Money market mutual fund assets declined for the 4th week in a row and have declined in 9 out of 12 weeks in 2014. Assets have dropped by $76 billion, or 2.8%, during the first quarter, with Institutional funds declining by $68 billion, or 3.8%, and Retail MMFs declining by $8 billion, or 0.8%. Below, we review the latest weekly asset series from the Investment Company Institute, which is the first to utilize ICI's recently updated "Fund Classification Categories." We also review the sizes of various fund categories, given the recent press attention on what fund segments may be covered by new regulations, and compare ICI's categorizations with Crane Data's.
ICI's latest "Money Market Fund Assets" release tells us, "Total money market fund assets decreased by $3.19 billion to $2.64 trillion for the week ended Wednesday, March 26, the Investment Company Institute reported today. Among taxable money market funds, treasury funds (including agency and repo) decreased by $1.38 billion and prime funds decreased by $520 million. Tax-exempt money market funds decreased by $1.29 billion." ICI adds in a footnote, "The weekly change in money market fund assets is primarily driven by flows and can be used as a proxy for net new cash flows."
The release continues, "Assets of retail money market funds decreased by $880 million to $921.69 billion. Treasury money market fund assets in the retail category increased by $280 million to $203.85 billion, prime money market fund assets decreased by $860 million to $523.37 billion, and tax-exempt fund assets decreased by $300 million to $194.47 billion." ICI's totals show Retail money funds making up 34.9% of total money fund assets, with Prime Retail accounting for 19.8% of all assets, Treasury Retail (includes Agency & Repo) accounting for 7.7% of assets, and Tax Exempt Retail accounting for 7.4% of total assets.
It adds, "Assets of institutional money market funds decreased by $2.31 billion to $1.72 trillion. Among institutional funds, treasury money market fund assets decreased by $1.66 billion to $717.48 billion, prime money market fund assets increased by $340 million to $927.62 billion, and tax-exempt fund assets decreased by $990 million to $76.07 billion." ICI's totals show Institutional money funds making up 65.1% of total money fund assets, with Prime Inst accounting for 35.1% of all assets, Treasury Inst (includes Agency & Repo) accounting for 27.1% of assets, and Tax Exempt Inst accounting for just 2.9% of total assets <b:>`_.
In comparison, Crane Data's separate "Fund Type" categorization shows Treasury Institutional money funds making up 12.8% of all assets, Government Institutional funds making up 12.0% of assets, Prime Institutional funds making up 32.9% of assets, Treasury Retail making up 4.7%, Govt Retail 5.1%, Prime Retail 22.3%, Tax Exempt Retail 5.1%, Tax Exempt Inst 2.2%, and State Tax Exempt 2.9%. (Note that the SEC's definition of "Prime Institutional", whether it will refer to redemption limits or social security numbers, will differ from ICI's or Crane's totals, but it's unclear by how much.)
The Institute's MMF Assets update explains, "ICI reports money market fund assets to the Federal Reserve each week. Data for previous weeks reflect revisions due to data adjustments, reclassifications, and changes in the number of funds reporting. Weekly money market assets for the last 20 weeks are available on the ICI website."
A second footnote says, "ICI classifies funds and share classes as institutional or retail based on language in the fund prospectus. Retail funds are sold primarily to the general public and include funds sold predominantly to employer-sponsored retirement plans and variable annuities. Institutional funds are sold primarily to institutional investors or institutional accounts purchased by or through an institution such as an employer, trustee, or fiduciary on behalf of its clients, employees, or owners. For a detailed description of ICI classifications, please see ICI New Open-End Investment Objective Definitions."
ICI's new fund classification system replaces the term "Non-Government" with the more commonly used "Prime", and it replaces "Government" with "Treasury" (that includes Treasury & Repo and Treasury & Agency). They also shifted some retirement assets into Retail from Institutional. ICI's recent re-categorization defines the various sectors as: Taxable Money Market funds seek to maintain a stable net asset value by investing in short-term, high-grade securities sold in the money market. The average maturity of their portfolios is limited to 60 days or less. Treasury & Repo Money Market funds invest in securities issued by the U.S. Treasury, including repurchase agreements collateralized fully by U.S. Treasury securities. Treasury & Agency Money Market funds invest in securities issued or guaranteed by the U.S. government or its agencies and repurchase agreements for those securities. Prime Money Market funds invest in a variety of money market instruments, including certificates of deposit of large banks, commercial paper and banker's acceptances."
Finally, they write, "Tax-Exempt Money Market funds seek income that is not taxed by the federal government, and in some cases state and municipalities, by investing in municipal securities with relatively short maturities. The average maturity of their portfolios is limited to 60 days or less. National Tax-Exempt Money Market funds seek income that is not taxed by the federal government by investing in municipal securities with relatively short maturities. State Tax-Exempt Money Market funds predominantly invest in short-term municipal bonds of a single state, which are exempt from federal income tax as well as state taxes for residents of that state included in the fund issue."
