Money Market News
The Investment Company Institute released its latest monthly "Trends in Mutual Fund Investing" and "Month-End Portfolio Holdings of Taxable Money Funds" for April 2023 on Tuesday. The monthly Trends shows money fund totals hitting record levels again in April after March's historic jump. The March jump ($371.0 billion increase) was the third largest monthly increase ever and the largest in history if you exclude 2 coronavirus lockdown panic months in March and April 2020. ICI's monthly "Trends" report shows that money fund assets increased $8.4 billion in April to a record $5.247 trillion. Bond fund assets also increased, jumping $23.3 billion to $4.653 trillion.
As we wrote last Wednesday, the Investment Company Institute recently published its "2023 Investment Company Fact Book," an annual compilation of statistics and commentary on the mutual fund industry. We reviewed much of the money fund content in our May 24 News, "ICI Publishes 2023 Fact Book, Reviews US, Worldwide Money Funds in '22." But below we focus on the numerous "Data Tables" involving "Money Market Mutual Funds." ICI lists annual statistics on shareholder accounts, the number of funds, net assets, net new cash flows, paid and reinvested dividends, composition of prime and government funds, and net assets of institutional investors by type of institution. (Note: Please register ASAP for our Money Fund Symposium show, which will be held June 21-23, 2023 in Atlanta, Ga!)
Securities & Exchange Commission Chair Gary Gensler spoke yesterday before the "2023 ICI Leadership Summit." "" His talk, entitled, "Bear in the Woods" tells us, "There is a saying when you're in the woods. 'You don't have to outrun the bear; you just have to outrun one of your fellow campers.' A bit gruesome, yet this helps explain why investors might try to cash out of investments before the proverbial bear -- of dilution and illiquidity -- catches them. It also helps explain why savers might try to cash out of deposits before that proverbial bear catches them at the bank. Bear this in mind, this is not a new feature of finance; it has been around for centuries. Runs, when otherwise uncorrelated actors suddenly become correlated, have brought down many a financial firm over time. Financial fires at banks and nonbanks alike have led policymakers to put in place laws to prevent such fires and associated runs, as well as to help fire departments contain fires."
Money fund assets continue rising and hitting record levels daily; they broke the $5.8 trillion level for the first time ever on Monday and inched higher again on Tuesday. Crane Data's Money Fund Intelligence Daily shows assets increasing by 9.6 billion on Tuesday, increasing by $59.7 billion over the week through 5/23 and increasing by $152.2 billion in May month-to-date to a record $5.818 trillion. Retail MMFs have increased by $80.8 billion MTD, while Inst MMFs have increased by $66.7 billion. Tax Exempt MMFs are up $4.7 billion. Prime MMFs are up $24.5 billion on the month so far, and Government MMFs are up $123.0 billion. Treasury MMFs are up $16.5 billion, though Treasury Inst MMFs are off a slight $3.9 billion MTD. (Note: Register and make hotel reservations ASAP for our Money Fund Symposium show, which will be held June 21-23, 2023 in Atlanta, Ga!)
The Investment Company Institute released its "2023 Investment Company Fact Book," an annual compilation of statistics and commentary on the mutual fund space. Subtitled, "A Review of Trends and Activities in the Investment Company Industry," the latest edition tells us, "With stock markets down across the globe in 2022 -- 19% in the United States, 15% in Europe, and 17% in the Asia-Pacific region -- worldwide total net assets of equity funds, which invest primarily in publicly traded stocks, decreased by 20% to $26.9 trillion at year-end 2022. Bond funds -- which invest primarily in fixed-income securities -- saw their total net assets decrease 16% over the same period, primarily reflecting capital losses on bonds in the United States and Europe of 12% and 14%, respectively. In contrast, net assets of money market funds -- which are generally understood to be regulated funds that are restricted to holding short-term, high-quality debt instruments -- increased slightly." We excerpt from the latest "Fact Book" below.
The Securities and Exchange Commission's latest monthly "Money Market Fund Statistics" summary shows that total money fund assets increased by $49.9 billion in April to an all-time high of $5.754 trillion. Assets at April month-end were well above their previous $5.70 trillion March 2023 record. The SEC shows that Prime MMFs increased by $36.0 billion in April to $1.186 trillion, Govt & Treasury funds increased $19.3 billion to $4.455 trillion and Tax Exempt funds decreased $5.4 billion to $113.1 billion. Taxable yields jumped again in April after surging in March. The SEC's Division of Investment Management summarizes monthly Form N-MFP data and includes asset totals and averages for yields, liquidity levels, WAMs, WALs, holdings, and other money market fund trends. We review their latest numbers below. (Month-to-date in May through 5/19, total MMF assets have jumped by $129.5 billion to a record $5.795 trillion, according to our MFI Daily.)
