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The October issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Thursday morning, features the articles: "ESG & Social Trend Reaches Frenzy as Funds Go All-In," which discusses the latest news and moves by managers to burnish their sustainability or diversity credentials; "Money Fund Symposium Flies in Philly; Regulations Focus," which reviews the highlights from our return to conferences; and, "Worldwide MF Assets Higher in Q2'21 Led by China, U.S.," which examines the latest global MMF market rankings. We also sent out our MFI XLS spreadsheet Thursday a.m., and have updated our Money Fund Wisdom database query system with 9/30/21 data. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our October Money Fund Portfolio Holdings are scheduled to ship on Tuesday, Oct. 12, and our October Bond Fund Intelligence is scheduled to go out next Friday, Oct. 15.
MFI's lead article says, "Dreyfus is the latest money market fund manager to integrate ESG criteria into its overall portfolio management credit analysis, joining Federated Hermes, Goldman Sachs, J.P. Morgan and others. A spokesperson for BNY Mellon Investment Management says, 'Dreyfus Cash Investment Strategies has announced the formal integration of environmental, social, and governance (ESG) considerations into its credit analysis process. We define ESG integration as the explicit inclusion of ESG factors in our credit evaluation where available and, ultimately, investment decisions. There is no change to our core investment process and many of the factors embedded within ESG are part of our credit analysis already."
It continues, "CIO John Tobin comments, "We believe the integration of ESG into our fundamental credit process where available makes us better investors and supports our mission of protecting our clients' future financial wellbeing. In our view, issuers that are environmentally aware, socially responsible, and well governed are often better positioned to manage risks and capitalize on opportunities."
Our "MFS" piece reads, "Crane Data hosted its latest Money Fund Symposium conference in Philadelphia recently, and the 250+ attendees gathered for our big show for first time since June 2019 in Boston. We excerpt from some of the sessions, below. (Note: Thanks to those who supported MFS! The recording and materials are available here for Attendees and Crane Data subscribers.)
The recap explains, "The opening session, 'Keynote: Adapting to Regulations, Tech & ESG,' featured BlackRock's Tom Callahan and Federated Hermes' Debbie Cunningham. Callahan comments, 'Here is what I believe the correct narrative for the cash management industry through the current crisis is: Our clients collectively, as everyone knows, are the largest and most sophisticated clients in the world, and they were thrust quite unexpectedly in March of 2020 into the most challenging operating environment that any of them had ever seen. In response, they did the logical thing. They raised liquidity. They raised a biblical amount of liquidity. And much of that, over $1.25 trillion, was invested in money funds in three weeks at the end of March 2020 and at the beginning of April.'"
The "Worldwide" article tells readers, "The Investment Company Institute published, 'Worldwide Regulated Open-Fund Assets and Flows, Second Quarter 2021,' which shows that money fund assets globally rose by $86.0 billion, or 1.0%, in Q2’21 to $8.565 trillion. The increase was driven by gains in Chinese and U.S. money market fund assets, but French and Australian MMF assets declined. MMF assets worldwide increased by $404.9 billion, or 5.0%, in the 12 months through 6/30/21, and money funds in the U.S. now represent 52.9% of worldwide assets."
ICI's release says, "At the end of the second quarter of 2021, 47% of worldwide regulated open-end fund assets were held in equity funds. The asset share of bond funds was 20% and the asset share of balanced/mixed funds was 12%. Money market fund assets represented 12% of the worldwide total.... Money market funds worldwide experienced an inflow of $79 billion in the second quarter of 2021 after registering an inflow of $263 billion in the first quarter of 2021."
MFI also includes the News brief, "Money Funds Celebrate 50 Years!" We write, "While we said one year ago that money market funds marked their 50th birthday, one could argue that 1971 was the actual launch date of Reserve Primary Fund, the first money fund. (It filed in October 1970 but went live in October 1971.) So Happy 50th Birthday, again!"
