ICI's latest weekly "Money Market Fund Assets" report shows that money fund assets rose to their highest level since June 2020; they're now just below their record level of $4.789 trillion (set on May 20, 2020). Money funds have risen in 6 of the past 7 weeks, rising by $156.7 billion since October 26. Over the past 52 weeks, money fund assets are up by $105 billion, or 2.3%, with Retail MMFs rising by $198 billion (13.7%) and Inst MMFs falling by $93 billion (-2.9%). ICI shows assets up by $105 billion, or 2.3%, year-to-date, with Institutional MMFs down $138 billion, or -4.3% and Retail MMFs up $174 billion, or 11.9%. (Thanks to those of you who attended our Money Fund University this week in Boston -- we hope you enjoyed the show! Attendees and subscribers may access the conference materials at the bottom of our "Content" page or via our "Money Fund University 2022 Download Center.")
The weekly release says, "Total money market fund assets increased by $22.57 billion to $4.74 trillion for the week ended Wednesday, December 14, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $13.88 billion and prime funds increased by $10.97 billion. Tax-exempt money market funds decreased by $2.28 billion." ICI's stats show Institutional MMFs rising $9.0 billion and Retail MMFs increasing $13.5 billion in the latest week. Total Government MMF assets, including Treasury funds, were $3.996 trillion (84.3% of all money funds), while Total Prime MMFs were $641.8 billion (13.5%). Tax Exempt MMFs totaled $103.1 billion (2.2%).
ICI explains, "Assets of retail money market funds increased by $13.54 billion to $1.64 trillion. Among retail funds, government money market fund assets increased by $4.11 billion to $1.15 trillion, prime money market fund assets increased by $10.92 billion to $394.67 billion, and tax-exempt fund assets decreased by $1.48 billion to $93.27 billion." Retail assets account for over a third of total assets, or 34.7%, and Government Retail assets make up 70.3% of all Retail MMFs.
They add, "Assets of institutional money market funds increased by $9.03 billion to $3.10 trillion. Among institutional funds, government money market fund assets increased by $9.77 billion to $2.84 trillion, prime money market fund assets increased by $56 million to $247.16 billion, and tax-exempt fund assets decreased by $798 million to $9.83 billion." Institutional assets accounted for 65.3% of all MMF assets, with Government Institutional assets making up 91.7% of all Institutional MMF totals.
For the month of November, MMF assets increased by $47.7 billion to $5.113 trillion, and they've increased by $58.1 billion month-to-date in December (through 12/14) according to Crane Data, which tracks a broader universe of funds than ICI. Crane Data's Prime asset totals, which broke the $1.0 trillion level early in November, increased $28.7 billion last month to $1.024 trillion (and another $21.4 billion MTD in December). Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're over $400 billion lower than Crane's asset series.)
In other news, Bloomberg published an opinion piece entitled, "Starving for Yield? Check Out Money-Market Funds." It says, "If you think high-yield savings accounts offer juicy rates to park some cash, wait until you see what money-market funds are paying. Yields paid by the typically staid mutual funds, which invest mostly in short-term government bonds, spiked from 0.02% earlier this year to more than 3.6% as of early December, according to Crane Data's 100 money-market fund index. After this week's rate increase by the Federal Reserve, money-market fund yields are poised to soar even higher."
The article explains, "Some funds, such as Allspring Money Market Fund, Goldman Sachs Investor Money Market Fund and JPMorgan Liquid Assets Money Market Fund, are already offering yields close to 4% or more. That compares with a 3% average payout for a high-yield online savings account. Although that's the highest in at least five years, banks haven't exactly kept pace with the Fed's interest-rate increases since May."
It adds, "That's because the rates offered by banks are ultimately at their discretion and influenced by factors other than the Fed's moves. The biggest banks are still flush with pandemic cash so have barely budged from what they're paying depositors on their savings accounts. (The average for all banks was 0.24% as of Nov. 21, according to the Federal Deposit Insurance Corp., but if you bank at say, Wells Fargo or Chase, you're lucky if you get 0.02%.)
Finally, Bloomberg writes, "Online banks are more eager for customer deposits so have been more responsive at passing on the Fed's rate increases to their customers. Still, given that money-market funds are investing mostly in Treasuries, their yields tend to move in lockstep with the Fed's rate. 'Money funds always give the market what the Fed gives them' said Pete Crane, founder of Crane Data."