Dreyfus published a Q&A and hosted a webinar entitled, "Unpacking the Debt Ceiling," which featured CIO John Tobin and Head of Portfolio Management & Trading Frank Gutierrez. It asks, "How likely is it that the debt ceiling limit will be breached without resolution?" They write, "We believe it is likely that Congress will resolve the current debt ceiling debate. Congress has faced debt ceiling concerns 78 times since 1960 and, in every instance, has raised or suspended the debt limit." (Note: Register and make hotel reservations ASAP for our Money Fund Symposium show, which will be held in just one month, June 21-23, 2023 in Atlanta, Ga!)
The Investment Company Institute's most recent "Money Market Fund Assets" report shows MMFs hitting record levels for the fourth week in a row and for the 9th week out of the past 10. Assets have risen by $521.3 billion, or 10.8%, over the past 12 weeks! ICI shows assets up by $607 billion, or 12.8%, year-to-date in 2023, with Institutional MMFs up $333 billion, or 10.9% and Retail MMFs up $274 billion, or 16.3%. Over the past 52 weeks, money fund assets have risen $857 billion, or 19.1%, with Retail MMFs rising by $534 billion (37.6%) and Inst MMFs rising by $323 billion (10.5%). (According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets hit a record $5.763 trillion on Wednesday, 5/17. 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.)
Forbes recently published, "The Great Yield Chase: Why A Trillion Has Fled Traditional Bank Accounts," which is subtitled, "Rising interest rates and a trio of regional bank failures have turbocharged the movement of cash into higher yielding alternatives -- particularly money market mutual funds. Here's how to bump up your own yield." The piece says, "The movement of funds out of traditional bank accounts started slowly at first in the spring of 2022, after the Federal Reserve belatedly began its battle against pandemic-era inflation by raising interest rates. It accelerated dramatically this past March, when Silicon Valley Bank became the first of three large regional banks to fail this year. In all, over the past 13 months, a staggering $1 trillion in deposits has left the commercial banking system."
Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics Tuesday, which track a shifting subset of our monthly Portfolio Holdings collection. The most recent cut (with data as of May 12) includes Holdings information from 71 money funds (up 14 from two weeks ago), which totals $2.891 trillion (up from $2.495 trillion) of the $5.749 trillion in total money fund assets (or 50.3%) tracked by Crane Data. (Our Weekly MFPH are e-mail only and aren't available on the website. See our latest Monthly Money Fund Portfolio Holdings here.)
Money fund yields moved higher over the past week as they continue to digest the Federal Reserve's latest 25 basis point rate increase (5/2). Our Crane 100 Money Fund Index (7-Day Yield) was up 13 bps to 4.84% in the week ended Friday, 5/12. Yields are up from 4.64% on April 30, 4.61% on March 31, 4.39% on Feb. 28, 4.15% on Jan. 31 and 4.05% on 12/31/22. They've increased from 3.59% on Nov. 30, from 2.88% on Oct. 31 and from 2.66% on Sept. 30. A number of the top-yielding money market funds now yield above the 5.0% level, and more should move above this level in coming days as they digest the remainder of the latest Fed hike. (Note: Register soon for our Money Fund Symposium show, which will take place June 21-23, 2023 in Atlanta, Ga!)
Crane Data's latest Money Fund Intelligence International shows that assets in European or "offshore" money market mutual funds fell over the past 30 days to $1.062 trillion. USD and GBP MMFs fell, while EUR MMFs rose. While still up year-to-date, European MMF assets remain well below their record high of $1.101 trillion set in mid-December 2021. These U.S.-style money funds, domiciled in Ireland or Luxembourg but denominated in US Dollars, Pound Sterling and Euros, decreased by $27.8 billion over the 30 days through 5/11. The totals are up $31.7 billion (3.1%) year-to-date. (Note that currency moves in the U.S. dollar cause Euro and Sterling totals to shift when they're translated back into totals in U.S. dollars. See our latest MFI International for more on the "offshore" money fund marketplace. Note that these funds are only available to qualified, non-U.S. investors.)
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