Money market mutual fund assets declined for the fifth week in a row and the ninth week out of the past 11 according to the latest statistics from the Investment Company Institute. The declines moderated in the week ended Wednesday, November 11, with assets dropping by $3.68 billion to $3.335 trillion, their lowest level since the end of January 2008. Money fund assets have declined by $495 billion, or 12.9%, year-to-date, and have declined by $585.2 billion, or 14.9%, since setting a record high of $3.920 trillion on Jan. 14, 2009.

ICI's weekly "Money Market Mutual Fund Assets," which is released every Thursday around 5pm, says, "Taxable government funds decreased by $4.68 billion, taxable non-government funds increased by $4.52 billion, and tax-exempt funds decreased by $3.51 billion." It adds, "Assets of retail money market funds decreased by $4.17 billion to $1.093 trillion. Taxable government money market fund assets in the retail category decreased by $380 million to $168.66 billion, taxable non-government money market fund assets decreased by $2.41 billion to $685.30 billion, and tax-exempt fund assets decreased by $1.38 billion to $238.80 billion."

The report continues, "Assets of institutional money market funds increased by $493 million to $2.242 trillion. Among institutional funds, taxable government money market fund assets decreased by $4.30 billion to $883.05 billion, taxable non-government money market fund assets increased by $6.93 billion to $1.191 trillion, and tax-exempt fund assets decreased by $2.13 billion to $168.39 billion."

Year-to-date, retail money fund assets have decline by a stunning 19.3% ($262 billion), which Crane Data believes is evidence of brokerages forcing investor cash into FDIC-insured sweep programs. Institutional money fund assets, which represent 67.2% of all money fund assets, have declined by a more modest 9.8% ($244 billion). Money funds haven't had two consecutive weeks of asset inflows since early March 2009.

We believe the majority of money fund asset outflows have taken temporary refuge in bank savings deposits, which have increased by $600.5 billion (to $4.703 trillion) YTD through 10/31 (according to the Federal Reserve's H.6. "Money Stock Measures" series) and in bond funds. Bond fund assets have increased by $508.9 billion (32.5%) YTD through Sept. 30 (according to ICI's monthly "Trends in Mutual Fund Investing"). A substantial portion of these assets should return once temporary deposit insurance increases expire and rising rates return the normal historical yield advantage that money funds have over bank deposits.

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