Money Fund Professionals Moving Around

Recently, a number of long-time portfolio managers and money fund professionals have “retired” or switched jobs after having been at positions for seemingly forever. Sharon Pichler is retiring from Janus, Darlene Rasel retired from Deutsche, and Pat Ford has moved from BlackRock. Cumulatively, these three had almost 50 years of experience. Money fund salespeople are also changing jobs at a pace heretofore unseen. What’s behind the movement?

Money of course, but boredom and comfort also play a role. After many years, often you haev to fire yourself. (I had to!) It’s interesting to note that even the boom years of 2000 and 2001 didn’t see as much movement among money fund pros. I think then everyone was making so much money they didn’t have time to work on their resumes. Then companies clamped down on huge paydays.

Not only are people moving, but lots more are looking (trust me!)…. It’s more than the booming assets. It’s also the shifting modern environment, with portals, mergers and reorganizations becoming facts of life. Finally, with experience alas for the organizations come big salaries.

We’d like to hear your thoughts, and also to let you know that we’ll soon have some semi-private blogs behind http://www.cranedata.us’s login screens. Let us know if you’d be interested in moderating a topic!

P.S. Visit http://www.cranedata.us/news/people/ to read up on the latest!

Consistent Top Banks: Countrywide Press Release

I just read the press release “Countrywide Bank: Pay Yourself by Saving Some of Your Tax Return, Company Bonus” at http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/04-17-2007/0004566964&EDATE=. While I’m normally a money market mutual fund partisan and skeptical of banks, I must admire Countrywide’s consistency. (See the top 5 yielding bank savings at: http://www.cranedata.us.)

ING Direct, Emigrant Direct, and soon HSBC Direct all came and went from the top-yielding rankings, but Countrywide has been delivering 5+% returns for some time now.  We’ve only been tracking the top bank rates for about 6 months now, so we still don’t have that long a track record. But we’ll be monitoring going forward. And savers could do worse than to choose this consistent yielder.

What Information is Important in Choosing a Money Fund?

I want to see if I can get any feedback from investors and providers about what information is important in choosing a money market mutual fund. The NASD says the 7-day yield must be displayed with any performance data. (The 7-day yield takes the daily dividends for the past 7 days, adds them up, divides by 7, then annualizes by multiplying by 365. Multiply by 100 to get in percent.) So 7-day yield has become the standard by which all funds are judged.

Does longer-term performance matter? While it usually has little bearing on how a fund is doing today, it does reveal the character, consistency and perhaps most importanly, expense ratio, of a fund. Crane Data hopes to broaden the debate by making other performance points, like 30-day yields, 1-month, 3-month, year-to-date, 1-year, 3-year, 5-year, and 10-year returns, more broadly available.

(See Crane Data’s new “Fund Detail” pages. Yields are available to all who register; additional fund performance stats and rankings are available to subscribers. http://www.cranedata.us/resources/funds/)

We’re in the process of creating some additional “ratings” guides, so would love to hear your thoughts. Moody’s, S&P and Fitch have AAA ratings, but these appear to be too homogenous. (Everyone gets the AAA or doesn’t get rated. There are AA and A ratings, but they’re not widely used by funds.) Would a star (ala Morningstar) or grade rating be of interest?

We’re looking at, like the star ratings, incorporating various performance rankings, adding in some volatility or standard deviation of returns and/or asset flows, and putting a grade rating on a fund. But we’d like to involve some outsiders, particularly investors, in the process. Let Crane Data know if you’d like to discuss, and post any comments … please!;-)

Regards, 

Pete Crane

Beware Municipal and Tax-Exempt Money Funds at Tax-Time!

Municipal and tax-exempt money market fund (and bond) yields spike up as demand rises at both year-end and at tax-payment time. At April 15 and the weeks following as checks clear, tax-exempt funds are drawn down, paradoxically, to pay taxes. This causes a spike in yields at the very time investors are wondering how to cut their taxes for next year. Don’t be fooled. Yields drop back down in May, and remain at non-eye-popping levels most of the year.

Since tax-exempt and municipal yields are quite volatile, investing in these funds requires a lot of attention. What looks to be a good deal once week could wind up costing you in the long run.

Also, beware the AMT! Tax-exempt or tax-free  money funds may only invest a maximum of 20% in AMT paper, while Municipal funds may invest all of their cash in bonds subject to the alternative minimum tax. See http://www.cranedata.us for our story Monday on this topic.

Let us know what your thoughts are on tax-exempt and/or municipal money funds!