Another News brief, "Assets Flat in Sept.," explains, "MMFs decreased $878 million to $4.964 trillion in Sept. according to MFI XLS. ICI's weekly 'MMF Assets' report shows assets jumping for the second week in a row, following a tax-related drop on Sept. 15. ICI says, 'Total MMF assets increased by $29.11 billion to $4.54 trillion for the week ended Sept. 29.'"
Our October MFI XLS, with Sept. 30 data, shows total assets decreased $878 million to $4.964 trillion, after increasing $27.9 billion in August, but decreasing $12.4 billion in July and $73.0 billion in June. They increased $74.0 billion in May and $62.2 billion in April. Assets rose $151.0 billion in March, $30.8 billion in February and $5.6 billion in January. Assets decreased $6.7 billion in December, $11.7 billion in November and $46.8 billion in October. Our broad Crane Money Fund Average 7-Day Yield was flat at 0.02%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) also remained flat at 0.02%.
On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 both stood at 0.09%. Charged Expenses averaged 0.07% for the Crane MFA and the Crane 100. (We'll revise expenses Friday once we upload the SEC's Form N-MFP data for 9/30.) The average WAM (weighted average maturity) for the Crane MFA was 35 days (down 2 days) while the Crane 100 WAM fell one day to 35 days). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
The September issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Wednesday morning, features the articles: "FSB Comment Letters Show Consensus on Reforms Close," which discusses the latest feedback on reforms; "BlackRock's Beccy Milchem Talks European MMF Issues," which profiles the new Head of EMEA Cash; and, "More D&I Share Classes on the Way, But ESG Takes Hit," which recaps the latest news on diversity MMFs. We also sent out our MFI XLS spreadsheet Wednesday a.m., and have updated our Money Fund Wisdom database query system with 8/31/21 data. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our September Money Fund Portfolio Holdings are scheduled to ship on Friday, Sept. 10, and our September Bond Fund Intelligence is scheduled to go out next Wednesday, Sept. 15.
MFI's lead article says, "Discussions continue to heat up and evolve over changing regulations governing money market funds, both in the U.S. and globally. The latest chapter in the saga is the posting of comment letters in response to the Financial Stability Board's 'Policy proposals to enhance money market fund resilience: Consultation Report.' Forty letters were posted in response and we've been quoting and summarizing from them since the August 12 deadline for comments passed. We review the latest highlights below."
It continues, "The Wall Street Journal discusses the pending money fund reforms in its article, 'Firms Wary as Money-Market Rule Changes Studied After Covid-19 Run.' They tell us, 'Investment managers are fighting for the future of money-market funds.... [F]inancial regulators are weighing rule changes designed to ensure that these funds fare better in the next crisis."
Our "BlackRock's Milchem" piece reads, "This month, MFI interviews Rebecca Milchem, BlackRock's new Head of Cash for EMEA. BlackRock is the 2nd largest manager of money funds worldwide and the largest manager of Euro and Sterling MMFs. We discuss the latest regulatory discussions, European vs. U.S. issues, and a number of other topics below in our Q&A."
MFI asks, "Give us a little bit of history. Milchem tells us, "Looking back at the BGI (Barclays) and BlackRock [merger] ... BGI always had the bigger Sterling book [and] BlackRock had a much bigger Dollar footprint when we put the businesses together back in 2009.... They were very complementary. I joined the business in 2008 ... so I had a bit of a baptism of fire.... I think we feel like we've been repeating history the last in the last year in terms of the experience from 2008.... But nothing brings a business together like going through some volatile market conditions and learning through and working with clients through those times."
The "D&I" article tells readers, "While it's been relatively quiet in the Social and ESG money fund space, there were a couple of developments over the past month. The good news was that BlackRock filed to launch several more D&I dealer affiliated share classes, while the bad news was that The Wall Street Journal took a shot at DWS and Deutsche Bank for overstating and struggling to define its ESG efforts."
