-end short-term investment vehicles, private liquidity funds, local government investment pools, collective funds, and hedge funds, among others. Regarding money market funds and open-end short-term investment vehicles, specifically, the FSOC recommended in its 2024 Annual Report that the SEC and the FSOC 'should monitor the efficacy of [the SEC's money market fund reforms] to address the financial stability vulnerabilities created by [money market funds]' and 'continue to assess and monitor the vulnerabilities from other [open-end short-term investment vehicles], considering what actions may be appropriate to address potential vulnerabilities.'"
Federated writes, "While the SEC's latest money market fund reforms became fully effective in October 2024 and the SEC removed its plans to propose a final rule on open-end fund liquidity risk management programs from its 2024 SEC Fall Reg Flex Agenda, the liquidity of (and perceived vulnerabilities created by) money market funds and other open-end short-term investment funds remain a focus of the FSOC. Federated Hermes has implemented the policy, procedure and operational changes required to comply with the latest SEC money market fund reforms and continues to work with the registered domestic Federated Hermes Funds' transfer agent and fund accounting service providers to further refine the operational model to support the delivery and remittance of the mandatory redemption fee required for institutional prime and municipal (or tax-exempt) money market funds (which, as noted above, Federated Hermes intends to discuss with the SEC Commissioners and Staff repealing the mandatory redemption fee requirement)."
They state, "To address certain interpretative questions, on Jan. 8, 2025, the SEC released updated Frequently Asked Questions (FAQs) that modify, supersede, or withdraw portions of prior FAQs related to the Names Rule.... With respect to money market funds, the FAQs also confirm that funds that use the term 'money market' in their name along with another term or terms that describe a type of money market instrument (e.g., a 'Treasury Money Market Fund') must adopt an 80% Policy to invest at least 80% of the value of their assets in the type of money market instrument suggested by its name. The FAQs further explain that a generic money market fund, one where no other describing term is included in its name, would not be required to adopt an 80% Policy."
On European Regulations, the 10-K tells us, "On Nov. 21, 2024, the European Central Bank (ECB) published its Financial Stability Review (ECB Review), which included, among other things, renewed critiques of money market funds. In the ECB Review, the ECB stressed that the EU must proceed with money market fund reform to ensure the stability of short-term funding markets and to mitigate the risk of cross-border regulatory arbitrage. The ECB argued that to prevent regulatory arbitrage due to divergences in minimum standards -- which could potentially shift liquidity risk towards EU money market fund markets -- the EU should prioritize money market fund legal reforms to address risks from liquidity mismatch by increasing liquidity buffer requirements for private debt money market funds and ensuring that these buffers are more usable. Additionally, the ECB supports removing threshold effects linked to breaches of liquidity requirements. This ECB push for reform will likely influence the incoming European Commission's decision regarding whether to reopen the money market fund reform review in early 2025."
Discussing the "Risk of Federated Hermes' Money Market Offerings' Ability to Maintain a Stable Net Asset Value," they explain, "Approximately 51% of Federated Hermes' total revenue for 2024 was attributable to money market assets. An investment in money market funds is neither insured nor guaranteed by the FDIC or any other government agency. Federated Hermes' retail and government/public debt money market funds, and its private and collective money market funds, seek to maintain a stable or constant NAV. Federated Hermes also offers non-U.S. low volatility NAV money market funds that seek to maintain a constant NAV, but will move to a four-digit NAV if such fund's NAV falls outside of a 20-basis point collar. While stable or constant NAV money market funds seek to maintain a NAV of $1.00 per share, it is also possible to lose money by investing in these funds. Federated Hermes also offers institutional prime or municipal (or tax-exempt) money market funds which transact at a fluctuating NAV that uses four-decimal-places ($1.0000), and a short-term variable NAV non-U.S. money market fund. It is also possible to lose money by investing in these funds."
The filing continues, "Federated Hermes devotes substantial resources, such as significant credit analysis, integration of proprietary insights from fundamental investment analysis, including governance, environmental or social factors and engagement interactions (for many of its investment offerings) and attention to security valuation, in connection with the management of its offerings. However, the NAV of an institutional prime or municipal (or tax-exempt) money market fund, or variable NAV fund or, if the above described conditions are met, a low-volatility NAV money market fund, can fluctuate, and there is no guarantee that a government/public debt or retail (i.e., stable or constant NAV) money market fund will be able to preserve a stable or constant NAV in the future. Market conditions can lead to a limited supply of money market securities and severe liquidity issues and/or declines in interest rates or additional prolonged periods of low yields in money market offerings, and regulatory developments and regulatory requirements can lead to shifts in asset levels and mix, which can impact money market fund NAVs and performance. If the NAV of a Federated Hermes stable or constant NAV money market fund were to decline to less than $1.00 per share, or if the fluctuating NAV of an institutional prime or municipal (or tax-exempt) money market fund, or variable NAV money market fund or low-volatility NAV money market fund consistently or significantly declines to less than $1.0000 per share, such Federated Hermes money market fund would likely experience significant redemptions, resulting in reductions in AUM, loss of shareholder confidence and reputational harm, all of which can cause material adverse effects on Federated Hermes’ Financial Condition. Given U.S. money market fund reforms, significant redemptions on any day from Federated Hermes' registered institutional prime or municipal (or tax-exempt) money market funds also may result in the imposition of discretionary or mandatory redemption fees, which would likely lead to further reductions in AUM, loss of shareholder confidence, and reputational harm, and can cause additional material adverse effects on Federated Hermes' Financial Condition."
Finally, it states, "Many of Federated Hermes' offerings are designed for use by institutions such as banks, insurance companies and other corporations. A large portion of Federated Hermes' managed assets, particularly money market, fixed-income and alternative/private markets assets, are held by institutional investors. If the structure of institutional investment offerings, such as money market funds, changes or becomes disfavored by institutions, whether due to regulatory or market changes, competing offerings (such as FDIC-insured deposit products or non-transparent, actively managed ETFs) or otherwise, Federated Hermes could be unable to retain or grow market share and this can adversely affect Federated Hermes' profitability and have a material adverse effect on Federated Hermes' Financial Condition."
