ICI's latest "Money Market Fund Assets" report shows that assets declined after rising for 14 of the previous 16 weeks, though Prime assets continued to increase. ICI's weekly series shows Retail MMFs added $6.0 billion, while Institutional MMFs had outflows of about $13.9 billion. Total Government MMF assets, including Treasury funds, stood at $2.311 trillion (75.2% of all money funds), while Total Prime MMFs reached $622.1 billion (20.2%). Tax Exempt MMFs totaled $138.8 billion, or 4.5%. We review the latest weekly assets below, and we also excerpt from Fidelity Investments' 2018 Shareholder Update, below.
They write, "Total money market fund assets decreased by $7.91 billion to $3.07 trillion for the week ended Wednesday, Feb. 20, the Investment Company Institute reported.... Among taxable money market funds, government funds decreased by $14.33 billion and prime funds increased by $5.92 billion. Tax-exempt money market funds increased by $499 million."
ICI states, "Assets of retail money market funds increased by $6.03 billion to $1.20 trillion. Among retail funds, government money market fund assets increased by $2.09 billion to $696.55 billion, prime money market fund assets increased by $3.70 billion to $371.22 billion, and tax-exempt fund assets increased by $234 million to $128.91 billion." Retail assets account for over a third of total assets, or 39.0%, and Government Retail assets make up 58.2% of all Retail MMFs.
The release concludes, "Assets of institutional money market funds decreased by $13.94 billion to $1.88 trillion. Among institutional funds, government money market fund assets decreased by $16.42 billion to $1.61 trillion, prime money market fund assets increased by $2.22 billion to $250.82 billion, and tax-exempt fund assets increased by $264 million to $9.84 billion." Institutional assets accounted for 61.0% of all MMF assets, with Government Institutional assets making up 86.1% of all Institutional MMF totals.
In other news, Fidelity Investments, the largest manager of money market mutual funds with $661.0 billion in U.S. assets, a massive 20.6% of the market (according to our MFI XLS as of 12/31/18), released its latest Annual Report yesterday. The update, which for the second year in a row barely mentions money market mutual funds, gives an update on the asset management giant's varied businesses. According to Crane Data's numbers, Fidelity's MMFs grew by $85.2 billion, or 14.8% in 2018, over twice the 6.1% increase of overall money fund assets. (Their stock and bond fund assets dropped during the year.)
Fidelity writes, "For the year, FMR LLC, comprising results from Fidelity Financial Services and FMR's diversified businesses, recorded revenue of $20.4 billion, surpassing 2017 revenue of $18.3 billion by 11.5%. Operating income, at $6.3 billion, was 18.6% higher than the $5.3 billion achieved in 2017. Both revenue and operating income were company records." (Crane Data estimates that Fidelity's money market funds accounted for over $1.85 billion, or 9.1% of this revenue.)
The report says, "A challenging fourth quarter after three relatively strong quarters caused full-year performance versus peers to fall somewhat from prior-year levels. In aggregate, Fidelity's mutual funds beat 66%, 72%, and 76% of peers for the trailing one-, three-, and five-year periods, respectively, ending December 31, 2018. This compares with 78%, 77%, and 76% for the same periods in 2017."
It continues, "The late-year stock market turmoil was a significant detractor to Fidelity’s equity performance for the year.... Drilling down to fixed-income groups, FMR investment-grade bond funds beat 62%, 76%, and 74% of peers over the one-, three- and five-year periods, while Fidelity's industry-leading money market funds beat 81%, 83%, and 82% of peers over the same periods."
Fidelity adds, "While the short-term challenges impacted one-year performance, Fidelity’s long-term investment management strength and ability to provide customers with the right products to meet evolving needs helped asset flows improve dramatically over recent levels. Net flows for discretionary products—inclusive of all Fidelity investment products, such as mutual funds and managed accounts—totaled $100.8 billion, up from $24.1 billion in 2017 and from $9.3 billion in 2016."
Finally, they comment, "As investors increasingly sought safety toward the end of the year, money market inflows accelerated, and for the year, money market products had inflows of $87.9 billion, compared with $19.3 billion in 2017.... AM also grew its exchange-traded fund (ETF) lineup with the introduction of Fidelity Low Duration Bond Factor ETF.... At the end of the year, the AM division's president, Charlie Morrison, retired after an outstanding 32-year Fidelity career. He was succeeded by Steve Neff, the former head of Fidelity Technology and Global Services."
According to a table, Fidelity's Money Market Funds outperformed 81% of their peers over 1 year (the same as last year), 83% of their peers over 3 years (down from 84% last year), and 82% of their peers over 5 years (same as last year). (The table says they use Lipper data and describes it as "Weighted % of peers outperformed.") See also, the Wall Street Journal's, "Fidelity Posts Record Revenue, Profit Despite Market Swoon."
