The ICI released its October 2012 statistics late Thursday, which showed money fund assets flat as repo holdings surged. (See our previous news on the repo jump, Nov. 12's "Repo Rebounds to Record in Oct.; European Holds Highest Since 5/12".) Money funds will likely show big asset increases in November, according to Crane Data's MFI Daily, after being down fractionally in October. ICI's "Trends in Mutual Fund Investing: October 2012" shows that money market mutual fund assets were again basically flat, falling a mere $3.2 billion in October after falling $3.8 billion in Sept. to $2.5481 trillion. Money fund assets continue to lose share to bond fund assets, which rose by $44.3 billion to $3.3791 trillion. ICI's "Month-End Portfolio Holdings of Taxable Money Market Funds shows Repurchase Agreements surging in October while Government Agencies, Treasuries and CDs all fell.
ICI's October "Trends" says, "The combined assets of the nation's mutual funds decreased by $43.5 billion, or 0.3 percent, to $12.711 trillion in October, according to the Investment Company Institute's official survey of the mutual fund industry.... Bond funds had an inflow of $34.37 billion in October, compared with an inflow of $29.18 billion in September.... Money market funds had an outflow of $3.55 billion in October, compared with an outflow of $3.44 billion in September. Funds offered primarily to institutions had an outflow of $2.94 billion. Funds offered primarily to individuals had an outflow of $609 million."
So far in November, month-to-date through 11/28, assets have decreased by $74.9 billion, according to Crane Data's Money Fund Intelligence Daily. Prime Institutional funds are seeing large inflows in November, up $44.3 billion, perhaps a reflection of investors moving cash ahead of the expected year-end expiration of the "TAG" unlimited FDIC insurance program. (Though this may be extended -- see Wednesday's "Link of the Day". We expect an extension.) But money fund assets are up modestly across all other categories too in November.
ICI's latest weekly "Money Market Mutual Fund Assets" also shows assets increasing for the third straight week. It says, "Total money market mutual fund assets increased by $10.09 billion to $2.612 trillion for the week ended Wednesday, November 28, the Investment Company Institute reported today. Taxable government funds increased by $1.39 billion, taxable non-government funds increased by $9.45 billion, and tax-exempt funds decreased by $760 million."
The ICI's Portfolio Holdings for October 2012 shows Repurchase Agreements jumped sharply after falling in September. Repos hit record levels in October, solidifying their position as the largest portfolio holding among taxable money funds with 26.5% of assets and $603.8 billion (up $80.5 billion in Oct.). Treasury Bills & Securities remained the second largest segment at 19.7%; holdings in T-Bills and other Treasuries fell by $16.3 billion to $449.1 billion. Holdings of Certificates of Deposits, which rank third among portfolio holdings, decreased by $24.4 billion to $415.3 billion (18.2%).
Commercial Paper took back the fourth largest spot from U.S. Government Agency Securities; CP fell by $10.7 billion to $315.1 billion (13.8% of assets) but Agencies fell by $24.1 billion to $313.8 billion (13.7% of taxable assets). Notes (including Corporate and Bank) rose by $2.8 billion to $97.7 billion (4.3% of assets), and Other holdings accounted for 3.7% ($85.3 billion).
The Number of Accounts Outstanding in ICI's Holdings series for taxable money funds decreased by 86.85K to 24.39 million, while the Number of Funds fell by one to 405. The Average Maturity of Portfolios remained at 49 days in October. Since October 2011, WAMs of Taxable money funds have lengthened by 8 days. (Note that the archived version of our Money Fund Intelligence XLS monthly spreadsheet -- see our Content Page to download -- now has Portfolio Composition and Maturity Distribution totals updated as of Oct. 31, 2012. We revise these following the monthly publication of our final Money Fund Portfolio Holdings data.)
Finally, ICI's Paul Schott Stevens writes a letter to the The Wall Street Journal editors entitled, "Ill-Advised 'Reform' of Money Funds Will Harm Savers". He says, "The Journal continues its efforts to tar money-market funds with the stigma of "bailout" and to impose a solution that will destroy a product that plays a key role in financing the economy ("Liberating Money Funds," Review & Outlook, Nov. 19). There is little evidence to support the Journal's claims that its favored proposal for money-market funds -- forcing them to float their per-share price -- would enhance financial stability. As the financial crisis demonstrated, floating-value funds aren't immune to runs. Instead, this "solution" would deprive investors and the economy of an efficient, diversified, well-regulated and transparent tool for cash management, and a crucial channel for financing businesses, state and local governments and nonprofit institutions. Little wonder that hundreds of organizations from these sectors have registered their opposition to forcing money-market funds to float."
