ICI's latest "Money Market Fund Assets" report shows money market mutual fund assets falling sharply again to $5.968 trillion as April 15 tax payments hit hard. MMF assets are still up by $82 billion, or 1.7%, year-to-date in 2024 (through 4/17/24), with Institutional MMFs down $29 billion, or -0.9% and Retail MMFs up $111 billion, or 6.6%. Over the past 52 weeks, money funds have risen by $760 billion, or 14.6%, with Retail MMFs rising by $507 billion (26.8%) and Inst MMFs rising by $253 billion (7.6%).
The weekly release says, "Total money market fund assets decreased by $112.08 billion to $5.97 trillion for the week ended Wednesday, April 17, the Investment Company Institute reported.... Among taxable money market funds, government funds decreased by $98.56 billion and prime funds decreased by $12.12 billion. Tax-exempt money market funds decreased by $1.39 billion." ICI's stats show Institutional MMFs falling $96.6 billion and Retail MMFs dropping $15.5 billion in the latest week. Total Government MMF assets, including Treasury funds, were $4.832 trillion (81.0% of all money funds), while Total Prime MMFs were $1.014 trillion (17.0%). Tax Exempt MMFs totaled $122.9 billion (2.0%).
ICI explains, "Assets of retail money market funds decreased by $15.45 billion to $2.40 trillion. Among retail funds, government money market fund assets decreased by $8.24 billion to $1.54 trillion, prime money market fund assets decreased by $5.89 billion to $745.53 billion, and tax-exempt fund assets decreased by $1.31 billion to $111.38 billion." Retail assets account for over a third of total assets, or 40.2%, and Government Retail assets make up 64.3% of all Retail MMFs. They add, "Assets of institutional money market funds decreased by $96.63 billion to $3.57 trillion. Among institutional funds, government money market fund assets decreased by $90.32 billion to $3.29 trillion, prime money market fund assets decreased by $6.23 billion to $268.04 billion, and tax-exempt fund assets decreased by $76 million to $11.50 billion." Institutional assets accounted for 59.8% of all MMF assets, with Government Institutional assets making up 92.2% of all institutional MMF totals.
According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets have fallen by $40.0 billion in April (through 4/17) to $6.357 trillion (they were a record $6.538 trillion on 4/2). Assets fell $68.8 billion in March, but rose $72.1 billion in February, $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, The Wall Street Journal's CFO Journal writes, "Companies Belly Up to Cash Buffet, in Five Charts." The article tells us, "Companies are socking away cash at the fastest rate since the onset of the pandemic. Four years ago, companies boosted their cash holdings to weather economic uncertainty stemming from virus-related lockdowns. Now, with interest rates hovering at two-decade highs, they are allocating more of their portfolios to high-yielding cash accounts and investments, getting a welcome boost from yields that top 5% on money-market funds."
It states, "High interest rates are a boon to cash-rich companies. What counts as cash or cash equivalents on corporate balance sheets includes cash deposits and investments with maturities of three months or less, including money-market funds, Treasury bills and commercial paper. Separately, companies also invest in short- and long-term securities.... Still, companies are preparing their playbooks on how they would respond to a cut, including by parking more cash in money-market funds, where rates take weeks to adjust, bankers and advisers said."
The piece says, "At Facebook parent Meta Platforms, interest and investment income increased more than threefold in 2023, to $1.6 billion, compared with a year earlier. At Google parent Alphabet, the same figure increased 78% over the same period, to $3.9 billion. As earnings season gets under way, companies are providing details on their cash positions. Here's a look at how corporate cash strategies have changed since the Fed began raising rates in 2022."
It explains, "Nonfinancial companies in the S&P 500 parked 56% of their funds in cash and cash equivalents, and the remainder in securities at the end of 2023, the highest level since the first quarter of 2020, according to JPMorgan Chase. The increase in cash allocations is largely due to companies moving cash into money-market funds, according to Teresa Ho, managing director and head of U.S. short duration strategy at JPMorgan. In previous rate-cutting cycles, money-market funds have seen inflows even after the Fed began to cut rates, because the funds adjust more slowly to rate cuts than Treasury bills do, according to Ho."
The CFO Journal writes, "Companies are parking more cash in money-market funds, where total assets under management jumped 22% by the end of 2023 from a year earlier, to $6.3 trillion, according to Crane Data. By the end of this year’s first quarter, the total had risen to $6.4 trillion. Money-market investments from nonfinancial companies accounted for approximately 14% of total assets under management at the end of 2023, roughly on par with a year earlier, according to Crane. The remainder comes mostly from households, as well as governments, pension funds, insurance companies and other firms."
It adds, "Money-market funds are attractive to companies because they're more liquid than CDs or other types of short-term investments, said Peter Crane, president of the eponymous firm. 'It's in cash because they might need the money tomorrow,' he said. The average yield for all money-market fund investors was 5.12% on Tuesday, according to Crane. The average rate on interest-bearing checking accounts in March was 3.03%, while the average rate on money-market deposit accounts was 3.79%, according to Curinos. Companies have the ability to negotiate higher rates on their accounts."
