Money market mutual fund assets decreased by $18.49 billion to $2.964 trillion for the week ended Wednesday, April 7, said the Investment Company Institute in its weekly survey. The release says, "Taxable government funds decreased by $16.88 billion, taxable non-government funds decreased by $5.55 billion, and tax-exempt funds increased by $3.94 billion."
Year-to-date, ICI's money fund series has declined by $329 billion, or 10%. This is on top of a $537 billion, or 14.0%, decline in 2009. Institutional funds have led the outflows in 2010, dropping by $273 billion, or 12.3%, while retail assets have decline by just $56 billion, or 5.3%. (Retail led the outflows in 2009 with a $287 billion, or 21.2% decline.) Assets have retreated to levels last seen in October 2007.
As we reported in yesterday's Money Fund Intelligence, March 2010 outflows rivalled those of September 2008 for the largest single-month money fund asset decline on record. Crane Data's monthly statistics show that assets fell by $159.2 billion in March, trailing Sept. '08's $160.1 billion drop by just a hair. (Crane Data has only been collecting monthly statistics since May 2006, but we don't believe any past monthly declines come anywhere near the magnitude of these two.)
Clearly, higher repo, Treasury bill and direct money market instrument rates over the past two months have pulled large amounts of cash from money funds, particularly government and Treasury money funds. Though of course outflows continue due to zero yields in funds and Fed policy forcing investors out the risk curve, it appears that much of the recent surge is temporary due to the fleeting yield advantage that some instruments now have over money funds. Funds should be moving higher shortly though, and yields in Treasuries have already eased somewhat, thereby returning funds to a somewhat level playing field.
