The Investment Company Institute's latest weekly "Money Market Fund Assets" report shows money market mutual fund assets jumping another $38.7 billion to a record $6.463 trillion, following an increase of $120.8 billion the week prior -- the 6th largest weekly increase ever and the largest non-Covid or non-SVB related increase. Assets have risen in 19 of the last 24 weeks, increasing by $485.6 billion (or 8.1%) since April 24. MMF assets are up by $577 billion, or 12.2%, year-to-date in 2024 (through 10/2/24), with Institutional MMFs up $269 billion, or 8.8% and Retail MMFs up $307 billion, or 18.3%. Over the past 52 weeks, money funds have risen by $755 billion, or 13.2%, with Retail MMFs up by $438 billion (20.3%) and Inst MMFs rising by $317 billion (8.9%). (Note: Crane Data's separate and more comprehensive asset series shows money funds hitting a record $6.799 trillion on September 26!)
ICI's weekly release says, "Total money market fund assets increased by 38.67 billion to $6.46 trillion for the week ended Wednesday, October 2, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $42.47 billion and prime funds decreased by $5.78 billion. Tax-exempt money market funds increased by $1.99 billion. " ICI's stats show Institutional MMFs rising $14.2 billion and Retail MMFs rising $24.5 billion in the latest week. Total Government MMF assets, including Treasury funds, were $5.287 trillion (81.8% of all money funds), while Total Prime MMFs were $1.045 trillion (16.2%). Tax Exempt MMFs totaled $131.0 billion (2.0%).
ICI explains, "Assets of retail money market funds increased by $24.48 billion to $2.60 trillion. Among retail funds, government money market fund assets increased by $19.16 billion to $1.65 trillion, prime money market fund assets increased by $3.84 billion to $824.94 billion, and tax-exempt fund assets increased by $1.48 billion to $119.73 billion." Retail assets account for over a third of total assets, or 40.2%, and Government Retail assets make up 63.6% of all Retail MMFs.
They add, "Assets of institutional money market funds increased by $14.19 billion to $3.87 trillion. Among institutional funds, government money market fund assets increased by $23.30 billion to $3.63 trillion, prime money market fund assets decreased by $9.62 billion to $220.14 billion, and tax-exempt fund assets increased by $509 million to $11.26 billion." Institutional assets accounted for 59.8% of all MMF assets, with Government Institutional assets making up 94.0% of all institutional MMF totals.
According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets have risen by $29.8 billion in October (through 10/2) to $6.795 trillion. Assets rose by $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, but they fell $15.8 billion in April and $68.8 billion in March. They rose $72.1 billion in February, $93.9 billion in January, $32.7 billion in December and $226.4 billion in November. MMF totals fell by $31.9 billion last October. 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, BankRate posted an article titled, "What happens to idle cash in your portfolio? Sweep accounts, explained." They write, "You might not think about the idle cash in your brokerage account very often. But behind the scenes, your money may be earning your brokerage company a lot more interest than it is earning you.... For the brokerage company and its affiliated banks, your money is earning relatively high interest. Yet many major brokers are returning less than 0.2 percent of that interest to customers."
The piece explains, "A growing number of financial firms are coming under fire -- and facing lawsuits -- for their behind-the-scenes cash sweep accounts and the extremely low yields paid to customers, especially as the federal funds rate increased in recent years and banks presumably earned more interest. By understanding how cash sweeps work, you can make informed decisions about your investments and ensure you’re getting the best possible return on your money."
Bankrate asks, "What is a cash sweep account? Many brokerage firms offer a service known as a cash sweep, which automatically collects and deposits uninvested cash from your account into affiliated bank accounts, where the brokerage earns interest on it. In other words, many brokerages use your idle cash as a low-cost source of funding for their operations. Interest they earn from swept funds can be substantial, especially when compared to the rates you, the individual customer, receive."
They state, "For example, in March 2024, Charles Schwab reported about $399 billion in client sweep cash balances -- a huge sum of money to earn interest on. In fact, Charles Schwab generated nearly half of its $18.8 billion in revenue in 2023 from net interest income, according to Barron's."
Bankrate tells us, "Low-yielding cash sweeps have become more common in recent years, as several large brokers have transitioned clients from money market funds to lower-yielding bank sweeps. While some companies, such as Fidelity, still offer a money market sweep program, most full-service brokerage firms offer only a bank sweep program."
They add, "Several major wealth management firms -- including Morgan Stanley, Wells Fargo and Charles Schwab -- are facing lawsuits over their low-yield cash sweep accounts. These lawsuits accuse the brokerages of violating their duty to act in the best interest of their clients.... Lawsuits were filed against at least eight financial firms between late June and early September 2024, according to Bloomberg Law. While the outcome of these lawsuits is uncertain, the legal action is shining a bright light on the murky practices behind cash sweep accounts."
