The Investment Company Institute, the trade group representing the mutual fund industry, released its monthly statistics for November on Tuesday, which showed that overall mutual fund assets fell by $261.7 billion to $9.355 trillion. Mutual fund assets fell by 2.7% in November and have fallen by $2.666 trillion, or 22%, YTD in 2008. Meanwhile, money market mutual fund assets rose by $130.2 billion, or 3.6%, in November to $3.736 trillion, and these assets have risen by $628.4 billion, or 20.2%, year-to-date in 2008.
Money funds now represent 40% of mutual fund assets, their highest percentage since 1990, when cash accounted for 46% of all funds. From 1979 through 1990, money market mutual funds represented anywhere from 40.8% (1986) to 77.1% (1981) of all fund assets. Before 1979, money fund assets represented a mere $10 billion out of the fund industry's total $55.8 billion (1978). Money funds had shrunk (or rather stock funds had grown) to approximately 25% of funds assets for most of the 1990's and 2000's. (See the ICI Fact Book for historical asset totals.)
ICI reports that money funds had inflows of $122.4 billion in November vs. $143.5 billion in October. (Inflows don't include reinvested dividends while our asset change figures do include these.) Institutional funds had inflows of $108.8 billion while Individual funds had inflows of $13.6 billion in November. As we've previously reported based on ICI's weekly and Crane Data's daily data, the strong money fund inflows have continued in December.
One reason money fund flows have been so strong is the "Liquid Assets of Stock Mutual Funds" total, which ICI reports as 5.4% in their latest month. Stock and bond funds have steadily increased their holdings in "cash," which often means money market funds, from 4.2% a year ago and from a record low of 3.4% during the summer of 2007. This total remains well below stock and bond funds' historical cash positions, which averaged 6.4% during the 1990's and 8.3% during the second half of the 1980's. If stock and bond funds (and other institutional investors) continue to build their cash positions, this should remain a bullish factor for money fund asset growth.
Finally, ICI's monthly statistics show that the total number of taxable money funds fell from 546 to 544 in November (down 5 from November '07), and the number of Tax-free money funds fell by two to 253 (down 6 over the past year). Thus, ICI tracks 797 money fund "portfolios" down from 808 a year ago.
