Crane Data's quarterly Money Fund Intelligence Distribution Survey, which tracks money fund sales trends and contains U.S. and global money fund family market share rankings, features a piece entitled, "Party Ending for Money Fund Asset Growth" in its most recent issue. The article explains, "Money fund asset growth stalled in the first quarter of 2009, following the most impressive run-up in history." Below are excerpts.
MFI's Distribution Survey says, "From 2004 through 2008, money fund assets grew by almost $2 trillion, increasing from $1.913 trillion to $3.830 trillion (a gain of $1.917 trillion, or 100%). The only period that comes close to that nominal pace of growth was 1995-2000, when money fund assets rose by $1.092 trillion, or 121%, in the 5 years."
It continues, "Since Dec. 31, 2008, however, money fund assets have stalled, rising a mere $4 billion, or 0.1%, in the weeks through April 2. Assets have declined by over $100 billion, or 2.6%, over the past 6 weeks (from March 18 through April 22, 2009), the biggest drop since a decline of $121 billion the week ending Sept. 17, 2008 (the week Reserve Primary Fund 'broke the buck')."
The Survey adds, "Though there are seasonal factors driving the current dip, and April 15 never helps, it's clear that the tailwind money funds have enjoyed due to falling rates has ended. The ultra-low rate policy of the Fed is beginning to push investors out on the risk spectrum."
Finally, our quarterly writes, "Nonetheless, all is not lost for money funds. Though we clearly won't be seeing the inflows we've seen over the past several years, it's not certain that we're in for large outflows. Rates likely won't be rising for some time still, and past periods of ultra-low then rising rates, such as 2003-2004, have shown relatively minor erosion in money funds' asset base."
