The new April issue of Money Fund Intelligence discusses money market mutual fund assets breaking the $3.5 trillion barrier and the reasons behind this stunning growth. One major contributor has been corporations shift into money market funds. We now have yet more evidence that companies have dramatically increased their holdings of money funds. New data from ICI shows business' short-term assets in money funds increasing from 24 percent in 2006 to a record 31 percent in 2007.

Short-term assets include foreign deposits, checkable deposits, time and savings deposits, money market funds, repurchase agreements, and commercial paper. The previous high had had been in 2002 (29%), but money funds' share declined to 22% in 2005. But money funds held a mere 9% in 1993 and 1994, and 14% ten years ago.

Given the surge in money fund assets year-to-date in 2008, we expect that these numbers are even higher currently. Treasury Strategies recently released a survey showing corporate holdings of money funds increasing from 29.5% as of mid-2007 to 40.7% as of Jan. 1, 2008. (The TSI survey likely covers a larger company demographic than the ICI study.)

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