The Federal Reserve's latest Z.1 "Financial Accounts of the United States" (formerly the "Flow of Funds") statistical data set for the Third Quarter of 2013 was released last week, and the four tables it includes on money market mutual funds continue to show that the Household sector, funding corporations (securities lenders), and nonfinancial corporate businesses remain the largest investor segments and that Time and Savings Deposits have surpassed SecurityRPs (repo) as the largest investment segment. Table L.206 (on page 93) shows the Household sector with $1.094 trillion, or 41.5% of the $2.637 trillion held in Money Market Mutual Fund Shares as of Q3 2013. Household shares increased by $42 billion in the 3rd quarter, and they've risen by $50 billion over the past 12 months. But Household sector money fund assets still remain well below their record level of $1.582 trillion at yearend 2008.
Funding corporations, which includes securities lenders, remained the second largest investor segment with $510 billion, or 19.3% of money fund shares. Their assets increased by $32 billion in the latest quarter, but fell by $98 billion over the past 12 months. (Funding corporations held over $1.025 trillion in money funds at the end of 2008.) Nonfinancial corporate businesses, the third largest investor segment, have gained on the No. 2 spot, according to the Fed's data series, with $456 billion, or 17.3% of the total. (These assets increased by $19 billion in the latest quarter and increased by $29 billion the past year.)
Private pension funds increased their money fund holdings dramatically over the past 12 months (though 9/30/13); they now rank fourth with $148 billion (5.6%), an increase of $52 billion over 12 months. State and local governments ranked fifth in market share among investor segments with 5.4%, or $142 billion (up $16 billion over 12 mos.), while the Rest of the world category ranked in sixth place with 4.5% of assets ($119 billion). Nonfinancial noncorporate businesses held $80 billion (3.0%), State and local government retirement held $43 billion (1.6%), Life insurance companies held $24 billion (0.9%), and Property-casualty insurance held $22 billion (0.8%), according to the Fed's Z.1 breakout.
The Fed's Z.1 Table L.120 (page 83) shows `Money Market Mutual Fund Assets largely invested in Time and savings deposits ($494 billion, or 18.7%), Security RPs ($489 billion, or 18.5%) and Treasury securities ($467 billion, or 17.7%). Money funds also hold large positions in Open market paper (we assume this is CP, $358 billion, or 13.6%), Agency and GSE backed securities ($354 billion, or 13.4%), and Municipal securities ($305 billion, or 11.6%). The remainder is invested in Corporate and foreign bonds ($89 billion, or 3.4%), `Foreign deposits ($36, or 1.4%), Miscellaneous assets ($34 billion, or 1.3%), and Checkable deposits and currency ($11 billion, or 0.4%).
In the 12 months through Sept. 30, 2013, Time and savings deposits (up $89 billion), Open market paper (CP, up $39 billion), Municipal securities (up $33 billion) and Agencies (up $23 billion) showed large increases, while "Miscellaneous" (down $31 billion) and Security RPs (down $24 billion) showed large declines. (We're not aware of a detailed definition of the Fed's various categories, so aren't sure in some cases how to map some of these figures against other data sets.)
In other news, Federated Investors, the third-largest manager of money market funds and one of the most vocal opponents of radical regulatory change, ran a full-page advertisement on page A10B of Wednesday's Wall Street Journal. Titled, "No to floating NAV for Money Market Funds," it listed a series of "Money Market Advocates," including: the U.S. Conference of Mayors, National Association of State Treasurers, Government Finance Officers Association, Association for Financial Professionals, U.S. Chamber of Commerce, and the American Council of Life Insurers.
The ad says, "Each organization and more than 1,400 other commenters have gone on the record to oppose the floating net asset value (NAV) for money market mutual funds in response to the SEC request for comments. In fact, more than 98% of the comments received by the SEC rejected the floating NAV. Users know money market funds are well-regulated, based on sound and widely accepted accounting principles, transparent, and enhance capital market efficiency."
