The Federal Reserve released its latest quarterly "Flow of Funds Accounts of the United States - Z.1" last week. The Flow of Funds contains several tables related to money market funds, including L. 206 "Money Market Mutual Fund Shares," which shows investor types in money funds, and L.121 "Money Market Mutual Funds," which shows investments held by money funds. The Z.1 report shows that households, funding corporations and nonfinancial corporate businesses remain the dominant categories of money fund shareholders, and that households and funding corporations (which include securities lenders) continued to drive the outflows from funds in Q2 of 2010.
The household sector remains by far the largest holder of money fund shares with $1.11 trillion, or 37.9% of the $2.931 trillion tracked by the Fed in Q2. Households reduced their money fund holdings by $78 billion in the second quarter, or 2.7%, and they've reduced holdings by $354 billion, or 24.2% over the 1-year through June 30, 2010. Overall money fund assets declined by $654 billion, or 18.2%, over the same 12 months.
Funding corporations, defined by the Fed as "funding subsidiaries, nonbank financial holding companies, [and] custodial accounts for reinvested collateral of securities lending operations," remain the second largest holder of money fund shares with $745 billion, or 25.4% of assets. This is down by $48 billion, or 1.6%, in the latest quarter and $266 billion, or 26.3%, in the latest year. Funding corporations have shrunk their money fund balances from a high of $1.071 trillion at year-end 2008, a decline of $326 billion, or 30.4%. (Households have shrunk balances by $463 billion, or 29.4% during this same period.)
Nonfinancial corporate businesses rank third among money fund investors, according to the Fed's quarterly Z.1 series, with $528 billion, or 18.0% of assets. Corporates reduced their holdings at a slower pace in the quarter, dropping $35 billion or 1.3%, but their money fund holdings fell a sharp $164 billion, or 23.7% over the year.
The Fed's money fund holdings table shows "Time and savings deposits" and "Open market paper" with the biggest declines in Q2. These lost $73 billion and $63 billion, respectively. Security RPs (repos) were the only segment to increase (up $23 billion); these represent the largest holding of money funds with $463 billion, or 15.8% of assets. Agency and GSE backed securities rank second with $450 billion (15.4%), while Time and savings deposits rank third with $432 billion (14.7%). Open market paper (CP) ranks fifth with $386 billion (13.2%), while Treasury securities and Municipal securities tie for sixth place with $351 billion (12.0%) each.
For more on the Fed's Flow of Funds, visit www.federalreserve.gov/releases/z1/Current/ or e-mail info@cranedata.us to request Crane Data's Excel files of the Fed's money fund tables.
