After four months of flatness, money fund assets clawed their way back into record territory, rising $32.09 billion to $3.560 trillion in the latest week. ICI's statistics show tax-free assets leading the advance. Retail funds increased by $3.35 billion to $1.244 trillion, with tax-exempt retail assets rising $4.26 billion to $306.9 billion, and institutional funds increased by $28.74 billion to a record $2.317 trillion, with tax-exempt institutional assets rising $12.69 billion to $209.32 billion.
Tax-exempt funds attracted heavy inflows as yields spiked following concerns about further downgrades in the municipal "monoline" insurance sector. Moody's placed FSA and Assured Guaranty, two of the only remaining triple-A monoline credits, on watch recently. Tax-free yields should fall back to earth as they reinvest the heavy inflows.
Money fund assets overall had been setting records almost weekly since the Subprime Liquidity Crisis began a year ago. Assets have risen by $903 billion, or 34.0%, over the past 52 weeks. Year-to-date, money fund assets have increased by $416.0 billion, or 13.2%, according to ICI's weekly series and Crane Data's archiving and calculations. But since hitting a record $3.558 trillion the week ended April 9, however, assets have stagnated the past 4 months.
