Four Percent Funds Now Endangered Species as Yields Continue Slide.
As our top rankings tables above show, the number of money funds and bank savings accounts yielding 4% or higher is becoming quite thin. Four percent yields, already an endanged species, should become extinct within another week or two. The last retail money fund with a 4+% yield, Vanguard Prime Money Market Fund, fell by the wayside last week. Just institutional three money funds -- Oppenheimer Institutional Money Fund, Russell Money Market S, and Reserve Primary Institutional -- have 7-day yields above 4%, though the list is larger if we compound yields. (Crane Data's rankings all show simple, or current yields and rates.)
Money fund yields, which averaged over 5% seven months ago, have declined to almost 3.25%. Our Crane 100 Money Fund Index declined 0.05% yesterday to 3.34% (7-day current yield), and declined 0.18% over the past week and 164 basis points since August 25. The broader Crane Money Fund Average declined by 5 bps yesterday to 3.20%, down from 3.36% a week ago. Treasury money funds showed the sharpest declines, down 7 bps (Individual Treasury money funds averaged 2.26% while Institutional Treasury money funds averaged 2.50% as of Feb. 25) as flight-to-safety flows continue to push these yields towards zero. Tax exempt money funds, which had seen yields as low as 1.89% on average a week ago, have seen yields rebound. Our new daily Crane Tax Exempt Money Fund Index series shows yields (7-day current) averaging 2.33% yesterday, up 0.28% from Friday, and up 0.44% from a week ago.
Our Crane Brokerage Sweep Index shows rates falling to 0.88% for investors with $50 to $100K and our Crane CD Index shows 1-year certificates of deposit from large brokerages averaging 2.82%. Assets of money funds declined yesterday on mortgage security related outflows (which pay on the 25th of the month), but assets continued their record growth spurt in the past week, rising $12.1 billion to $2.78 trillion. (Our new Money Fund Intelligence Daily collects a subset of the money fund universe, the 300 largest funds.)