It adds, "BlackRock's new Form N-1A Registration Statement filings include: Bancroft Capital Shares for BlackRock Liquid Federal Trust Fund, Cabrera Capital Markets Shares for TempFund and BlackRock Liquid Federal Trust Fund, Mischler Financial Group Shares for BlackRock Liquid Federal Trust Fund and Bancroft Capital Shares for the BlackRock Liquid Environmentally Aware Fund (LEAF). BlackRock already offers ESG MMFs BlackRock LEAF Direct (LEDXX) and LEAF Inst (LEFXX); BlackRock Wealth LEAF Inv (PINXX) and Inst (PNIXX); and BlackRock Liquidity FedFund Mischler (HUAXX)."
MFI also includes the News brief, "MFs Higher in August, Dip on Week," which says, "Money fund assets increased by $27.9 billion in August to $4.968 trillion, according to our MFI XLS. This follows declines of $38.5 billion in July and $84.8 billion in June. ICI's latest 'Money Market Fund Assets' report shows MMFs down $17.2 billion to $4.509 trillion in the latest week. Year-to-date, ICI shows MMFs up $212 billion, or 4.9%."
Another News brief, "August Portfolio Holdings: Treasuries Plunge Again; Repo, TDs Jump," comments, "Crane Data's latest Money Fund Portfolio Holdings, with data as of July 31, 2021, show another increase in Repo holdings, a jump in Other (Time Deposits) and another plunge in Treasuries. Treasury securities remained the largest portfolio segment, though Repo is closing in on the No. 1 spot. Agencies were the third largest segment, CP remained fourth, ahead of Other/Time Deposits, CDs and VRDNs."
Our September MFI XLS, with August 31 data, shows total assets increased $27.9 billion to $4.968 trillion, after decreasing $12.4 billion in July and $73.0 billion in June. They increased $74.0 billion in May and $62.2 billion in April. Assets rose $151.0 billion in March, $30.8 billion in February and $5.6 billion in January. Assets decreased $6.7 billion in December, $11.7 billion in November, $46.8 billion in October and $121.2 billion in September. Our broad Crane Money Fund Average 7-Day Yield was flat at 0.02%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) also remained flat at 0.02%.
On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 both remained at 0.09%. Charged Expenses averaged 0.07% for the Crane MFA and the Crane 100. (We'll revise expenses Thursday once we upload the SEC's Form N-MFP data for 8/31.) The average WAM (weighted average maturity) for the Crane MFA was 37 days (unchanged) while the Crane 100 WAM fell one day to 36 days). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
The August issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Friday morning, features the articles: "MF Portfolio Holdings Review; Shift to Repo from Treasuries," which looks at the latest securities and composition held by MMFs; "Federated's Donahue Says Q2 High-Water Mark for Waivers," which quotes the latest on fee waivers from earnings calls; and, "Reviewing ESMA Comments: IMMFA, Irish Funds, EFAMA," which quotes from recent feedback to European regulators. We also sent out our MFI XLS spreadsheet Friday a.m., and have updated our Money Fund Wisdom database query system with 7/31/21 data. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our August Money Fund Portfolio Holdings are scheduled to ship on Tuesday, August 10, and our August Bond Fund Intelligence is scheduled to go out Friday, August 13.
MFI's lead article says, "Money fund portfolios continue their massive shift away from Treasuries and towards repo, especially Fed repo. So we thought it would be a good time to review Crane Data's Money Fund Portfolio Holdings data and information. Our last monthly cut, with data as of June 30, 2021, showed another huge increase in Repo holdings and a giant drop in Treasuries, and we expect our 7/31 data to show the trend continuing." (Our August holdings will ship on Tuesday, 8/10.)
It continues, "Money market securities held by Taxable U.S. money funds (tracked by Crane Data) inched higher by $1.5 billion to $4.949 trillion in June, after rising $30.2 billion in May. Treasury securities remained the largest portfolio segment, followed by Repo, then Agencies. CP remained fourth, ahead of CD, Other/Time Deposits and VRDNs."
