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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

Changes in Money Fund Investments & Regulations

February 6, 2014

Peter Crane President & PublisherCrane Data LLC

CPIWG Meeting

DTCC, Jersey City, NJ


Changes in money fund investments regulations1
Changes in Money Fund Investments & Regulations

  • Current State, Assets, Yields, Expenses

  • Portfolio Holdings Trends & Data

  • Regulatory Issues & Update

  • Miscellaneous, News

  • Questions & Discussion


Current state of money fund industry
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


History of money fund assets
History of Money Fund Assets

Money Funds Are Down $1.2 Trillion Over

5 Years (-31%), But Still at mid-’07 Levels.

3



Banks take 1 trillion from mmfs
Banks Take $1+ Trillion From MMFs

Money Funds Are Down $.965T (-28.4%)

Over 5 Yrs.; MMDAs Are Up $3.121T (+77.5%)



Fund expenses fee waivers
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)






Regulatory sec mmf reform proposal
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



Worldwide intl mf markets 4 7t
Worldwide & Intl MF Markets ($4.7T)

Dublin & Luxemburg (IMMFA) Domiciles

Source: ICI, Crane Data.


Online money fund trading portals
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


Ultra short enhanced cash smas
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?




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