Prime and Muni MMFs Fall Hard Again
Money fund assets increased for the third week in a row the latest week to their highest level since March 30, but Prime and Tax Exempt MMF assets continued their steep slide. Prime assets fell below $1 trillion for the first time in almost 20 years 2 weeks ago and total declines since late 2015 are now above $500 billion. Government MMF assets again took in more than the Prime and Muni declines. Gains here were likely driven by the conversion of a major chunk of Morgan Stanley sweep assets -- Morgan Stanley Govt Sec Inst took in over $21 billion on the week according to our Money Fund Intelligence Daily, while MS's prime and municipal Active Assets, and Liquid Assets funds saw big declines. (Watch for more on this Monday.) ICI's weekly "Money Market Fund Assets" report shows all MMFs increasing $6.0 billion in the latest week. Prime funds fell $22.8 billion -- their 12th decline out of the past 13 weeks (-$236.3B). (Govt funds continue to be the recipient of these assets.) Since Oct. 29, 2015, just prior to Fidelity Cash Reserves' huge conversion, Prime assets have fallen by a massive $514.0 billion, or 35.2%. Govt MMFs have increased by $613.8 billion during this same time while Tax Exempt MMFs have fallen by $72.0 billion. YTD in 2016, Prime MMFs are down by $339.4 billion, or 26.4% while Govt MMFs are up by $406.5 billion, or 33.3%. The shift was initially fueled by the conversion of over $300 billion of Prime funds into Govt funds, but since June appears to be driven by investors and investor segments shifting from Prime funds into Govt MMFs. ICI's latest weekly says, "Total money market fund assets increased by $6.04 billion to $2.74 trillion for the week ended Wednesday, August 10, the Investment Company Institute reported today. Among taxable money market funds, government funds2 increased by $40.40 billion and prime funds decreased by $22.76 billion. Tax-exempt money market funds decreased by $11.61 billion." Government assets, including Institutional and Retail (and Treasury and Government), which broke above the $1.5 trillion level for the first time ever 3 weeks ago, stand at $1.627 trillion, while Prime assets, which dipped below the $1.0 trillion level for the first time in 17 years 3 weeks ago, are at $944.4 billion. The release explains, "Assets of retail money market funds decreased by $12.31 billion to $946.09 billion. Among retail funds, government money market fund assets increased by $4.81 billion to $481.35 billion, prime money market fund assets decreased by $8.86 billion to $332.61 billion, and tax-exempt fund assets decreased by $8.26 billion to $132.13 billion.... Assets of institutional money market funds increased by $18.34 billion to $1.80 trillion. Among institutional funds, government money market fund assets increased by $35.58 billion to $1.15 trillion, prime money market fund assets decreased by $13.90 billion to $611.80 billion, and tax-exempt fund assets decreased by $3.34 billion to $40.87 billion."
