Money fund assets rose for the first time in 2011 in the latest week, breaking a five-week, $74 billion losing streak. ICI's "Money Market Mutual Fund Assets" report says, "Total money market mutual fund assets increased by $10.23 billion to $2.747 trillion for the week ended Wednesday, February 9, the Investment Company Institute reported today. Taxable government funds increased by $490 million, taxable non-government funds increased by $10.56 billion, and tax-exempt funds decreased by $820 million."
ICI's weekly continues, "Assets of retail money market funds decreased by $1.80 billion to $935.08 billion. Taxable government money market fund assets in the retail category decreased by $570 million to $165.21 billion, taxable non-government money market fund assets decreased by $800 million to $564.34 billion, and tax-exempt fund assets decreased by $430 million to $205.53 billion. Assets of institutional money market funds increased by $12.03 billion to $1.812 trillion. Among institutional funds, taxable government money market fund assets increased by $1.06 billion to $623.62 billion, taxable non-government money market fund assets increased by $11.36 billion to $1.069 trillion, and tax-exempt fund assets decreased by $390 million to $119.28 billion."
Year-to-date, money fund assets have declined by $63 billion, or 2.3%, with institutional assets accounting for $53 billion, or 84% of the total. Assets had remained rangebound within $50 billion of the $2.8 trillion level since May 2010 until last week when they dipped to $2.737 trillion. In 2010, money fund assets declined by $483 billion, or 14.7%, with almost all of the drop occurring in the first four months of last year. (Money funds dropped by over $100 billion in the first seven weeks of 2010.)
This followed asset declines of $537 billion, or 14.0%, in 2009, according to ICI's weekly statistics (the most comprehensive series available). Over the past 104 weeks (2 years), money fund assets have declined by $1.156 trillion, or 30.2%. But money fund totals overall have merely retreated to their levels of August 2007, at the start of the Subprime Liquidity Crisis.
Crane Data's Money Fund Intelligence Daily shows the modest recent asset recovery continuing, with money funds rising by $2 billion on Wednesday and $8.2 billion more on Thursday, February 10. We expect weather and higher than expected Fed funds effective rates to have played a role in the surprise resumption of outflows in January 2011. We believe that a long Holiday weekend with a quarterly tax payment date in the middle of January, coupled with the first of a series of blizzards on the East Coast, spiked demand for cash temporarily, and that the trends will remain more flat than down in coming weeks. (See also, The Wall Street Journal's "Money Funds Post Inflows".)
