While money fund assets overall were flat in the latest week, Prime MMF assets continued their summer plunge and massive shift into Government MMFs, falling below $1.0 trillion for the first time in 20 years. ICI's weekly "Money Market Fund Assets" report shows all MMFs increasing a mere $130 million in the latest week. But Prime funds lost another $18.2 billion -- their 8th week in a row of declines (-$150.4B). (Govt funds continue to be the recipient of these assets.) Over the past 4 weeks, overall assets have declined by about $3 billion. Prime MMFs have fallen $58.4 billion the past 4 weeks and $174.0 billion the past 9 weeks, while Govt MMFs gained $65.1 billion over 4 weeks and $182.9 over 9 weeks. We look at these latest flows, and excerpt from ICI's latest "Trends in Mutual Fund Investing" and "Month-End Portfolio Holdings of Taxable Money Funds" reports below.
Since Oct. 29, 2015, just prior to Fidelity Cash Reserves' huge conversion, Prime assets have fallen by a massive $468.4 billion, or 32.1%. Govt MMFs have increased by $527.7 billion during this same time while Tax Exempt MMFs have fallen by $61.5 billion. YTD in 2016, Prime MMFs are down by $293.8 billion, or 22.9% while Govt MMFs are up by $320.4 billion, or 26.2%. Government fund assets moved ahead of Prime assets in February 2016 for the first time ever, and they haven't looked back. The shift was initially fueled by the conversion of over $300 billion of Prime funds into Govt funds, but since June appears to be driven by investors and investor segments shifting from Prime funds into Govt MMFs.
ICI's latest weekly says, "Total money market fund assets increased by $130 million to $2.71 trillion for the week ended Wednesday, July 27, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $23.19 billion and prime funds decreased by $18.23 billion. Tax-exempt money market funds decreased by $4.82 billion." Government assets, including Institutional and Retail (and Treasury and Government), which broke above the $1.5 trillion level for the first time ever last week, stand at $1.541 trillion, while Prime assets, which dipped below the $1.0 trillion level for the first time in 20 years, are at $990 billion.
The release explains, "Assets of retail money market funds decreased by $2.56 billion to $955.81 billion. Among retail funds, government money market fund assets increased by $4.10 billion to $461.21 billion, prime money market fund assets decreased by $3.50 billion to $353.67 billion, and tax-exempt fund assets decreased by $3.16 billion to $140.93 billion…. Assets of institutional money market funds increased by $2.69 billion to $1.76 trillion. Among institutional funds, government money market fund assets increased by $19.08 billion to $1.08 trillion, prime money market fund assets decreased by $14.73 billion to $636.33 billion, and tax-exempt fund assets decreased by $1.66 billion to $42.52 billion."
ICI's "Trends in Mutual Fund Investing June 2016" confirms another decrease in MMF assets in June. MMFs were down $7.5 billion, or 0.3%, to $2.703 trillion after dropping $11.8 billion in May, $41.8 billion in April, and $15.1 billion in March. (Assets should be down in July too.) But in the 12 months through June 30, money fund assets are up $87.4 billion, or 3.3%, according to ICI.
The monthly release says, "The combined assets of the nation’s mutual funds decreased by $1.58 billion to $15.91 trillion in June, according to the Investment Company Institute’s official survey of the mutual fund industry. In the survey, mutual fund companies report actual assets, sales, and redemptions to ICI…. Bond funds had an inflow of $8.32 billion in June, compared with an inflow of $12.88 billion in May …. Money market funds had an outflow of $8.02 billion in June, compared with an outflow of $6.61 billion in May. In June funds offered primarily to institutions had an inflow of $10.89 billion and funds offered primarily to individuals had an outflow of $18.91 billion <b:>`_."
The report shows that the bulk of the money fund outflows in May were from Tax-Exempt MMFs, which declined by $6.1 billion, compared to taxable, which had $4.6 billion in outflows. Year-to-date through May, MMFs have had $47.1 billion in outflows, with $293 million in inflows to Taxable funds and $47.4 billion in outflows from Tax-Exempt funds." Money funds now represent 17.0% of all mutual fund assets, while bond funds represent 22.4%. The total number of money market funds dropped to 450 in May, down from 456 in April and down from 520 a year ago.
ICI's latest "Portfolio Holdings" summary shows that Repo and Agencies jumped in June, while CDs and CP declined sharply. Repo solidified its position as the largest portfolio segment, rising $84.0 billion, or 15.0%, to $643.4 billion or 25.6% of holdings. U.S. Government Agency Securities held onto second, gaining $54.3 billion, or 10.6%, to $566.0 billion or 22.6% of holdings. Treasury Bills & Securities stayed in third place among composition segments, rising $8.8 billion, or 1.7%, to $517.6 billion, or 20.6% of holdings. These gains reflect the ongoing conversions of Prime funds to Government funds and shifts of assets from Prime to Govt.
Certificates of Deposit (CDs) stood in fourth place, but decreased $113.1 billion, or 20.4%, to $440.8 billion (17.6% of assets). Commercial Paper remained fifth, decreasing $36.6B, or 11.7%, to $276.6 billion (11.0% of assets). Notes (including Corporate and Bank) dropped by $4.2 billion, or 18.8%, to $18.3 billion (0.7% of assets), and Other holdings (including Cash Reserves) stood at $47.1 billion, up from $35.6 billion. (See our July 13 News, "MF Portfolio Holdings: Repo, Agencies Up; TDs, CDs, European Down Big.")
The Number of Accounts Outstanding in ICI's series for taxable money funds increased by 292.8 thousand to 23.422 million, while the Number of Funds fell by 1 to 322. Over the past 12 months, the number of accounts rose by 64.9 thousand and the number of funds declined by 34. The Average Maturity of Portfolios was 36 days in June, up 1 day from May. Over the past 12 months, WAMs of Taxable money funds have declined by 2 days. Note: Crane Data also revised its July MFI XLS this week to reflect the latest 6/30/16 Portfolio Composition data and Maturity breakouts. (Visit our Content Center and the latest Money Fund Portfolio Holdings download page to access our June Money Fund Portfolio Holdings and the latest files.)
