Money market mutual fund assets rose for the 10th week in a row, increasing $29.1 billion to a record $3.743 trillion. The Investment Company Institute's weekly statistics showed retail assets increasing $6.7 billion to $1.283 trillion and institutional assets increasing $22.34 billion to $2.460 trillion in the week ended Dec. 3. Since Sept. 30, 2008, money fund assets have grown by $286.7 billion, or 8.3%, and assets have grown by $598.5 billion, or 19.0%, over the past 52 weeks.
Government Institutional funds accounted for almost the entire increase, rising $260.9 billion, or 29.0% during this period. They rose by $12.0 billion in the latest week to $1.160 trillion. General Purpose ("Prime") Institutional assets rose by $7.1 billion, their 4th consecutive increase (up $55.5 billion over the past five weeks), to $1.111 trillion, while Tax Exempt Institutional funds increased by $3.2 billion to $188.5 billion.
General Purpose Retail funds increased by $4.0 billion, their 3rd consecutive increase, to $715.8 billion, while Government Retail funds added a mere $540 million to $267.0 billion. Tax Exempt Retail money fund assets rose $2.1 billion to $300.4 billion. Assets should continue moving higher in the next week or two, but they should then experience seasonal declines due to Holiday spending and year-end "window dressing".
In other news, Standard & Poor's Paris released a report entitled, "Money-Market Fund Support Strains Fund Managers And Bank Sponsors," which says, "Once considered among the safest of investments, certain enhanced cash and money-market funds have joined the many that the global credit market downturn has affected as a result of declining net asset values (NAVs) in their underlying investments."
S&P says, "Fund managers' and bank sponsors' actions in recent months to preserve the safety of the funds have strained the profitability, liquidity, and capital of a few asset managers rated by Standard & Poor's, notably `Legg Mason Inc. Others (Bank of America Corp., Barclays Bank PLC, Credit Suisse, and SunTrust Banks Inc.) have also provided billions of dollars in aggregate support to their sponsored money-market funds.
"With credit markets still shaky, we believe that the potential for further deterioration in market values -- particularly for enhanced-cash funds -- may lead to more investor redemptions and require fund managers and bank sponsors to continue to support their funds," said Standard & Poor's credit analyst Francoise Nichols. "This could result in Standard & Poor's taking negative rating actions on some issuer ratings in certain cases. We do not expect potential rating actions to be widespread across the sector, however."
Finally, see the New York Times article on Reserve, "Embattled, Fund Shifts Cost of Suits To Investors". Also note that the December issue of our flagship Money Fund Intelligence, which will feature an interview with Cavanal Hill, a review of Government support programs and support actions, and our usual extensive news, will be available along with our monthly performance rankings, statistics and indexes, on Monday morning.
