The Federal Reserve released its latest quarterly "Z.1 Financial Accounts of the United States" statistical survey (a.k.a. "Flow of Funds") late last week. Among the 4 tables it includes on money market mutual funds, the Third Quarter 2023 edition shows that Total MMF Assets increased by $226 billion to $6.143 trillion in Q3'23. The Household Sector, by far the largest investor segment with $3.690 trillion, saw the biggest asset increase in Q3, followed by Nonfinancial Corporate Businesses. The Fed's latest Z.1 numbers, which contain one of the few looks at money fund investor segments available, also showed noticeable increases for the Other Financial Business (formerly Funding Corps), the Rest of World and the Private Pension Funds categories in Q3 2023. (Note: There's still time to register for our Money Fund University, which is Dec. 18-19, 2023 in Jersey City. We hope to see you next week!)
Rest of World, Private Pension Funds and State & Local Governments categories saw small asset increases in Q3. The Nonfinancial Noncorporate Business category was the only one to stay unchanged and the Property-Casualty Insurance, Mutual Funds, Life Insurance Companies, State and local govt. retirement funds and Exchange-traded funds categories saw assets decreases last quarter. Over the past 12 months, the Household Sector, Nonfinancial Corporate Business, Other Financial Business, Rest of World, State & Local Governments and Private Pension Funds categories showed the biggest asset increases, while Mutual Funds, Exchange-traded Funds and State and local govt. retirement funds saw the biggest asset decreases.
The Fed's "Table L.206," "Money Market Mutual Fund Shares," shows that total assets increased by $226 billion, or 3.8%, in the third quarter to $6.143 trillion. The largest segment, the Household sector, totals $3.690 trillion, or 60.1% of assets. The Household Sector increased by $151 billion, or 4.3%, in the quarter. Over the past 12 months through September 30, 2023, Household assets were up $771 billion, or 26.4%.
Nonfinancial Corporate Businesses, the second-largest segment according to the Fed's data series, held $882 billion, or 14.3% of the total. Assets here increased by $38 billion in the quarter, or 4.5%, and they've increased by $155 billion, or 21.3%, over the past year. Other Financial Business was the third-largest investor segment with $514 billion, or 8.4% of money fund shares. This category jumped $46 billion, or 9.7%, in the latest quarter. Other Financial Business, which we believe includes Securities Lending, has increased by $94 billion, or 22.5%, over the previous 12 months.
The fourth-largest segment, Private Pension Funds held $237 billion (3.9%). Mutual Funds (a recent addition to the tables), was the 5th largest category with 3.6% of money fund assets ($219 billion); it was down by $9 billion (-4.0%) for the quarter and down $42 billion, or -16.1% over the last 12 months. The Rest of World remained sixth place in market share among investor segments with 3.5%, or $216 billion, while Nonfinancial Noncorporate Business held $139 billion (2.3%), Life Insurance Companies held $81 billion (1.3%), State & Local Governments held $78 billion (1.3%), Property-Casualty Insurance held $38 billion (0.8%), Exchange-traded Funds held $30 billion (0.5%), and State & Local Govt Retirement held $18 billion (0.3%) according to the Fed's Z.1 breakout.
The Fed's "Flow of Funds" Table L.121 shows "Money Market Mutual Funds" largely invested in “Security Repurchase Agreements” with $2.949 trillion, or 48.0% and "Debt Securities," or Credit Market Instruments, with $2.881 trillion, or 46.9% of the total. Debt securities includes: Open market paper ($293 billion, or 4.8%; we assume this is CP), Treasury securities ($1.767 trillion, or 28.8%), Agency and GSE-backed securities ($690 billion, or 11.2%), Municipal securities ($122 billion, or 2.0%) and Corporate and foreign bonds ($9 billion, or 0.1%).
Another large MMF position in the Fed's series includes `Time and savings deposits ($293 billion, or 4.8%). Money funds also hold minor positions in Miscellaneous assets ($9 billion, or 0.2%) and Foreign deposits ($11 billion, 0.2%). Note: The Fed also lists "Variable Annuity Money Funds," which currently total $44 billion.
During Q3, Debt Securities were up $489 billion. This subtotal included: Open Market Paper (up $30 billion), Treasury Securities (up $523 billion), Agency- and GSE-backed Securities (down $64 billion), Corporate and Foreign Bonds (down $1 billion) and Municipal Securities (up $1 billion). In the third quarter of 2023, Security Repurchase Agreements were down $284 billion, Foreign Deposits were up $8 billion, Time and Savings Deposits were up by $26 billion, and Miscellaneous Assets were down $13 billion.
Over the 12 months through 9/30/23, Debt Securities were up $768 billion, which included Open Market Paper (up $48B), Treasury Securities (up $511B), Agencies (up $198B), Municipal Securities (up $8B), and Corporate and Foreign Bonds (up $3B). Foreign Deposits (up $10 billion), Time and Savings Deposits were up $83B, Securities repurchase agreements were up $205 billion and Miscellaneous Assets were down $7B.
The L.121 table shows `Stable NAV money market funds with $5,498 billion, or 89.5% of the total (up $234.5 or 4.5% in Q3 and up $1.087 trillion or 24.6% over 1-year), and Floating NAV money market funds with $645 billion, or 10.5% (down $8.8B or -1.3% in Q3 and down $28B or -4.2% over 1-year). Government money market funds total $4.761 trillion, or 77.5% (up $164.5B or 3.6% in Q3 and up $750B or 18.7% over 1-year), Prime money market funds total $1.258 trillion, or 20.5% (up $59.9B or 5.0% in Q3 and up $292B or 30.3% over 1-year) and Tax-exempt money market funds $124B, or 2.0% (up $1.2B or 1.0% in Q3 and up $17B or 15.6% last year).
The Federal Reserve made changes to the Z.1 tables seven quarters ago. Describing a "Money market funds sector data source change," the report says, "The money market mutual funds (MMF) sector (tables F.121 and L.121) has been revised beginning 2010:Q4 to reflect a change in data source to Securities and Exchange Commission Form NMFP. The level of assets and shares outstanding of the sector have increased due to the inclusion of private placement MMFs in the source data. Changes in the level due to changes in the data source in 2010:Q4 are recorded as other volume changes in the Financial Accounts."
On "Mutual funds sector holdings of money market funds," Z.1 tells us, "The mutual funds sector (tables F.122 and L.122) has been revised beginning 2010:Q4 to reflect holdings of money market funds not previously reported on the tables. In addition, holdings of repurchase agreements, commercial paper, corporate bonds, and miscellaneous assets have been revised. Additional and revised holdings are estimated using data from Morningstar and Investment Company Institute.... The exchange-traded funds sector (tables F.124 and L.124) has been revised beginning 2010:Q4 to reflect holdings of money market funds not previously reported on the tables."
