Money market mutual fund assets increased slightly in the latest week, but this marked the 3rd week in 4 that funds have seen asset increases. Funds have now recovered over half of the outflows associated with the Treasury debt ceiling debate. In the 3 weeks ended August 3, money funds lost $114.3 billion in assets, but they've gained $68.7 billion over the past 4 weeks. Year-to-date, money market mutual fund assets have declined by $173 billion, or 6.2 percent. Institutional funds account for all of the decrease, declining by $173 billion, or 9.3%, while Retail money funds now show an increase of $1, or 0.1%, YTD through August 31.
The Investment Company Institute's latest "Money Market Mutual Fund Assets" report says, "Total money market mutual fund assets increased by $7.95 billion to $2.637 trillion for the week ended Wednesday, August 31.... Taxable government funds increased by $7.91 billion, taxable non-government funds increased by $1.37 billion, and tax-exempt funds decreased by $1.34 billion."
ICI explains, "Assets of retail money market funds increased by $33 million to $944.80 billion. Taxable government money market fund assets in the retail category increased by $1.65 billion to $193.01 billion, taxable non-government money market fund assets decreased by $527 million to $557.78 billion, and tax-exempt fund assets decreased by $1.09 billion to $194.01 billion." Retail assets now account for 35.8% of all money fund assets, up from 33.6% at the beginning of 2011.
They add, "Assets of institutional money market funds increased by $7.92 billion to $1.692 trillion. Among institutional funds, taxable government money market fund assets increased by $6.26 billion to $665.20 billion, taxable non-government money market fund assets increased by $1.90 billion to $926.11 billion, and tax-exempt fund assets decreased by $242 million to $100.89 billion."
Money fund assets declined by 14.0% ($537 billion) in 2009 and by 14.7% ($483 billion) in early 2010, following a $1.3 trillion increase from August 2007 through January 2009. Assets now stand at the same level they were during the first week of 2007, just prior to the start of the "Subprime Liquidity Crisis," $2.6 trillion.
Crane Data is estimating that money fund assets will flatten and drift slightly lower over the remainder of 2011 (assuming, of course, that the risks of a headline-induced European concern run are past). We have indicated to clients that we think money funds will end the year down 10% at the $2.53 trillion level, then will decline an additional 5.0% in 2012 to the $2.5 trillion level. We assume funds will then begin attracting assets again in 2013, as interest rates begin to slowly rise. Crane estimates that money funds will gain 5.0% in 2013 to $2.523 trillion, 10% in 2014 to $2.775 trillion, and 5% in 2015 (as rates plateau out around 3%) to $2.914 trillion.
