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Changes in Money Fund Investments & Regulations

Changes in Money Fund Investments & Regulations. February 6 , 2014. Peter Crane President & Publisher Crane Data LLC. CPIWG Meeting DTCC, Jersey City, NJ. Changes in Money Fund Investments & Regulations. Current State, Assets, Yields, Expenses Portfolio Holdings Trends & Data

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Changes in Money Fund Investments & Regulations

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  1. Changes in Money Fund Investments & Regulations February 6, 2014 Peter Crane President & PublisherCrane Data LLC CPIWG Meeting DTCC, Jersey City, NJ

  2. Changes in Money Fund Investments & Regulations • Current State, Assets, Yields, Expenses • Portfolio Holdings Trends & Data • Regulatory Issues & Update • Miscellaneous, News • Questions & Discussion

  3. Current State of Money Fund Industry • MMF Assets $2.7 Trillion (Record was $3.9T) • Bank Savings Over $6.5 Trillion • Approx. 27 Million Shareholders • $5 Billion in Annual Revenue (down from $11B) • Approx. 1/4 Share of “Cash” Markets • “Breaking the Buck,” Near-Death Experience • Shifting Regulatory & Competitive Landscape • Zero Yields, Attrition & Consolidation • Record Levels of Cash

  4. History of Money Fund Assets Money Funds Are Down $1.2 Trillion Over 5 Years (-31%), But Still at mid-’07 Levels. 3

  5. Assets by Type: Prime Bottom & Rebound

  6. Banks Take $1+ Trillion From MMFs Money Funds Are Down $.965T (-28.4%) Over 5 Yrs.; MMDAs Are Up $3.121T (+77.5%)

  7. Rock Bottom Yields (Crane MFA 7-Day)

  8. Fund Expenses & Fee Waivers Money Fund Revenue Estimates: $2.6 Trillion x 0.15% = $3.8 Billion (12/13); $3.1 Trillion x 0.35% = $8.4 Bil. (12/09)

  9. Money Fund Market Share (12/31/13)

  10. Taxable MMF Portfolio Composition 9

  11. Securities, Supply & Transparency 10

  12. Largest Issuers & Largest CD & CP

  13. Regulatory: SEC MMF Reform Proposal Timeline of Events • Rule 2a-7 Amendments (2/10) • President’s Working Grp (10/10) • SEC Cancels Vote (8/12) • FSOC Issues Draft (11/12) • SEC Reform Proposal (6/13) • Comment Letters Due (9/13) Predictions? Current Proposals • Final Rule March-June ‘14 • Floating NAV & Gates Combo • Letters to Date • Floating NAV (Prime Inst) or • Liquidity Fees/Gates (Prime) • 2a-7 Tweaks, Buffer Gone

  14. SEC MMF Reform Comment Letters

  15. Worldwide & Intl MF Markets ($4.7T) Dublin & Luxemburg (IMMFA) Domiciles Source: ICI, Crane Data.

  16. Online Money Fund Trading Portals • Approx. $438 Billion in Assets • 25% of Institutional MMFs’ $1.75T • AFP ‘13 Liquidity Survey • 34% of Corps. Use Portals (46% of large cos.) • 73% of Trades Via Portal? (old data) • Enhancements • Adding MM Securities, TDs, Tools • Transparency: Weekly, SMAs • New Entrants, Exits

  17. Ultra-Short, Enhanced Cash & SMAs • Bond Funds & Ultra-Shorts • Bonds $3.5T But Ultras < $200B • ETFs ($100B) • PIMCO MINT, Guggenheim, SHY • Enhanced Cash (maybe $200B) • Banned from using stable NAV? • Separately Managed Accounts ($200B-$400B) • “Bankerage”/FDIC Amalgamators • $400B + $200B?

  18. Money Fund News; Q&A

  19. Contact Info

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