Rumors of the demise of money fund asset growth were greatly exagerrated, as assets continued their post-tax outflow surge in the latest week. The Investment Company Institute reports that money fund assets increased by $11.17 billion in the week ended Wednesday, May 21, to $3.509 trillion. Assets are $27 billion below their pre-April 15 record level. They have increased by $90.9 billion in the last three weeks and have increased by $364.5 billion year-to-date (11.6%).
Retail money funds showed outflows of $7.8 billion to $1.227 trillion, while Institutional money funds showed inflows of $18.97 billion to $2.282 trillion. Institutional General Purpose funds rose $23.17 billion and Institutional Government funds declined by $4.64 billion. Retail Government funds declined by $1.02 billion, Retail General funds declined by $11.00 billion, and Retail Tax Exempt funds increased by $4.22 billion.
Assets have increased by $1.011 trillion, 40.5%, over the past 52 weeks, though they should pause next week due to the Memorial Day Holiday weekend and month-end. `We expect assets to resume their climb over the summer, though the pace should cool as the market prepares for a possible hike in rates later this year.
Money fund yields continued inching lower, though they have yet to fully reflect the Federal Reserve's likely final April 30 1/4-point cut (to 2.0%). The Crane 100 Money Fund Index declined by one basis point yesterday and by three basis points over the past week to 2.33%. Money funds have declined just 14 basis points since the Fed cut. Yields should continue inching lower in coming weeks, though they should stabilize around the 2.25% level.
