Investment News, a Crain Communications publication, writes "Prime money funds see recent inflows" in this week's issue. The "leading news source for financial advisors" writes that "Time -- and the government's guarantee -- have buoyed confidence" in money funds and that, "`The tide has finally turned for prime money market mutual funds."
Investment News says, "Once considered among the safest and most uninteresting investments, prime money funds were thrust into the spotlight in mid-September when the prime fund managed by The Reserve Management Co. Inc. of New York 'broke the buck' and redemptions were frozen." It quotes our Peter Crane, "The Reserve [Primary Fund] is being seen more as an isolated incident because no one else broke the buck."
The article quotes Robert Deutsch of JPMorgan Asset Management, "Investors took a step back and realized that their managers were running the funds conservatively. Also during that time, Treasury fund yields had dropped to very low levels. We've seen money that had gone into Treasuries move back to prime money funds."
Crane Data wrote on Friday that Prime Institutional money fund assets have regained their status as the largest sector of money fund assets, surpassing the combined Government and Treasury Institutional sector. According to ICI's latest statistics, Prime Institutional funds now total $1.183 trillion vs. Govt Inst's $1.165 trillion.
After losing $395 billion, or 28.7%, from Sept. 3 through Oct. 1, 2008, Prime Institutional money fund assets have increased by $193 billion, or 19.7%. Year-to-date, Prime Institutional assets have increased by $78 billion, or 7%, vs. Government assets, which have declined by $28 billion, or 2.3%. (Government Institutional funds, including Treasury funds, increased by $291 billion, or 41.7%, during the 4-weeks that included Reserve Primary Fund "breaking the buck" and have increased another $203 billion, or 20.5%, since Oct. 1.)
