The Federal Reserve released its latest quarterly "Z.1 Financial Accounts of the United States" statistical survey (a.k.a. "Flow of Funds") late last week. Among the 4 tables it includes on money market mutual funds, the Third Quarter 2021 edition shows that Total MMF Assets increased by $5 billion to $4.545 trillion in Q3'21. The Household Sector, by far the largest investor segment with $2.755 trillion, saw assets decrease in Q3. But the second largest segment, Nonfinancial Corporate Businesses, experienced a jump in assets. The Fed's latest Z.1 numbers, which contain one of the few looks at money fund investor segments available, also show asset increases in MMF holdings for the Property-Casualty Insurance and Private Pension Funds categories in Q3 2021.
The Nonfinancial Noncorporate Business category also saw a small asset increase in Q3, while the State & Local Govt Retirement sector remained unchanged. Other Financial Business (formerly Funding Corps), Life Insurance Companies, the Rest of the World and State & Local Governments categories all saw minor asset decreases last quarter. Over the past 12 months, the Household Sector, Private Pension Funds, Property-Casualty Insurance and Other Financial Business (formerly Funding Corps) categories showed the biggest asset increases, while Nonfinancial Corporate Businesses and Life Insurance Companies saw the biggest asset decreases.
The Fed's "Table L.206," "Money Market Mutual Fund Shares," shows that total assets increased by $5 billion, or 0.1%, in the third quarter to $4.545 trillion. The largest segment, the Household sector, totals $2.755 trillion, or 60.6% of assets. The Household Sector declined by $18 billion, or -0.6%, in the quarter. Over the past 12 months through Sept. 30, 2021, Household assets were up $90 billion, or 3.4%.
Nonfinancial Corporate Businesses, the second-largest segment according to the Fed's data series, held $645 billion, or 14.2% of the total. Assets here increased by $35 billion in the quarter, or 5.8%, and they've decreased by $42 billion, or -6.1%, over the past year. Other Financial Business was the third-largest investor segment with $492 billion, or 10.8% of money fund shares. They dropped by $19 billion, or -3.7%, in the latest quarter. Other Financial Business, which we believe includes Securities Lending, has increased by $10 billion, or 2.2%, over the previous 12 months.
The fourth-largest segment, Private Pension Funds, held $237 billion (5.2%). The Rest of the World, was the 5th largest category with 2.9% of money fund assets ($130 billion); it was down by $3 billion (-2.1%) for the quarter but up $1 billion, or 0.8% over the last 12 months. The Nonfinancial Noncorporate Business remained sixth place in market share among investor segments with 2.7%, or $121 billion, while Life Insurance Companies held $62 billion (1.4%), Property-Casualty Insurance held $41 billion (0.9%), State and Local Governments held $35 billion (0.8%), and State and Local Government Retirement Funds held $25 billion (0.6%), according to the Fed's Z.1 breakout.
The Fed's "Flow of Funds" Table L.121 shows "Money Market Mutual Funds" largely invested in "Debt Securities," or Credit Market Instruments, with $2.296 trillion, or 50.5% of the total. Debt securities includes: Open market paper ($154 billion, or 3.4%; we assume this is CP), Treasury securities ($1.591 trillion, or 35.0%), Agency and GSE-backed securities ($448 billion, or 9.9%), Municipal securities ($93 billion, or 2.1%) and Corporate and foreign bonds ($9 billion, or 0.2%).
Other large holdings positions in the Fed's series include Security repurchase agreements ($2.056 trillion, or 45.2% of total assets) and Time and savings deposits ($152 billion, or 3.3%). Money funds also hold minor positions in Miscellaneous assets ($11 billion, or 0.2%), Foreign deposits ($1 billion, 0.0%) and Checkable deposits and currency ($29 billion, 0.6%). Note: The Fed also lists "Variable Annuity Money Funds," which currently total $36 billion.
During Q3, Debt Securities were down $569 billion. This subtotal included: Open Market Paper (up $7 billion), Treasury Securities (down $516 billion), Agency- and GSE-backed Securities (down $51 billion), Corporate and Foreign Bonds (down $3 billion) and Municipal Securities (down $6 billion). In the third quarter of 2021, Security Repurchase Agreements were up $471 billion, Foreign Deposits were up $1 billion, Checkable Deposits and Currency were up $100 billion, Time and Savings Deposits were up by $3 billion, and Miscellaneous Assets were down -3.6%.
Over the 12 months through 9/30/21, Debt Securities were down $995 billion, which included Open Market Paper (down $24B), Treasury Securities (down $684B), Agencies (down $252B), Municipal Securities (down $28), and Corporate and Foreign Bonds (down $7B). Foreign Deposits were unchanged, Checkable Deposits and Currency were up $103B, Time and Savings Deposits were down $28B, Securities repurchase agreements were up $1.059 trillion and Miscellaneous Assets were down $4B.
Note that the Federal Reserve changed its numbers related to money market funds substantially in the second quarter of 2018. Its "Release Highlights Second Quarter 2018" tells us, "New source data for money market funds from the U.S. Securities and Exchange Commission's (SEC) form N-MFP have been incorporated into the sector's asset holdings (tables F.121 and L.121). Money market funds not available to the public, which are included in the SEC data, are excluded from Financial Accounts' estimates. Data revisions begin 2013:Q1. Holdings of money market fund shares by households and nonprofit organizations, state and local governments, and funding corporations (tables F.206 and L.206) have been revised due to a change in methodology based on detail from the Investment Company Institute. Data revisions begin 1976:Q1."
