The Federal Reserve published its comprehensive quarterly "Z.1 Flow of Funds Accounts of the United States" statistical release yesterday, which showed that the Household sector solidified its position as the largest owner of money market mutual funds shares in the first quarter of 2011. Households owned $1.188 trillion, or 44.3% of the $2.679 trillion in money funds in Q1, up $37 billion or 2.5% from Q4 2010. Funding corporations, which includes securities lenders, remained the second largest investor in money funds with $591 billion, or 22.0%, but their holdings declined by $99 billion, or 4.1% in the latest quarter.
Nonfinancial corporate businesses' holdings of money market funds drifted lower by $20 billion, or 0.2%, to rank third with $497 billion, or 18.6% of the total All other investor types remained relatively flat. Private pension funds held $96 billion, or 3.6% of assets, unchanged from the prior quarter; State and local governments held $91 billion, or 3.4% of assets (unchanged); the "Rest of the world" category held $85 billion, or 3.2% of assets (up $1 billion); Nonfarm noncorporate businesses held $66 billion, or 2.5% (unchanged); the Property-casualty insurance category held $28 billion, or 1.0% (up $2 billion); Life insurance companies held $24 billion, or 0.9%; and State and local government retirement held $15 billion, or 0.5%.
The Fed's Z.1. Survey also showed that Time and savings deposits accounted for the largest percentage of money fund portfolio holdings at 17.5%, or $470 billion. Security RPs (repo) ranked second among the Fed's L.121 table with $439 billion, or 16.4%, while Open market paper ranked third with $398 billion, or 14.9%. Agency and GSE backed securities accounted for $373 billion of holdings, or 13.9%; Treasury securities accounted for $338 billion, or 12.6%; and Municipal securities accounted for $321 billion, or 12.0% of the total. Corporate and foreign bonds totalled $154 billion (5.7%), Foreign deposits totalled $108 billion (4.0%), and Miscellaneous assets and Checkable deposits and currency together totalled $79 billion (2.9%). Repo and Agency declines accounted for almost all of the $76 billion asset decline in the first quarter, dropping $40 billion and $29 billion, respectively.
Chicago-based consulting firm Treasury Strategies commented on the "Flow of Funds" release, "The Federal Reserve today reported corporate cash balances climbed to $1.91 trillion -- a 36% increase since the first quarter of 2009 -- representing $510 billion. This significant increase indicates that businesses continue to generate cash from operations, while corporate treasurers remain concerned about the future economic outlook."
In other news, ICI said in its weekly "Money Market Mutual Funds" report, "Total money market mutual fund assets increased by $15.88 billion to $2.742 trillion for the week ended Wednesday, June 8, the Investment Company Institute reported today. Taxable government funds increased by $4.94 billion, taxable non-government funds increased by $10.09 billion, and tax-exempt funds increased by $850 million."
