Money market mutual fund assets leapt $49.9 billion to a record $6.059 trillion after inching lower the previous two weeks, according to ICI's latest weekly "Money Market Fund Assets" report. After their phenomenal $1.15 trillion increase in 2023, MMF assets are up by another $172 billion, or 3.6%, year-to-date in 2024 (through 2/28/24), with Institutional MMFs up $93 billion, or 3.0% and Retail MMFs up $79 billion, or 4.7%. Over the past 52 weeks, money funds have risen a massive $1.165 trillion, or 23.8%, with Retail MMFs rising by $556 billion (30.7%) and Inst MMFs rising by $609 billion (19.8%). (Note: Register soon for our Bond Fund Symposium, March 25-26 in Philadelphia. We hope to see you in Philly!)
The weekly release says, "Total money market fund assets increased by $49.86 billion to $6.06 trillion for the week ended Wednesday, February 28, the Investment Company Institute reported. Among taxable money market funds, government funds increased by $45.73 billion and prime funds increased by $5.50 billion. Tax-exempt money market funds decreased by $1.37 billion." ICI's stats show Institutional MMFs rising $46.9 billion and Retail MMFs rising $3.0 billion in the latest week. Total Government MMF assets, including Treasury funds, were $4.918 trillion (81.2% of all money funds), while Total Prime MMFs were $1.021 trillion (16.9%). Tax Exempt MMFs totaled $119.2 billion (2.0%).
ICI explains, "Assets of retail money market funds increased by $2.97 billion to $2.37 trillion. Among retail funds, government money market fund assets increased by $2.00 billion to $1.53 trillion, prime money market fund assets increased by $1.88 billion to $729.22 billion, and tax-exempt fund assets decreased by $908 million to $108.24 billion." Retail assets account for over a third of total assets, or 39.1%, and Government Retail assets make up 64.7% of all Retail MMFs.
They add, "Assets of institutional money market funds increased by $46.88 billion to $3.69 trillion. Among institutional funds, government money market fund assets increased by $43.73 billion to $3.39 trillion, prime money market fund assets increased by $3.61 billion to $291.76 billion, and tax-exempt fund assets decreased by $459 million to $10.99 billion." Institutional assets accounted for 60.9% of all MMF assets, with Government Institutional assets making up 91.8% of all Institutional MMF totals.
According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets have risen by $77.1 billion in February to a record $6.471 trillion. Assets rose $93.9 billion in January, $32.7 billion in December and $226.4 billion in November. MMF totals fell by $31.9 billion in October. They rose $93.9 billion in September, $98.3 billion in August and $34.7 billion in July. Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're over $400 billion lower than Crane's asset series.
In other news, Financial Planning writes "Morgan Stanley wealth head sets eyes on trillions sitting in money markets," It explains, "Morgan Stanley sees huge piles of wealth sitting in money markets and high-yield savings accounts and wants to have a big part in managing it when falling interest rates undermine the appeal of those investments. Money markets and high-yield accounts are just two sources Morgan Stanley is looking to as it pursues its twin goals of eventually having $10 trillion under management and a pre-tax profit margin of 30% from managing clients' wealth and assets, according to Jed Finn, the recently appointed head of the firm's wealth management business."
Finn comments, "We know that our clients are holding cash balances outside of Morgan Stanley, sitting in savings accounts, sitting in money market funds, getting a really nice yield while they're waiting for a catalyst."
The article continues, "More than $6 trillion dollars are now estimated to be in cash proxies like money markets, which typically pay slightly higher rates than savings accounts. Getting even a piece of that total would push Morgan Stanley toward its goal of having $10 trillion under management, up from roughly $6.6 trillion today. 'I think everybody knows the story pretty well,' Finn said. 'The highest yielding cash environment in 15 years has attracted clients' excess cash.'"
Financial Planning writes, "But Tim Welsh, the CEO of the industry consulting firm Nexus Strategy, questioned whether the small predicted decrease in interest rates would be enough to encourage clients to move their cash off the sidelines. He noted that one of the reasons investors are attracted to money markets is their tendency to be far more stable than stocks or other investment assets. 'Of course, cash used to be trash,' Welsh said. 'But now that anybody can get a nice 4% or 5% yield, it's going to take some very drastic moves to get someone to reallocate those assets.'"
They quote, "Peter Crane, the president of Crane Data and the publisher of the Money Fund Intelligence newsletter, said the main reason investors have been moving cash into money market funds hasn't been fears of stock market instability. Rather, it's because the yields on regular bank accounts have been hovering around 1%. 'It didn't come from the stock markets, so what makes Wall Street think it's going to go back into the stock market?' said Crane, whose firm tracks money markets. 'Historically,' he added, 'cash competes with cash.'"
