With the Federal Reserve Board of Governors meeting Monday and Tuesday to debate whether to cut their benchmark Fed funds rate below one-percent, we wanted to take another look at the portion of money market mutual funds that might be further impacted by lower rates. We examined our latest monthly data series, as well as our daily series from Friday, and found that the percentage of funds yielding below 0.5% remains relatively small.
Treasury money funds, which represent the majority of assets that have been and likely will be impacted by fee waivers to prevent negative yields, represent approximately 20.4% of all money fund assets. Government money funds, which may be impacted, represent another 18.5% of assets. But Prime assets, which are paying yields comfortably above 1.0%, still represent the biggest slice of money fund assets, at 43.5%. Tax-Exempt money funds represent an additional 17.6%.
As of Nov. 30, Crane Data shows 239 taxable money funds out of 910 with yields of 0.50% or lower. These funds, primarily Treasury money funds, represent 17.9% of all taxable assets and have an average expense ratio of 0.52%. As of Nov. 30, 155 money funds had yields of 0.25% or lower, representing $194.1 billion in assets, while 64 funds had yields of 0.05% or lower, representing 2.4% of assets.
Crane Data estimates that money market mutual funds are currently bringing in revenue at an annualized rate of $12.55 billion. Funds at or under 0.25% represent $978 million in revenue, or 9.3%, while funds at or under 0.5% represent $2.0 billion, or 19.0% of revenues. Fee waivers would vary according to yields, but we'd guess that a half-point cut would eventually cost money funds about a billion in revenue, or just under 10.0%.
Our Money Fund Intelligence Daily statistics from Friday (12/12) show that among the 500 largest money funds there are three funds with negative 7-day yields (though investor returns remain positive due to capital gains), five funds with zero yields, and 13 funds with 0.01% yields. Forty one funds have yields of 0.05% or lower (5.4% of assets), 89 funds have yields of 0.25% or lower (13.3% of assets), and 147 funds (23.2%) have yields of 0.50% or lower. Our Crane 100 yielded 1.40% and our broader Crane Money Fund Average yielded 1.08% as of Friday. Finally, remember that the majority of these funds too are Treasury funds, which may see yields rebound as year-end pressures abate.
