ICI's latest "Money Market Fund Assets" report shows money fund assets falling $125.4 billion to $6.881 trillion, after falling $25.4 billion the week prior but rising $17.6 billion two weeks ago (to a record on 4/2). Massive (presumably) tax-related outflows make this the largest weekly outflow in history. But money fund assets have still risen in 24 of the last 37, and 35 of the last 52 weeks, increasing by $577.3 billion (or 9.2%) since the Fed cut on 9/18/24 and increasing by $903.4 billion (or 15.1%) since 4/24/24. MMF assets are up by $913 billion, or 15.3%, in the past 52 weeks (through 4/16/25), with Institutional MMFs up $465 billion, or 13.0% and Retail MMFs up $447 billion, or 18.6%. Year-to-date, MMF assets are up by $30 billion, or 0.4%, with Institutional MMFs down $82 billion, or -2.0% and Retail MMFs up $113 billion, or 4.1%.
ICI's weekly release says, "Total money market fund assets decreased by $125.36 billion to $6.88 trillion for the week ended Wednesday, April 16.... Among taxable money market funds, government funds $120.96 billion and prime funds decreased by $3.05 billion. Tax-exempt money market funds decreased by $1.35 billion." ICI's stats show Institutional MMFs decreasing $96.3 billion and Retail MMFs decreasing $29.1 billion in the latest week. Total Government MMF assets, including Treasury funds, were $5.622 trillion (81.7% of all money funds), while Total Prime MMFs were $1.126 trillion (16.4%). Tax Exempt MMFs totaled $133.6 billion (1.9%).
It explains, "Assets of retail money market funds decreased by $29.11 billion to $2.85 trillion. Among retail funds, government money market fund assets decreased by $21.63 billion to $1.81 trillion, prime money market fund assets decreased by $6.24 billion to $916.38 billion, and tax-exempt fund assets decreased by $1.24 billion to $122.55 billion." Retail assets account for well over a third of total assets, or 41.4%, and Government Retail assets make up 63.5% of all Retail MMFs.
They add, "Assets of institutional money market funds decreased by $96.25 billion to $4.03 trillion. Among institutional funds, government money market fund assets decreased by $99.33 billion to $3.81 trillion, prime money market fund assets increased by $3.19 billion to $209.24 billion, and tax-exempt fund assets decreased by $102 million to $11.01 billion." Institutional assets accounted for 58.6% of all MMF assets, with Government Institutional assets making up 94.5% of all institutional MMF totals.
According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets have fallen by $76.0 billion in April (through 4/16/25) to $7.248 trillion, hitting a record high of $7.384 trillion on April 3. Assets rose by $2.8 trillion in March, $94.2 billion in February, $52.8 billion in January, $110.9 billion in December, $200.5 trillion in November, $97.5 billion in October, $149.8 billion in September, $109.7 billion in August, $16.6 billion in July, $15.7 billion in June and $91.4 billion in May. They declined by $15.8 billion in April 2024. Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're over $330 billion lower than Crane's asset series.
In other news, an ignites story, "Brokers Got Hit With 47 Cash Sweep Suits. So Far, None Have Stuck," explains, "At least 13 brokerages have been implicated in a spate of lawsuits targeting cash sweep rates, court records show. In fact, of the 47 lawsuits filed since 2019, all but three are pending. That, lawyers say, suggests that plaintiffs may have a tough time convincing courts that brokerages acted wrongly in sweeping their cash into affiliated bank deposit accounts rather than higher-yielding accounts or products like money market funds. The first such suit was filed in August 2019 against Merrill Lynch, claiming that the brokerage breached a contract with investors and acted negligently by sweeping cash into affiliated bank deposit products with 'below market' yields. Money market funds would have been a more appropriate option, plaintiffs contended."
The piece continues, "District Judge Valerie Caproni dismissed [this] complaint in June 2020, saying that Merrill's cash sweep policy disclosures were 'sufficiently conspicuous' to investors, court documents show. [The investor] filed an amended complaint in February 2021, which is pending."
