Money market mutual fund assets jumped in July for the third month in a row, recording their strongest summer period in a decade, while funds continue to shorten their WAMs, or weighted average maturities in preparation for a rate hike by the Federal Reserve. Below, we review out preliminary July numbers and ICI's latest "Trends in Mutual Fund Investing" for June, which shows that total money fund assets increased by $12.9 billion, or 0.5%, to $2.616 trillion last month. June was the second straight month that assets increased, and the first time MMF assets have gone up in June in almost 10 years. Money market funds jumped $38.0 billion in May after declining $80.0 billion in April, $32.9 billion in March, and $13.9 billion in February.
July appears to be another winning month, according to ICI's latest weekly "Money Market Fund Assets" report and according to Crane Data's Money Fund Intelligence Daily. The weekly asset series shows that MMF assets are up about $33 billion for the month through July 29, while our MFI Daily shows assets up by $43.0 billion through July 30. For the year through July 29, MMF assets are down $85 billion or 3.1%, according to ICI data. We also review ICI's latest "Month-End Portfolio Holdings of Taxable Money Funds" below, which verified our previously reported increase in Fed Repo and drop TDs in June. (See Crane Data's July 13 News, "July MMF Portfolio Holdings Show Jump in Fed Repo, Drop in TDs, VRDNs.")
The Trends report says, "The combined assets of the nation's mutual funds decreased by $179.79 billion, or 1.1 percent, to $16.12 trillion in June, according to the Investment Company Institute's official survey of the mutual fund industry.... Bond funds had an inflow of $8.26 billion in June, compared with an inflow of $5.47 billion in May.... Money market funds had an inflow of $12.67 billion in June, compared with an inflow of $36.16 billion in May. In June funds offered primarily to institutions had an inflow of $9.25 billion and funds offered primarily to individuals had an inflow of $3.43 billion." Money funds represent 16.2% of all mutual fund assets, while bond funds represent 21.8%.
As previously mentioned, the June asset gain is significant in that June is typically one of the worst months of the year for money funds. Assets have decreased each June going back to 2008 by an average of $41 billion. July has also been stronger than usual this year, up about $40 billion (our official monthly numbers will be out Friday with our MFI XLS). Last year, assets dipped $19 billion in July, but over the last 6 years they have averaged a decrease of $20 billion. We believe that some of these inflows are clearly coming from bank deposits, especially from JP Morgan, which reportedly shed $100 billion in bank deposits in the second quarter.
ICI's latest Portfolio Holdings summary shows that Holdings of Repo holdings increased $122.4 billion, or 23.4%, in June to $644.9 billion, jumping ahead of CDs as the largest portfolio segment, representing 27.2% of taxable MMF holdings. CDs (including Eurodollar CDs), the second largest segment, decreased by $97.8B, or 15.4%, in June to $536.6B. (ICI's CD total likely includes Time Deposits, which we, and the SEC, categorize as "Other" -- we reported a sizable drop in Other in June.) CDs make up 22.6% of holdings.
Treasury Bills & Securities remained in third place increasing by $5.5 billion, or 1.4%, in June to $404.1 billion (17.0$ of assets). Commercial Paper stayed in fourth, dropping $18.3B, or 5.1%, to $341.7 billion (14.4% of assets). U.S. Government Agency Securities was fifth after increasing $20.2 billion, or 6.3%, to $339.0 billion (14.3% of assets). Notes (including Corporate and Bank) dropped by $1.7 billion, or 2.5%, to $68.3 billion (2.9% of assets), and Other holdings (including Cash Reserves) stood at $39.5 billion.
The Number of Accounts Outstanding in ICI's series for taxable money funds decreased by 8.8 thousand to 23.357 million, while the Number of Funds fell 3 to 357. Over the past 12 months, the number of accounts fell by 355.7 thousand and the number of funds declined by 18.
The Average Maturity of Portfolios declined by one day to 38 days in June. Over the past 12 months, WAMs of Taxable money funds have declined by 6 days. At 38 days, WAM's are at the lowest level since June 2010, according to our analysis of ICI's data. In July, WAM's appear to continue to trend lower as managers prepare for interest rate hikes, possibly as soon as September. On July 30 the WAM for Crane's Money Fund Average was 34 days, according to our Money Fund Intelligence Daily, down from 36 on June 30.
Note: Crane Data has updated its July MFI XLS to reflect the 6/30/15 composition data and maturity breakouts for our entire fund universe. Note too that we are now producing a "Holdings Reports Issuer Module," which allows subscribers to choose a series of Portfolio Holdings and Issuers and to see a full listing of which money funds own what paper. (Visit our Content Center and the latest Money Fund Portfolio Holdings download page to access our March Money Fund Portfolio Holdings and the latest version of this new file.)
