iMoneyNet's former VP offers a new
source for money fund information.
A new source of information on money market mutual funds has debuted.
Peter Crane, the former vice president and managing director of iMoneyNet in Westboro, Mass., has launched Money Fund Intelligence.
His eight-page monthly online PDF publication, also based in Westboro, covers 200 of the largest money market funds, with assets over $500 million. Data, Crane says, represent more than 70% or $1.43 trillion of the more than $2 trillion in money market fund assets.
"With both Bankrate (the North Palm Beach, Fla., bank rate research company) and iMoneyNet, the problem is way too many choices," Crane says. "One of my main strategies is to focus on the biggest offerings. I report on where the money is, on the theory that bigger is not only better but safer."
Money Fund Intelligence also contains a new choice in money market mutual fund averages. The Crane Money Fund Index is available in Taxable, Tax-Exempt, Institutional, and Individual peer groups. The report also contains a number of other statistics that include:
The first brokerage firm sweep account benchmark, the "Crane Sweep Index."
A ranking and index of the highest-yield bank deposits, called the "Crane Top Bank Savings Index."
Money Fund Intelligence marks the first product from Crane Data LLC, a mutual fund information company. Crane, the company's president, co-founded Crane Data last April with Shaun Cutts, the firm's chief technology officer and a computer and statistics professional.
For 30 years, investors have lived by the gospel of iMoneyNet's Money Fund Report. iMoneyNet is owned by Informa Financial Information Inc., which is a subsidiary of London-based Informa Group PLC. That company's "seven-day average yield" is the most widely published benchmark for money market mutual fund yields.
Formerly Donoghue's Money Fund Report, Money Fund Report was started by Dan Butler in 1975. William E. Donoghue purchased the report in 1977. At the time, there were only 61 money funds with just $3.69 billion in assets, according to the Investment Company Institute.
But as interest rates rose to double-digit levels in the late 1970s and early 1980s, investor interest and the number of money funds exploded. By 1982, there were 318 money market funds with $220 billion in assets. Today, there are 1,780 money market funds, including multiple share classes, with more than $2 trillion in assets.
Donoghue sold his company to International Business Communications, London, in 1986. The company changed its name to Informa Group PLC in 1998.
"iMoneyNet folks know that we have the largest and most comprehensive money fund database," says Connie Bugbee, managing editor of iMoneyNet. "We have a staff of seasoned veterans who are able to assess data to assure accuracy. We collect data daily, weekly and monthly. We have net and gross performance statistics; daily, weekly and monthly assets; portfolio holdings as well as averages of daily assets for more than 1,780 funds. By including all funds in each portfolio, we provide a complete picture of the industry."
Bugbee says that every major fund complex and most small money fund complexes subscribe to one or more of iMoneyNet's products. Other subscribers include regulatory agencies, rating agencies and those who market their products to funds, as well as state and corporate treasurers.
But Crane says he is focusing on smaller institutions and advisory firms.
Advisors haven't thought about cash for years because stocks were doing so well in the 1980s and 1990s, he says. In the past, stock funds always maintained a cash position. Today stock funds are fully invested so they can fit into an advisor's asset class for portfolio diversification.
In addition, Crane notes there is a lot of money sitting on the sidelines that can move into money market funds. Some $3.5 trillion is sitting in bank savings accounts earning just 2%. Advisors can tap that market and dramatically increase the return on their clients' risk-free investments.
"Cash looks attractive today," Crane says. "Given the current interest rates and volatile stock market, investors are looking at cash. Money funds yield over 5%. An advisor could increase the return on his or her client's cash position by 25 to 50 basis points. On a $1 million dollar portfolio, that translates into $2,500 to $5,000 in annual income."
Crane Data is developing a series of reports, indexes and analytics. Meanwhile, Money Fund Intelligence contains commentary, analysis, news and research on money market funds and securities, bank savings products and the short-term cash investment market. Unlike iMoneyNet, however, Crane's data do not include the portfolio holdings of the money market funds he tracks.
Crane says he collects the monthly yields and data from the investment company. Then he reconciles that data by computing the seven-day yield year-to-date for one-year, three-year, five-year and ten-year periods. He also calculates returns from the date of inception. All returns are based on Securities and Exchange Commission rules on the calculation of money fund yields. He has a performance list on the firm's Web site, http://www.cranedata.us.
The problem with iMoneyNet's data, according to Crane, is that its average money fund yields are lower because the data is skewed by small, high-expense and lower-yielding funds. The B and C share-class money funds, which charge 12b-1 fees, also are a drag on performance-even though little money is invested in these share classes.
The largest funds, he says, hold a significant performance advantage over smaller funds via their lower expense ratios and economies of scale. They bring added safety of deeper-pocketed parents with recognized brand names.
By focusing on the largest funds, Crane says his average yield on money funds is more than 5%. Meanwhile, iMoneyNet's average money fund yield is below 5%, he says.
"While investors have thousands of mutual fund choices, the number of information and index providers has been limited," says Crane. "We want to provide more managed investment choices to investors by concentrating on the largest funds and providers."
Crane is selling his report for an initial annual charge of $500. He seeks to sell an affordable product to financial advisors, smaller institutions and investment companies. However, a single institution with multiple users was paying as much as $5,000. Currently he has 50 clients and 250 readers. Subscribers to his report include Reserve Fund and J.P. Morgan.
"Our mantra is to sell things at a tenth the price and do ten times the volume," he says. "I always thought there was a void in the market for advisors and the mass institutional market-companies that can buy the report for their advisors at an affordable price."
iMoneyNet's weekly Money Fund Report, its flagship product published since 1975, costs $3,675 per subscription. Money Market Insights, a monthly report, costs $1,875. And iMoneyNet's Vision electronic database software product, which includes ten years of data and commentary, costs $32,500 for a single year. Prices for multiple users and site licenses are higher, according to Mike Krasner, iMoneyNet spokesperson.
iMoneynet reports cover the entire universe of 1,780 money market funds, including yields, average maturities, portfolio holdings and commentary. In addition to the reports listed above, the company offers the following products:
Rated Money Fund Report, which covers 718 funds rated by Standard & Poor's, Moody's Investors Service and Fitch.
Money Fund Expense Report, which lists monthly charges and incurred expenses, quarterly net and gross returns, average daily assets, money fund averages, rankings and commentary.
In addition to the electronic database, it provides software to offshore and European money funds and Web-based products, which include a Money Fund Analyzer. There are several spreadsheet products, as well a customized data and trademark licensing.
Alan Lavine was director of research
for The Donoghue Organization, Holliston, Mass., which was iMoneyNet's
predecessor, from 1981 to 1983. Today, he is the author of several
books. His latest, coauthored with his wife, Gail Liberman, is Quick
Steps to Financial Stability (Que/Penguin).