The Investment Company Institute's latest weekly "Money Market Mutual Fund Assets" series says, "Total money market mutual fund assets decreased by $42.24 billion to $3.404 trillion for the week ended Wednesday, October 14.... Taxable government funds decreased by $31.29 billion, taxable non-government funds decreased by $7.79 billion, and tax-exempt funds decreased by $3.17 billion." Year-to-date, we show ICI's money fund asset totals declining by $426 billion, or 11.1%.
ICI's release adds, "Assets of retail money market funds decreased by $6.71 billion to $1.115 trillion. Taxable government money market fund assets in the retail category decreased by $1.39 billion to $174.99 billion, taxable non-government money market fund assets decreased by $3.90 billion to $697.75 billion, and tax-exempt fund assets decreased by $1.42 billion to $242.69 billion. Assets of institutional money market funds decreased by $35.53 billion to $2.288 trillion. Among institutional funds, taxable government money market fund assets decreased by $29.90 billion to $910.02 billion, taxable non-government money market fund assets decreased by $3.88 billion to $1.205 trillion, and tax-exempt fund assets decreased by $1.75 billion to $173.54 billion."
Money fund assets are on track to post a larger percentage decline than in 2003, their second largest annual decline in history. Money fund flows experienced their worst year ever in 1983, when they declined by 18.4%. This was followed by 2003's 9.7% drop. This year appears almost certain to be the fifth year in money funds' 40-year history to show a decline in assets. (The others were 2002, down 0.6%, and 2004, down 6.8%.) And until rates rise or markets correct, there appears to be no relief in site for cash.
In other news, Evergreen Money Market Fund posted a note to shareholders yesterday saying, "A special distribution was declared on October 15, 2009 for Evergreen Money Market Fund. This distribution, which is being made from short-term capital gains, is in addition to the Fund's normal income dividend. The normal income dividend and special distribution will be combined into one payout that clients will receive on November 2, 2009, the Fund's normal monthly payment date.... This payment is the result of a capital infusion provided by Wachovia Corporation in 2008 to support certain securities within the Fund. The securities have since matured at par value, and as a result, the Fund is required to make this special distribution to satisfy federal income tax regulations."
Wells Fargo Funds Management Group spokesperson Laura Fay tells Crane Data, "The support agreement was put in place in an effort to protect the interests of our shareholders during a challenging market environment, and we are pleased that the precautionary measure proved to be unnecessary. As they have in the past, our money market funds continue to maintain a conservative approach to investing that prioritizes the preservation of capital and liquidity." She added that Morgan Stanley securities were the ones involved in this particular CSA (capital support agreement).
