The Investment Company Institute released its latest monthly "Trends in Mutual Fund Investing: May 2009, which showed total mutual fund assets breaking back above the $10 trillion level. But money market fund assets continued their decline, falling by $24.4 billion to $3.767 trillion in May. Money funds had been the biggest slice of the mutual fund pie since late 2008, but they now represent 37.4% of all mutual fund assets vs. 39.8% for stock funds. (Note that ICI's latest weekly series shows money fund assets rebounding by $34.22 billion to $3.709 trillion.)
ICI's monthly statistics release says, "Money market funds had an outflow of $25.80 billion in May, compared with an outflow of $23.23 billion in April. Funds offered primarily to institutions had an inflow of $7.19 billion. Funds offered primarily to individuals had an outflow of $32.99 billion." Taxable money fund assets declined from $3.328 to $3.303 trillion, while tax-free money fund assets increased from $463.8 to $464.4 billion, according to the tables. Year-to-date (through May 31), money fund assets have declined by $65 billion.
The monthly "Trends" report tracks 510 taxable funds (down from 520 in April and 543 in December 2008) and 236 tax-free money funds (same as April and down from 254 in Dec. '08). The "Liquid Assets of Stock Mutual Funds" fell to 4.8% in May 2009 from 5.1% in April, but this figure is up from 4.3% in May 2008 (and is still very low historically).
ICI's separate (available to members-only) "Month-End Portfolio Holdings of Taxable Money Market Funds" shows U.S. Government Agency Securities and Repurchase Agreements continuing to represent the largest portion of money fund assets at 23.0% and 18.3% respectively ($758.6 billion and $604.8 billion). These were followed in size by Commercial Paper (16.3%, or $536.7 billion), Certificates of Deposits (16.0%, or $527.8 billion), and U.S. Treasury Bills and Securities (14.9%, or $493.0 billion). There is an additional 4.8%, or $157.1 billion, held in Corporate Notes; 2.9%, or $94 billion, held in Eurodollar CDs; 1.8%, or $57.8 billion, held in Bank Notes; and, 2.2%, or $74 billion, held in "Other" cash assets.
CDs showed the largest increase in May (up $49.5 billion), while CP showed the largest decline (down $27.0 billion). Treasury Bills (down $23.1 billion) and Government Agency securities (down $25.0 billion) also showed sharp declines in money fund portfolio holdings. Average maturities of taxable funds increased by 3 days to 53 days in May, according to ICI. (Look for Crane Data's new updated portfolio composition totals in the next issue of our Money Fund Intelligence XLS.)
In other news, see law firm Stradley's comments on "Money Market Fund Reform: SEC Proposes Rule Amendments and Seeks Comment on Fundamental Issues", which says, "On June 24, 2009, the SEC voted to propose amendments to Rule 2a-7, the money market fund rule under the Investment Company Act of 1940, designed to strengthen the regulatory requirements governing money market funds to increase their resilience to economic stresses and reduce the risks of runs on the funds. The SEC also voted to seek public comment on some possible fundamental reforms relating to money market funds, including whether the stable $1.00 share price should be abandoned in favor of a floating net asset value per share (NAV) and whether money market funds should be required to satisfy redemption requests in excess of a certain size through in-kind redemptions. The SEC did not include those more fundamental reforms as formal proposals."
