ignites on Retail MMF Inflows
Mutual fund news source ignites published, "Retail Prime Money Fund Assets Jumped 67% Since March." They tell us, "Since March, when the Federal Reserve kicked off a series of five interest rate hikes, retail prime money market funds have added $132 billion in assets, growing to $331 billion, Investment Company Institute data shows. Assets in such products have grown by 66% in the past seven months, the data shows. During the same period, retail prime money funds boosted their market share from 46% of all prime money fund assets to 59%, according to the ICI's data. Institutional prime money fund assets, on the other hand, have remained essentially flat since March, dropping about $2 billion, to $228.3 billion, as of Oct. 19." They quote, "It's a 'tale of two investor bases in money market funds,' said Peter Crane, chief executive of Crane Data. 'Everybody keeps expecting money market fund assets to move higher, and they've been flat or lower, but retail has been growing, and that's really a function of brokerage sweep cash.'" The article continues, "`The retail money fund 'comeback' is in prime money funds, he added.... The volatile stock market is clearly driving the substantial flows into retail money funds, but low rates on brokerage sweep and bank deposit options are equally responsible for the influx of cash, Crane said. Most brokerages no longer sweep client assets into a money market fund, and instead push the assets into bank sweep products, which generally yield substantially less. But brokerage clients can also opt to move their money into what firms call 'a position money fund,' he noted, and that appears to be happening. 'Investors are starting to move the money themselves,' Crane said." The ignites piece adds, "Certain money funds in brokerage plans tend to be 'prime heavy,' Crane said, 'so you look at who's gaining assets, and that tells you [the gain is due to] position money funds.' At Schwab, for example, investors added about $17 billion to money funds in September, according to Crane Data. The firm's money fund assets stood at $211 billion as of Sept. 30, up 43% from a year earlier, its latest earnings report shows.... Schwab's bank sweep option yielded 40 bps as of Oct. 17, Crane Data reports. Its $73 billion Schwab Value Advantage Money Fund, a retail prime fund, had a seven-day yield of 2.93% as of Oct. 20.... 'The spreads between bank sweeps and top money funds, you could drive a truck through,' Crane said."
