Money fund assets jumped for the third week straight and Prime MMFs rose for the 8th week in a row, we learned from the Investment Company Institute's latest "Money Market Fund Assets" report. Government money funds continued their rebound, also jumping for the third week in a row, after they showed outflows during most of the first half of the year. Meanwhile, the slow and steady Prime recovery continues. Prime MMFs rose for the 16th week in the past 18 (up $34.4%, or 8.6%), and they've now increased by $53.2 billion, or 14.1%, year-to-date. We review the latest asset flows below, and we also look at the 10th anniversary of the start of the Subprime Liquidity Crisis. We quote from a new WSJ brief, as well as Crane Data's News coverage from that fateful week 10 years ago. (See our August 8 Link of the Day, "10 Years Ago: Subprime Liquidity Crisis Began in Money Markets With ABCP Extensions.")
ICI writes, "Total money market fund assets increased by $33.05 billion to $2.69 trillion for the week ended Wednesday, August 9, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $29.58 billion and prime funds increased by $3.83 billion. Tax-exempt money market funds decreased by $365 million." Total Government MMF assets, which include Treasury funds too, stand at $2.132 trillion (79.2% of all money funds), while Total Prime MMFs stand at $430.8 billion (16.0%). Tax Exempt MMFs total $130.7 billion, or 4.9%.
They explain, "Assets of retail money market funds increased by $1.15 billion to $962.04 billion. Among retail funds, government money market fund assets increased by $464 million to $582.14 billion, prime money market fund assets increased by $772 million to $255.04 billion, and tax-exempt fund assets decreased by $90 million to $124.87 billion." Retail assets account for over a third of total assets, or 35.7%, and Government Retail assets make up 60.5% of all Retail MMFs.
ICI's release adds, "Assets of institutional money market funds increased by $31.90 billion to $1.73 trillion. Among institutional funds, government money market fund assets increased by $29.11 billion to $1.55 trillion, prime money market fund assets increased by $3.06 billion to $175.77 billion, and tax-exempt fund assets decreased by $275 million to $5.87 billion." Institutional assets account for 64.3% of all MMF assets, with Government Inst assets making up 90.1% of all Institutional MMFs.
It explains, "ICI reports money market fund assets to the Federal Reserve each week. Data for previous weeks reflect revisions due to data adjustments, reclassifications, and changes in the number of funds reporting. Weekly money market assets for the last 20 weeks are available on the ICI website." Note: Crane Data also publishes a daily money fund assets series via our Money Fund Intelligence Daily product, and a monthly asset series via our MFI XLS.
In other news, The Wall Street Journal writes, "Ten Years On, the Crisis Still Looms Large." They explain, "Wednesday marks the 10th anniversary of one of the defining events of the global financial crisis. There had been rumblings before, but Aug. 9, 2007 saw money markets seize up after BNP Paribas suspended three funds holding U.S. asset-backed securities, saying they were impossible to value and blaming a 'complete evaporation of liquidity.'"
Below, we excerpt from Crane Data's News Archives from August 2007. On August 9, 2007, we wrote, "`"Money Funds May Hold Subprime Too" Says Wall Street Journal <i:https://cranedata.com/archives/all-articles/905/>`_." The brief says, "Thursday's WSJ article names names, saying that Evergreen Institutional Money Market Fund held recently-extended Broadhollow Funding LLC debt earlier this year, according to SEC filings. The Journal also incorrectly mentions Putnam Premier Income Trust, but this is a bond fund and not a money market fund. (Putnam says they've never held Broadhollow in their money funds.) The Journal says money fund managers will likely "pay closer attention to what is backing the commercial paper they buy, demand additional compensation for investing in a particular type pf vehicle that issues some asset-backed commercial paper and call for greater transparency in the market". The article quotes several fund managers, including Schwab's Linda Klingman, Advantus' Jon Thompson, and William Blair's Jim Kaplan. The subprime problem "isn't likely to cause big losses at these funds or endanger them" adds the piece."
Ten years ago today (8/11), we wrote, "Standard and Poor's Says No Downgrades on Rated Money Market Funds." The piece says, "S&P Director Peter Rizzo tells us, "Standard & Poor's assigns principal stability fund ratings to more than 450 money market funds globally. Of these, only a handful have any exposure to the ABCP programs that were extended this week. We are monitoring the credit market situation closely and to date have not taken any actions on any rated funds."
On August 13, 2007, we commented in "Commercial Paper and Money Market Seizure: Last Week in Review," "Money fund yields jumped on Friday in reaction to the spike in overnight Fed funds, repo and commercial paper rates. While the crisis seems to be easing, higher rates should continue working their way through funds this week, and money markets should remain on edge. Here we list links to last week's Crane Data News coverage on the Extendible ABCP Crisis of 2007: "`Trouble in ABCP Market as Secured Liquidity Notes Extended <i:https://cranedata.com/archives/news/2007/8/#item-901>`_;" "Bloomberg: "Subprime Tsunami Hits CP";" "Extendible ABCP Troubles Trigger;" and, "'Money Funds May Hold Subprime Too' (WSJ)."
Finally, we wrote on 8/14, "CFTC Sentinel Management Pool Is NOT a Money Market Mutual Fund," "CNBC reported Tuesday morning that Sentinel Management Group has asked the Commodities Futures Trading Commission (CFTC) to halt redemptions from its pooled accounts. The CNBC report erroneously identified the managed account as a money market mutual fund. It is not a money fund, and no money market mutual funds have halted redemptions, dropped in value or suffered any losses on any securities to date. Money funds do not appear to be in danger from recent market events, contrary to some reports, but we of course are watching events closely. CNBC also incorrectly labelled the Luxembourg-based AXA Libor Plus fund, which has declined in value, a money fund last Friday."
