MMF Assets Plunge on Tax Date
Money fund assets dropped sharply in the latest week, likely due to quarterly corporate tax payments on March 15; they dropped back below the $2.8 trillion level in the week ended March 16. It was the 2nd straight week of asset declines. The Investment Company Institute's weekly "Money Market Fund Assets statistics also show that Government fund totals climbed back ahead of Prime MMF assets. (Three weeks ago, Government MMF assets surpassed Prime last week for the first time ever.) The report says, "Total money market fund assets decreased by $39.99 billion to $2.76 trillion for the week ended Wednesday, March 16, the Investment Company Institute reported today. Among taxable money market funds, government funds decreased by $14.79 billion and prime funds decreased by $23.31 billion. Tax-exempt money market funds decreased by $1.89 billion." Government assets, including Institutional and Retail (and Treasury and Government), stand at $1.268 trillion, while Prime assets are at $1.258 trillion. Since November, over $191 billion has converted from Prime MMFs to Govt, and another $82 billion is scheduled to switch over the next several months. (Later this year, many expect investors to shift as much as hundreds of billions more in assets from Prime to Government funds as the October 14 deadline for the SEC's floating NAV, and emergency gates and fees, reforms approach. ICI's weekly release explains, "Assets of retail money market funds decreased by $7.38 billion to $1.00 trillion. Among retail funds, government money market fund assets decreased by $1.07 billion to $378.15 billion, prime money market fund assets decreased by $5.68 billion to $451.39 billion, and tax-exempt fund assets decreased by $630 million to $173.54 billion." It adds, "Assets of institutional money market funds decreased by $32.60 billion to $1.76 trillion. Among institutional funds, government money market fund assets decreased by $13.72 billion to $889.96 billion, prime money market fund assets decreased by $17.62 billion to $806.30 billion, and tax-exempt fund assets decreased by $1.26 billion to $63.30 billion." Year-to-date through March 16, MMF assets are up $4 billion and month-to-date assets are up $11 billion. 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."