Our "Federated's Donahue" piece reads, "On its latest quarterly earnings call, Federated Hermes spend a lot of time discussing fee waivers. CEO & President Chris Donahue comments, 'We believe that Q2 was the high-water mark for money market fund yield waiver impact. As we expected, the Fed raised the administered rates in mid-June, moving repo rates from zero to 5 basis points and interest on excess reserves from 10 to 15 bps.' We quote from the call below, and we also review other earnings calls that mentioned money fund fee waivers."
Donahue explains, "While the Fed movement was a step in the right direction, the money fund yield curve remains very flat, and we are experiencing more waivers for competitive purposes. Tom will update our yield waiver outlook for the third quarter. Taking a look now at recent asset totals, managed assets were approximately $638 billion, including $421 billion in money markets.... MMMF assets were at $293 billion."
CFO Tom Donahue tells us, "Total revenue for the quarter was down from the prior quarter due mainly to the impact of higher minimum yield and competitive waivers.... Now other revenue increases from Q1 included the impact of higher money market assets.... The decrease in distribution expense of $6.3 million, compared to the prior quarter was mainly due to the impact of minimum yield waivers, partially offset by higher distribution expense incurred for competitive purposes.' (See Federated's recent 'Domestic Fee Waiver Notice.')"
The "ESMA" article tells readers, "As we mentioned last month, over 30 comment letters have been posted in response to the European Securities and Markets Authority's (ESMA's) 'Consultation on EU Money Market Fund Regulation - Legislative Review.' We've reviewed several of these over the past few weeks, but below we excerpt highlights from the major fund industry association comment letters."
The piece continues, "The U.K.-based Institutional Money Market Fund Association writes, 'Although the overwhelming majority of IMMFA MMFs are LVNAV or PDC-NAV, IMMFA represents all fund types ... our members offer a range of funds.... We feel strongly that questions of how MMFs fared should be considered in the context of the broader ecosystem and that any proposed solutions should take this symbiosis into account, rather than isolating MMFs. The March crisis was the first test of the reforms introduced under EU MMFR. Those reforms proved instrumental in providing MMFs with the increased resilience which enabled them to pass this test. We note that MMFs continued to serve their purpose in preserving capital and providing liquidity, with no MMFs imposing gates or fees, and all IMMFA MMFs staying within ... collars."
MFI also includes the News brief, "MMF Assets Down Again," which says, "Money fund assets fell by $12.4 billion in July to $4.966 trillion, according to our MFI XLS. ICI's 'Money Market Fund Assets' report shows MMFs down $1.1 billion to $4.501 trillion in the latest week, but up $204 billion, or 4.7% YTD."
Another News brief, "TBAC Recommends MMF Reforms," tells readers, "The Treasury Borrowing Advisory Committee discussed MMF reforms. A 'presenting member argued that reforms should include removing the ties between MMFs liquidity mandates and redemption fees and gates, mandating that prime MMFs hold a higher degree of liquid assets, and using floating net asset values for all non-government MMFs to set clearer expectations of risks to MMF investors.'"
Our August MFI XLS, with July 31 data, shows total assets decreased $12.4 billion to $4.966 trillion, after decreasing $73.0 billion in June, increasing $74.0 billion in May and increasing $62.2 billion in April. Assets rose $151.0 billion in March, $30.8 billion in February and $5.6 billion in January. Assets decreased $6.7 billion in December, $11.7 billion in November, $46.8 billion in October, $121.2 billion in September, and $42.3 billion in August. Our broad Crane Money Fund Average 7-Day Yield inched higher to 0.02%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) remained flat at 0.02%.
On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 both remained at 0.09%. Charged Expenses averaged 0.07% for the Crane MFA and the Crane 100. (We'll revise expenses Monday once we upload the SEC's Form N-MFP data for 7/31.) The average WAM (weighted average maturity) for both the Crane MFA and Crane 100 was 37 days (down one day from the previous month). (See our Crane Index or craneindexes.xlsx history file for more on our averages.)