Last week, we wrote about some of the statistics and commentary on instutional money market funds and flows available in the recently-released "2008 Investment Company Fact Book. This excellent resource, published by ICI, also comments on record retail money fund inflows and shows a table breaking cash flows into U.S. Government and General Purpose money funds.
The Fact Book says, "Retail money market funds, which are principally sold to individual investors, received net new cash of $172 billion in 2007, following an inflow of $96 billion the previous year. Money fund yields followed the pattern of short-term interest rates, remaining steady in the first part of 2007 then falling off somewhat in the latter part of the year. The difference between yields on money market funds and those on bank deposits remained at just under 4 percentage points for much of the year before narrowing about 80 basis points by year-end. Nevertheless, the yield on retail money market funds by year-end 2007 remained quite favorable when compared to the historical experience of the past 15 years."
While ICI's statistics show General Purpose Institutional money fund assets rising at over twice the rate of Government Institutional money fund assets in the first half of 2007 -- $53 billion (to $983 billion) vs. $22 billion (to $329 billion) -- this reversed in the second half of the year. Government Inst funds saw $249 billion of net new cash flow (to $583 billion) in the second half vs. $131 billion (to $1.123 trillion) for General Purpose ("Prime") Inst money funds.
ICI's new publication also shows that Businesses accounted for over half of the new institutional inflows into money funds, rising $123 billion, or 31.2%, in 2007. (Business assets in Institutional and Retail money funds total $518.1 billion, or 58.4%, in a Table entitled, "Assets of Institutional Investors in Taxable Money Market Mutual Funds by Type of Institution and Type of Fund".) However, Nonprofits grew at the fastest rate (74.7%), followed by "Other", which includes "state and local governments, funds holding mutual shares, and other institutional accounts not classified" (46.7%).
