The total amount of money that's moved out of Prime and Tax Exempt MMFs combined approached $1.0 trillion (-$988B) this week, as the "Big Shift" of assets into Government money funds accelerated ahead of the mid-October money fund reform deadline. ICI's latest "Money Market Fund Assets" report shows MMFs overall increasing $10.5 billion in the latest week, but Prime funds fell by over $85 billion (after falling by $60 billion a week the prior 2 weeks). Prime has declined in 17 out of the past 18 weeks (-$579B), and has averaged outflows of $33 billion a week since June 1 and $59 billion since Sept. 1.

Since Oct. 29, 2015, Prime assets have fallen by a massive $875 billion, or 60%, and Tax Exempt funds have declined by another $113 billion, or 46%. Combined these two non-Government sectors (which will be subject to emergency gates and fees come October 14) have fallen by $988 billion (58%) since this giant migration started. We expect the total amount shifted to break above $1.0 trillion within the next few days. We look at these latest asset totals, and we also review ICI's latest monthly "Trends" data below.

Government funds (including Treasury funds) gained $102 billion in the past week. They've increased by $952 billion since last October (up 94%) and by $745 billion, or 61%, YTD. (YTD in 2016, Prime MMFs are down by $700 billion, or 55%.) Over the past 6 weeks, Prime MMFs have fallen by $320 billion and they've fallen by $464 billion over the past 13 weeks. Govt MMFs have risen $321 billion over 6 weeks and $488 billion over 13 weeks.

ICI's latest release says, "Total money market fund assets increased by $10.51 billion to $2.68 trillion for the week ended Wednesday, September 28, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $102.07 billion and prime funds decreased by $85.65 billion. Tax-exempt money market funds decreased by $5.92 billion."

It continues, "Assets of retail money market funds decreased by $6.14 billion to $924.82 billion. Among retail funds, government money market fund assets increased by $10.96 billion to $538.02 billion, prime money market fund assets decreased by $13.44 billion to $279.39 billion, and tax-exempt fund assets decreased by $3.66 billion to $107.41 billion."

The update adds, "Assets of institutional money market funds increased by $16.65 billion to $1.76 trillion. Among institutional funds, government money market fund assets increased by $91.11 billion to $1.43 trillion, prime money market fund assets decreased by $72.20 billion to $304.04 billion, and tax-exempt fund assets decreased by $2.25 billion to $24.16 billion." Government assets, including Institutional and Retail (and Treasury and Government) stand at $1.965 trillion, while Prime assets fell below $600 billon and are now at $583 billion.

ICI explains, "Since January 2015, prime and tax-exempt money market funds have seen a decrease in assets of $1.00 trillion, in response to the Securities and Exchange Commission's 2014 money market fund reforms, which must be implemented by October 14. During the same period, government money market funds have seen an increase in assets of $974.77 billion, and total money market fund assets have remained consistently close to $2.7 trillion."

Chief Economist Brian Reid comments, "Retail and institutional investors, intermediaries, and funds have reacted to the requirement for floating net asset values and the prospect of liquidity fees and redemption gates by significantly reducing assets held in prime and tax-exempt money market funds. Extensive preparation by money market fund sponsors has helped funds, investors, and markets manage those flows and make a smooth transition so far to the new rules."

ICI's latest "Trends in Mutual Fund Investing" and "Month-End Portfolio Holdings of Taxable Money Funds," which confirmed earlier reports of jumps in Treasury, Agency and Repo holdings. (See our Sept. 13 News, "Sept. Portfolio Holdings: CDs, CP Plunge in Aug., Repo, T-Bills Jump.") The report shows an $18 billion increase in money market fund assets in August to $2.723 trillion. The increase follows an increase of $14 billion in July, and declines of $8 billion in June and $12 billion in May. In the 12 months through August 31, money fund assets have gone up by $51 billion, or 1.9%. (Month-to-date in Sept. through 9/28, our Money Fund Intelligence Daily shows total assets down by $36 billion with Prime MMFs down $224 billion, Tax Exempt MMFs down $21 billion, and Govt MMFs up $210 billion.)

The monthly report states, "The combined assets of the nation’s mutual funds increased by $55.80 billion, or 0.3 percent, to $16.36 trillion in August, according to the Investment Company Institute’s official survey of the mutual fund industry. In the survey, mutual fund companies report actual assets, sales, and redemptions to ICI.... Bond funds had an inflow of $23.08 billion in August, compared with an inflow of $24.48 billion in July.... Money market funds had an inflow of $17.63 billion in August, compared with an inflow of $14.08 billion in July. In August funds offered primarily to institutions had an inflow of $40.56 billion and funds offered primarily to individuals had an outflow of $22.94 billion."

The latest "Trends" shows that while Taxable MMFs overall increased again in August, Tax-Exempt MMFs continued to bleed assets. Tax-Exempt MMFs declined by $31 billion, compared to taxable, which increased by $49 billion. Year-to-date through August 31, MMFs have had $30 billion in outflows, with $70 billion in inflows to Taxable funds and $100 billion in outflows from Tax-Exempt funds. Money funds now represent 16.7% (up from 16.6%) of all mutual fund assets, while bond funds represent 22.7%. The total number of money market funds dropped to 426 in August, down from 432 in July and down from 506 a year ago.

ICI's Portfolio Holdings confirms a jump in Treasuries, Repo and Agencies in August, and continued declines in CDs and CP. Repo remained the largest portfolio segment, rising by $97 billion, or 15%, to $730 billion or 28% of holdings. Treasury Bills & Securities jumped into second place among composition segments, rising $76 billion, or 14%, to $616 billion, or 24% of holdings. U.S. Government Agency Securities dropped to third place, gaining $22 billion, or 4%, to $607 billion or 24% of holdings. These moves continue to be driven by the ongoing shifts of Prime fund assets into Government funds.

Certificates of Deposit (CDs) stood in fourth place, but decreased $51 billion, or 11%, to $396 billion (15% of assets). Commercial Paper remained in fifth place but decreased $59B, or 24%, to $184 billion (7% of assets). Notes (including Corporate and Bank) were down by $1 billion, or 8%, to $16 billion (0.6% of assets), and Other holdings (including Cash Reserves) jumped to $45 billion, up from $35 billion.

The Number of Accounts Outstanding in ICI's series for taxable money funds increased by 147 thousand to 23.914 million, while the Number of Funds fell by 5 to 315. Over the past 12 months, the number of accounts rose by 621 thousand and the number of funds declined by 37. The Average Maturity of Portfolios was 35 days in August, up 1 day from July. Over the past 12 months, WAMs of Taxable money funds have declined by 1 day. Note: Crane Data also revised its Sept. MFI XLS this week to reflect the latest 8/31/16 Portfolio Composition data and Maturity breakouts. (Visit our Content Center and the latest Money Fund Portfolio Holdings download page to access our Sept. Money Fund Portfolio Holdings and the latest files.)

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