Mutual fund news source ignites writes, "Money Funds Hit $7T and Are Likely to Stay There in 2025." The piece states, "Money market fund assets hit a record high last week. Even as interest rates continue to fall, however, money funds still have a 'significant yield advantage' over bank deposits, buoying their assets, one analyst said. Money market funds are unlikely to see outflows in 2025, despite continued rate cuts, one analyst said. The funds reached $7 trillion in combined assets Wednesday before dipping below that milestone on Thursday, noted Peter Crane, president of Crane Data. November and December are typically the strongest months of the year for money market fund inflows, and a looming 25-basis-point rate cut by the Federal Open Market Committee in December should provide a short-term tailwind for the funds, he said."
The article quotes, "Falling rates tend to be a 'short-term positive' for money market funds, because they lag the direct money market, Crane noted. Although a falling rate environment would be a 'long-term negative' for money market funds, their yield was hovering around 4.5% last week, indicating a 'significant yield advantage' over bank deposits, he said. 'So, I wouldn't expect outflows from money funds anytime soon, even as we get well into 2025,' Crane said. Money funds' inflows will likely 'slow and subside,' relative to significant recent inflows, but their advantages over bank deposits should remain in place if interest rates bottom out above 4%, he said."
The piece adds, "Money market fund assets grew by $46.8 billion during the week ended Nov. 14, Crane's data shows. Investors piled $634.2 billion into the funds during the year ended Oct. 31, according to data from Morningstar Direct. Recent inflows have primarily come from institutional investors, while the majority of 2024's inflows were from retail investors, Crane noted, adding that those flows have shifted toward firms such as BlackRock over shops like Fidelity and Schwab, as a result."
In other news, 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 Nov. 15) includes Holdings information from 61 money funds (up 14 from two weeks ago), or $3.455 trillion (up from $2.801 trillion) of the $6.982 trillion in total money fund assets (or 49.5%) 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 and our Oct. 10 News, "Nov. Money Fund Portfolio Holdings: Treasuries Surge, Reclaims Top Spot.")
Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Treasuries totaling $1.719 trillion (up from $1.310 trillion two weeks ago), or 49.8%; Repurchase Agreements (Repo) totaling $1.138 trillion (up from $963.0 billion two weeks ago), or 32.9%, and Government Agency securities totaling $315.4 billion (up from $276.6 billion), or 9.1%. Commercial Paper (CP) totaled $111.1 billion (up from two weeks ago at $97.3 billion), or 3.2%. Certificates of Deposit (CDs) totaled $63.1 billion (up from $58.6 billion two weeks ago), or 1.8%. The Other category accounted for $73.0 billion or 2.1%, while VRDNs accounted for $35.8 billion, or 1.0%.
The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.719 trillion (49.8% of total holdings), Fixed Income Clearing Corp with $334.0B (9.7%), the Federal Home Loan Bank with $213.4 billion (6.2%), BNP Paribas with $88.4B (2.6%), JP Morgan with $77.2B (2.2%), Citi with $74.7B (2.2%), Federal Farm Credit Bank with $73.1B (2.1%), RBC with $57.7B (1.7%), Goldman Sachs with $47.7B (1.4%) and Bank of America with $40.5B (1.2%).
The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($279.3B), Goldman Sachs FS Govt ($264.4B), JPMorgan 100% US Treas MMkt ($227.3B), Fidelity Inv MM: Govt Port ($207.5B), BlackRock Lq FedFund ($176.7B), State Street Inst US Govt ($167.1B), Morgan Stanley Inst Liq Govt ($157.1B), BlackRock Lq Treas Tr ($154.9B), Fidelity Inv MM: MM Port ($140.0B) and Dreyfus Govt Cash Mgmt ($129.5B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary.)
ICI also released its latest monthly "Money Market Fund Holdings" summary, which reviews the aggregate daily and weekly liquid assets, regional exposure, and maturities (WAM and WAL) for Prime and Government money market funds. This release says, "The Investment Company Institute (ICI) reports that, as of the final Friday in October, prime money market funds held 41.3 percent of their portfolios in daily liquid assets and 60.4 percent in weekly liquid assets, while government money market funds held 76.0 percent of their portfolios in daily liquid assets and 86.8 percent in weekly liquid assets." Prime DLA was down from 42.3% in September, and Prime WLA was down from 61.7%. Govt MMFs' DLA fell from 77.5% and Govt WLA decreased from 87.9% the previous month.
ICI explains, "At the end of October, prime funds had a weighted average maturity (WAM) of 29 days and a weighted average life (WAL) of 54 days. Average WAMs and WALs are asset-weighted. Government money market funds had a WAM of 38 days and a WAL of 91 days." Prime WAMs were 5 days longer and WALs were 7 days longer from the previous month. Govt WAMs were 6 days longer and WALs were 10 days longer from September.
Regarding Holdings by Region of Issuer, the release tells us, "Prime money market funds' holdings attributable to the Americas declined from $532.92 billion in September to $518.33 billion in October. Government money market funds' holdings attributable to the Americas rose from $4,870.45 billion in September to $4,880.05 billion in October." The Prime Money Market Funds by Region of Issuer table shows Americas-related holdings at $518.3 billion, or 49.4%; Asia and Pacific at $197.1 billion, or 18.8%; Europe at $309.7 billion, or 29.5%; and, Other (including Supranational) at $23.8 billion, or 2.3%. The Government Money Market Funds by Region of Issuer table shows Americas at $4.880 trillion, or 90.3%; Asia and Pacific at $128.4 billion, or 2.4%; Europe at $373.1 billion, 6.9%, and Other (Including Supranational) at $24.3 billion, or 0.4%.
