October 2006 Money Fund Intelligence

The October issue of Money Fund Intelligence is out! In addition to performance stats on 475 funds and the Crane Money Fund Indexes, MFI an Outlook for 2007, the results of our reader “mini-survey”, a story on Portals & Enhanced Cash, a profile of Morgan Stanley Institutional Liquidity, and, of course, our comprehensive monthly News and Analyses of the money fund business. E-mail pete@cranedata.us for a copy or call 1-508-439-4419.

Assets have increased by 9% year-to-date and are on pace for 12% gains in ‘06; money funds stand just 2% below their all-time record of $2.3 trillion. In the issue, Crane Data Predicts 15% Growth for Money Funds in 2007. I expect a banner year based on the following: historically high nominal and real returns; the psychological and practical impact of 5% rates; the significant advantage money fund yields hold over bank savings and “sweep” products; the continued attractiveness of “cash” vs. stocks, bonds, and alternative “hedge” assets; and, an expected surge in institutional money fund inflows due to the flat- to-falling rate environment.

The October MFI also polled our readership on the following questions:

1) In 2007, do you expect money fund assets to grow by?

a) 0% b) 5% c) 10% d) 15% e) 20% f) other

(AVERAGE of 18 responses to date: 9.1% asset growth in ‘07)

2) Where do you expect money fund yields (currently at 5.0%) to be at year end 2007?

(Approximately Fed funds minus .25%)

a) 4.0% b) 4.5% c) 5.0% d) 5.5% e) 6.0% f) 3.5% g) other

(AVERAGE of 17 RESPONSES TO DATE: 4.68% Money Fund Index year end ‘07)

3) What do you think will be the most important issue for money funds in 2007?

a) “Bankerage” b) Portals c) Inflows d) Blowups e) Consolidation f) Enhanced Cash

g) A New Cash Competitor h) Other

(TOP RESPONSES TO DATE: e) 33%, b) 28%, c) 17%, f) 11%, g) 11%, d) 6%)

Please post your responses and I’ll add to the tally!

PeteC