It quotes, "'If you're making the decision for the client to put it in poor-yielding cash investment, then you may have legal risk,' said Pete Crane, president of Crane Data. By comparison, if the client is picking the product with openly disclosed rates, 'there's very little concern, because it's not like they're holding you hostage.' Since 2023, four similar cases have been filed against Merrill Lynch or parent company Bank of America, court filings show."
The piece says, "Other major brokerages with affiliated banks have also been targeted by similar lawsuits filed since 2023, including J.P. Morgan, LPL, Morgan Stanley, Schwab and Wells Fargo. Last year alone, each were sued at least five times. Money market funds have had significantly higher yields than brokerage sweep programs since 2021, Crane Data shows. But real scrutiny started in 2022, when the Federal Reserve began increasing interest rates, said Steve Jodlowski, senior counsel at DiCello Levitt."
It tells us, "Last year, the Fed cut rates three times, and it has sat in the range of 4.25% to 4.50% since December. Most of the lawsuits include allegations that the brokerages should have swept cash into money market funds from Fidelity or Vanguard, rather than their affiliated bank deposit accounts, court records show. The average bank deposit returned 0.4% at the end of last year, Crane Data shows. That's compared to a 4.2% 7-day yield, on average, for money funds during 2024."
The story also states, "But swept cash is a large income stream for brokerage firms, Crane said. For example, in 2024, Schwab recorded $729 million in revenue from its cash sweeps and Ameriprise collected $154 million in distribution fees from them, company disclosures show. 'The brokerages clearly are going to fight any kind of trend to pay higher yields on sweeps, because that's how they make all their profits,' Crane said."
The ignites article continues, "Suits against Ameriprise and LPL have been voluntarily dismissed, but the court has left the door open for the plaintiffs to refile the cases, court records show. Plaintiffs in those cases include both brokerage and IRA clients whose accounts earned low rates for sweep assets in accounts held by affiliated banks, court records show. 'The plaintiffs appear to be going after a number of different customer relationships, each of which would have different legal considerations,' said Paul Clark, senior counsel at Seward & Kissel.... Regulators are also paying attention to where brokerages default client cash. Since 2022, six firms have agreed to pay a combined $267 million to resolve Securities and Exchange Commission allegations over their sweep programs."
Finally, it says, "In January, the SEC settled sweep rate-related charges with Merrill and Wells Fargo affiliates. In those cases, the regulator said that the firms failed to put reasonable policies in place when picking cash sweep options for customers. Merrill agreed to pay $25 million, and Wells Fargo paid $35 million.... Under current law, the SEC does not require brokers to offer any form of sweep program and permits brokers to hold customers' uninvested cash without paying interest at all, Seward & Kissel's Clark said."
For more on lawsuits over brokerage sweeps, see these Crane Data News stories: "WSJ: SEC, Brokerage Sweeps Settle" (1/21/25), "Schwab Latest Firm Sued Over Sweeps; BlackRock's Small: MMFs Stickier" (12/12/24), "Wells Quiet on Sweeps on Q3 Call" (10/18/24), "Barron's Writes on Brokerage Sweep Woes; Reuters on Rate Cuts, MMFs" (9/23/24), "Alight Money Fund Liquidates; Bloomberg Law on Brokerage Sweep Suits" (9/19/24), "Sept. MFI: Sticking with Prime Inst; MMFs Hit Record; Sweeps Scrutiny" (9/9/24), "Barron's: JPMorgan Sued on Sweeps" (8/29/24), "More on SEC Sweeps Scrutiny; Inv News on Sweeps, UBS's Earnings Call" (8/20/24), "Law Firm Says Bolster Disclosures, Rates on Sweeps; Crane Index 5.11%" (8/13/24), "Barron's: BofA Cites Risk from Sweeps" (8/8/24), "Central Bank of Ireland on Fund Regulations; Brokerage Sweeps Lawsuits" (8/5/24), "Tradeweb Completes ICD Acquisition; AdvisorHub on Wells Sweep Suit" (8/2/24) and "IN: Ameriprise Sued Over Sweeps" (7/31/24).
