The Household sector continues to be by far the largest owner of money market mutual fund shares with $1.092 trillion, or 41.4%, of all assets at the end of the 2nd quarter 2011, according to the Federal Reserve's latest "Flow of Funds Accounts" statistical release. Funding corporations, which includes Securities Lending cash, ranked second with $665 billion, or 25.2%, of the total $2.638 trillion held in money funds. Businesses (nonfinancial corporate) remained the third largest segment with $498 billion, or 18.9%. Sec lending and business holdings of money funds declined on a relative basis, while Households increased their share of the total in the quarter, according to the Fed's data.
The Fed's quarterly "L. 206 Money Market Mutual Fund Shares <b:>" table shows that overall money fund assets fell by $42 billion in the quarter and by $123 billion in the year through June 30, 2011. Other holders of money funds in the Fed's table showed relatively flat assets. Private pension funds held $96 billion, or 3.6% of all assets, State and local governments held $89 billion, or 3.4%, the Rest of the world category held $84 billion, or 3.2%, Nonfarm noncorporate businesses held $66 billion, or 2.5%, Property casualty insurance and Life insurance companies each held $26 billion, or 1.0%, and State and local government retirement held $16 billion, or 0.6%.
The Fed's Z.1 series also features a table "L.121 Money Market Mutual Funds" which shows that Time and Savings Deposits and Securities RPs remain the largest holdings of money funds with $462 billion (17.5%) and $458 billion (17.3%), respectively. Repo holdings increased by $18 billion, or 1.0%, in the quarter, while bank deposits fell by $8 billion. Open market paper (which we assume is commercial paper) was the third largest holding in money funds with $361 billion, or 13.7%, Agency and GSE backed securities was fourth with $359 billion, or 13.6%, Treasury securities were fifth with $342 billion, or 12.9%, and Municipal securities were sixth with $306 billion, or 11.6%. Corporate and foreign bonds ranked seventh among money fund holdings with $153 billion, or 5.8%, Foreign deposits ranked eighth with $112 billion, or $4.3%, Miscellaneous assets held $64 billion (2.4%) and Checkable deposits and currency held $21 billion (0.8%).
Treasury Strategies noted Friday in a press release, "The Federal Reserve today reported corporate cash balances grew to $2.05 trillion -- a 4.5% increase over last quarter -- representing a $648 billion increase since the first quarter of 2009.... Companies continue to see strong cash flow from operations. Many highly-rated companies are taking advantage of the current low-rate environment to issue debt. Additionally, companies are returning cash to shareholders or deploying it to improve business operations."
Partner Anthony Carfang notes, "Historically, corporations have not been comfortable holding so much cash. However, changes such as unlimited federal deposit insurance for noninterest bearing accounts are making treasurers much more comfortable holding onto large sums of cash -- particularly when placed in the U.S. banking system."
