Taxable money market mutual fund yields were flat in August and will remain remain flat for the foreseeable future. Tax-exempt money fund yields, however, plunged in August after jumping in July. Our Crane Money Fund Average, which is comprised of 900 taxable money market mutual funds, yielded 1.96% (7-day simple) as of Aug. 31, 2008, unchanged from the prior month. The Crane Tax Exempt MF Index, which is comprised of 455 municipal and tax-free money funds, yielded 1.35% at the end of August vs. 1.82% as of July 31.
The Crane 100 Money Fund Index, a benchmark of the 100 largest taxable funds, remained flat at 2.24% in August. A year ago, the Crane 100 was 5.01%, and at the start of 2008 the index was 4.49%. Through August 31, 2008, the Crane 100 shows the following unannualized returns: 0.19% for 1-month 0.55% for 3 months; and 1.88% for YTD. For the pasy 1-year it returned 3.50%. Average annualized returns for money fund investors were 4.29% over 3 years, 3.16% for 5 years, and 3.48% for 10 years. All of these returns are net of fees.
Expense ratios for money funds declined slightly in August. The average expense ratio among the largest money funds, as measured by the Crane 100, was 0.37% (annualized) for the latest month. The broader Crane Money Fund Average shows taxable money fund expenses at 0.47%, while Tax Exempt funds averaged 0.54%.
Money fund portfolio maturities extended slightly. Our Crane MF Average remained at a 40 day AM (average maturity), but our Crane 100 Index's AM rose from 45 to 47 days. Tax exempt AMs went from 29 days to 30 days. Average maturity measures the duration of fund investments and the length of time, in days, it takes a portfolio to turn over. As you can see, money fund portfolios have an extremely short lifespan.
For more on our Crane Money Fund Indexes and Averages, see the latest issue of Crane Index, Money Fund Intelligence, Money Fund Intelligence XLS, or Money Fund Intelligence Daily. Crane Indexes are also available on Bloomberg Professional -- enter 'ALLX CRNI' for a listing.
