News Archives: March, 2025
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."
