Yields on money market mutual funds continued their march lower in April, according to our monthly Money Fund Intelligence statistics. The bellwether Crane 100 MF Index fell from a (7-day) yield of 2.76% on March 31 to 2.47% as of April 30, 2008. A year ago, the index of the 100 largest taxable money funds was 4.98%, and on Dec. 31, the Crane 100 was 4.49%. The broader Crane Money Fund Average, which tracks 865 taxable money market mutual funds, declined from 2.26% to 2.08% currently. It has fallen from 4.85% on April 30, 2007.
Treasury fund yields rose for the month of April, increasing from 1.36% to 1.61% for Institutional funds and 1.04% to 1.19% for Treasury Individual money funds. Government Institutional Money Fund yields fell from 2.46% to 2.22% in the latest month, and Government Individual yields fell from 2.05% to 1.85%. Prime Institutional yields declined by 34 basis points to 2.73%, while Prime Individual yields, on average, declined by 31 bps to 2.29%. Tax Exempt Money Fund Yields rose from 1.86% to 2.05% on the month.
Rates should continue lower in May, though they appear to be taking their sweet time digesting the Fed's latest 1/4-point rate cut. Markets anticipate that this could be the last Fed move for this series, so money fund rates should stabilize slightly below current levels. Longer-term and LIBOR-linked money market rates have actually risen slightly, so money fund yields may even start inching higher once the latest Fed move lower is digested.
The pending May issue of Crane Index and Money Fund Intelligence will contain our full series of money fund and cash investment averages. The new issue will also feature a discussion with `Vanguard Prime Money Market Fund manager David Glocke, a celebration of Crane Data and Money Fund Intelligence's 3rd birthday and a review of our first two years, and of course coverage of all the news impacting the world of money market mutual funds.
