Money market mutual fund assets inched lower for the second week in a row, declining $5.3 billion to $6.009 trillion. ICI's latest weekly "Money Market Fund Assets" report shows MMF assets down slightly after jumping to break $6.0 trillion for the first time ever three weeks ago. Assets remain up by $122 billion, or 2.6%, year-to-date in 2024, with Institutional MMFs up $46 billion, or 1.5% and Retail MMFs up $76 billion, or 4.5%. Over the past 52 weeks, money funds have risen a massive $1.188 trillion, or 24.7%, with Retail MMFs rising by $576 billion (32.1%) and Inst MMFs rising by $613 billion (20.2%). (Note: Register and make hotel reservations soon for Bond Fund Symposium, Crane Data's ultra-short bond fund conference, which will take place March 25-26 in Philadelphia. We hope to see you next month in Philly!)
The weekly release says, "Total money market fund assets decreased by $5.33 billion to $6.01 trillion for the week ended Wednesday, February 21, the Investment Company Institute reported. Among taxable money market funds, government funds decreased by $8.92 billion and prime funds increased by $2.84 billion. Tax-exempt money market funds increased by $747 million." ICI's stats show Institutional MMFs dipping $9.0 billion and Retail MMFs rising $3.6 billion in the latest week. Total Government MMF assets, including Treasury funds, were $4.873 trillion (81.1% of all money funds), while Total Prime MMFs were $1.015 trillion (16.9%). Tax Exempt MMFs totaled $120.6 billion (2.0%).
ICI explains, "Assets of retail money market funds increased by $3.64 billion to $2.37 trillion. Among retail funds, government money market fund assets decreased by $1.07 billion to $1.53 trillion, prime money market fund assets increased by $4.55 billion to $727.34 billion, and tax-exempt fund assets increased by $158 million to $109.15 billion." Retail assets account for over a third of total assets, or 39.4%, and Government Retail assets make up 64.6% of all Retail MMFs.
They add, "Assets of institutional money market funds decreased by $8.97 billion to $3.64 trillion. Among institutional funds, government money market fund assets decreased by $7.85 billion to $3.34 trillion, prime money market fund assets decreased by $1.71 billion to $288.15 billion, and tax-exempt fund assets increased by $590 million to $11.45 billion." Institutional assets accounted for 60.6% of all MMF assets, with Government Institutional assets making up 91.8% of all Institutional MMF totals.
According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets have risen by $14.03 billion in February to $6.408 trillion. (Assets hit a record $6.430 trillion on 2/13 but have inched lower over the past week.) Assets rose $93.9 billion in January, $32.7 billion in December and $226.4 billion in November. MMF totals fell by $31.9 billion in October. They rose $93.9 billion in September, $98.3 billion in August and $34.7 billion in July. 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, Kiplinger Personal Finance recently published an article entitled, "How to Earn a Decent Yield From Your Sweep Account." It tells us, "Gone are the days when cash was trash. Now, it's a valued asset that can earn 5% a year. That's why it's important to make sure the ready money in your brokerage account is earning a competitive yield. A brokerage sweep account, sometimes called a core or settlement account, holds your uninvested cash. When you sell a security ... the proceeds are placed in the sweep account. And when you buy a security, cash in the account pays for the trade. It all happens automatically. But here's the rub: Some brokerage firms park your cash in accounts with good yields, while others put it in holding places with not-so-good yields."
The article explains, "At Fidelity, for instance, cash in retail brokerage and retirement accounts sits in a money market mutual fund that yields a healthy 5.0%. Vanguard's default settlement account, a government money market fund, yields 5.3%. By contrast, Charles Schwab offers a choice of two sweep accounts. Both yield 0.45%. And E*Trade offers little choice -- most customers land in a bank deposit program that currently yields 0.01% for balances of $499,999 or less."
It tells us, "If your brokerage firm offers a government money market fund as its default sweep account, you probably don't need to worry about your settlement account yield or make a change. But if your brokerage account cash isn't earning 4% or better, it may pay to consider alternatives. Finding the right place for your idle cash isn't just about getting the best yield, however, says Peter Crane, president of money-fund-tracker Crane Data. Other factors matter too, such as how soon you plan to use your cash and how much of it you have. Keep these tips in mind before you move your money out of a sweep account."
Kiplinger's writes, "Schwab guides investors who want to boost their cash yield to money market funds, including money funds that hold government debt or municipal bonds. The taxable money fund yields range from 5.06% to 5.25%, and they have no transaction fees or investment minimums. But you don't get instant access -- the money will be available in your sweep account the next day if you sell shares in the money fund by 4 pm Eastern time."
The piece continues, "Where you hold your money matters, depending on how you plan to use it. 'Convenience is the most important factor,' says Crane. Funds you want to put to work immediately in the event the stock market takes a dip are best held at the ready in your brokerage account, even if that's in a low-yielding sweep account. Otherwise, 'you could miss a buying opportunity of a lifetime,' says Crane."
The piece adds, "The caveat is how much money you're sitting on and how long you plan to hold it. If it's $100,000, $20,000 or even $10,000, a 5.0% yield over one year can be meaningful ($500 to $5,000). Unless you're planning to invest the whole pot in short order, it may be worthwhile to shift some of the cash to a higher-yielding money fund.... The vast majority of money market funds invest in short-term government debt, says Crane, and 'it really doesn't matter which one you pick.' The two biggest are the Fidelity Government Money Market Fund (SPAXX, expense ratio 0.42%, seven-day yield 5.0%) and the Vanguard Federal Money Market Fund (VMFXX, 0.11%, 5.3%)."
Finally, it says, "People tend to dither over choosing a fund with a 5.25% yield or one at 5.00%, says Crane. That's annualized. You'd have to leave the cash for 12 months to earn the full yield, and even if you do, the difference in earnings may not amount to much. Over the course of a year, for instance, you'd earn $1,050 on a $20,000 balance at 5.25% and $1,000 at 5.00%. That said, money market funds with yields that seem too high are a red flag."
