Money fund assets increased for the third straight week, climbing $15.1 billion and pushing asset totals to $2.778 trillion, their highest total since January 2011. The Investment Company Institute's weekly statistics show that for the first time ever, Government money funds now have more assets than Prime funds. Government MMF assets stand at $1.270 trillion, while Prime assets are at $1.265 trillion, according to ICI data. We review ICI's latest "Money Market Fund Assets" report, and their latest monthly "Trends in Mutual Fund Investing," which shows a $19 billion decline in January, below. We also discuss ICI's "Month-End Portfolio Holdings of Taxable Money Funds," which confirms that holdings of Repo plummeted in January, while CDs (including Time Deposits) skyrocketed. Commercial Paper and Agencies also gained. (See our Feb. 10 News, "Latest MF Portfolio Holdings Show Fed Repo Plunge; TDs, CDs, CP Jump.")

ICI's latest weekly asset update says, "Total money market fund assets increased by $15.05 billion to $2.78 trillion for the week ended Wednesday, February 24, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $17.30 billion and prime funds increased by $140 million. Tax-exempt money market funds decreased by $2.39 billion."

As mentioned, Government assets, including Institutional and Retail (and Treasury and Government), stand at $1.270 trillion, slightly ahead of Prime assets, which are at $1.265 trillion, for the first time ever. This was eventually likely inevitable, given the restrictions placed on Prime funds by the SEC. Since November, over $172 billion has converted from funds (and $92 billion more is scheduled to switch in the next several months. Later this year, investors are expected to move hundreds of billions more to Government funds -- most estimates range from $200 billion to $400 billion.

The weekly release explains, "Assets of retail money market funds decreased by $2.64 billion to $1.02 trillion. Among retail funds, government money market fund assets increased by $1.20 billion to $375.97 billion, prime money market fund assets decreased by $2.12 billion to $463.77 billion, and tax-exempt fund assets decreased by $1.72 billion to $177.21 billion. Assets of institutional money market funds increased by $17.69 billion to $1.76 trillion."

ICI continues, "Among institutional funds, government money market fund assets increased by $16.10 billion to $894.36 billion, prime money market fund assets increased by $2.26 billion to $801.25 billion, and tax-exempt fund assets decreased by $670 million to $65.26 billion." Year-to-date through Feb. 24, MMF assets are up $19 billion. For the month of February, assets are up about $26 billion, and note that February is typically a down month. In six of the last 7 years, MMF assets have declined in February, averaging a drop of about $22 billion in February.

A Footnote to ICI's release adds, "In anticipation of the Securities and Exchange Commission's (SEC) new money market fund regulations, many advisers are changing their prime money market funds into government money market funds. As a result, there have been, and will continue to be, large shifts in assets from prime funds to government funds before the October 2016 deadline." (There were no noticeable shifts in ICI's series in the latest week, but note that Crane Data reclassified a number of funds in its `MFI Daily earlier this week.)

ICI's "Trends in Mutual Fund Investing: January 2016" confirmed a decrease in MMF assets in January. It shows MMFs down $19.0 billion, or 0.7%, to $2.736 trillion last month. Assets had increased in 7 of the last 8 months of 2015, but they've slowed in the new year, as is typically the trend. MMFs increased $35.3 billion in December, $4.8 billion in November, and $45.2 billion in October.

The release says, "The combined assets of the nation's mutual funds decreased by $571.38 billion, or 3.7 percent, to $15.08 trillion in January, according to the Investment Company Institute's official survey of the mutual fund industry.... Bond funds had an outflow of $5.15 billion in January, compared with an outflow of $27.21 billion in December.... Money market funds had an outflow of $20.45 billion in January, compared with an inflow of $35.39 billion in December. In January funds offered primarily to institutions had an outflow of $21.55 billion and funds offered primarily to individuals had an inflow of $1.10 billion." Money funds now represent 18.1% of all mutual fund assets, while bond funds represent 22.7%. The total number of money market funds increased to 483 in January, from 482 the previous month.

ICI's latest "Month-End Portfolio Holdings of Taxable Money Fund" summary shows that Repo plummeted and Treasuries fell in January, while CD holdings skyrocketed and CP and Agencies gained. CDs (including Eurodollar CDs) leapt from fourth to first, displacing Repurchase agreements as the largest portfolio segment. CDs increased $122.7 billion, or 27.0%, in January to $576.4 billion, representing 23.2% of taxable MMF holdings. (ICI's CD totals likely include Time Deposits, which Crane Data and the SEC categorize as "Other" -- we reported a large decrease in Other/TDs in December.)

Repurchase agreements dropped to second, decreasing $160.7 billion, or 23.0%, in January to $538.6 billion. Treasury Bills & Securities dropped to third place among composition segments, falling $7.2 billion, 1.5%, in January to $475.7 billion (19.1% of assets). U.S. Government Agency Securities increased by $4.2 billion, or 0.9%, to $471.6 billion (18.9% of assets), but fell to fourth among portfolio segments. Commercial Paper remained fifth, increasing $12.0B, or 4.0%, to $310.8 billion (12.5% of assets). Notes (including Corporate and Bank) jumped by $12.2 billion, or 18.9%, to $76.6 billion (3.1% of assets), and Other holdings (including Cash Reserves) gained $5.8 billion to $39.0 billion.

The Number of Accounts Outstanding in ICI's series for taxable money funds decreased by 640.7 thousand to 22.754 million, while the Number of Funds increased by 3 to 339. Over the past 12 months, the number of accounts fell by 574.7 thousand and the number of funds declined by 24. The Average Maturity of Portfolios increased by 2 days to 37 days in January. Over the past 12 months, WAMs of Taxable money funds have declined by 7 days. Note: Crane Data updated its February MFI XLS last week to reflect 1/31/16 Portfolio Composition and Maturity Breakout data for our entire fund universe. (Visit our Content Center and the latest Money Fund Portfolio Holdings download page to access our February Money Fund Portfolio Holdings and the latest files.)

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