The Federal Reserve released its latest quarterly "Z.1 Financial Accounts of the United States" statistical survey (formerly the "Flow of Funds") late last week. Among the 4 tables it includes on money market mutual funds, the Third Quarter, 2016 edition shows that the Household Sector remains the largest investor segment, though assets here declined again, falling further below the $1.0 trillion level. Nonfinancial Corporate Businesses and Funding Corporations (which is primarily Securities Lending money) remained the second and third largest segments. State & Local Governments, Nonfinancial Noncorporate Business and Private Pension Funds showed (very small) gains in the latest quarter, while the Household Sector and Funding Corporations showed declines. Nonfinancial Corporate Businesses, Funding Corporations, State & Local Governments, and Nonfinancial Noncorporate Businesses showed the biggest increases over the past 12 months. We review the latest Fed Z.1 numbers, and we also review a number of recent minor fund changes and lineup tweaks, below.
The Fed's "Table L.206," "Money Market Mutual Fund Shares," shows total assets declining by $31 billion, or 1.1%, in the second quarter to $2.672 trillion. Over the year through September 31, 2016, assets are up $4 billion, or 0.2%. The largest segment, the Household sector, totals $973 billion, or 36.4% of assets. The Household Sector decreased by $14 billion, or -1.4%, in the quarter, after decreasing $50 billion in the 1st quarter, and $32 billion in Q1'16. Over the past 12 months through Sept. 30, Household assets are down $34 billion, or -3.4%. Household assets remain well below their record level of $1.581 trillion (from year-end 2008).
Nonfinancial Corporate Businesses were the second largest investor segment, according to the Fed's data series, with $575 billion, or 21.5% of the total. Business assets in money funds decreased $2.0 billion in the quarter, or -0.3%, and have risen by $16 billion over the past year, or 2.9%. Funding Corporations remained the third largest investor segment with $457 billion, or 17.1% of money fund shares. They decreased by $7 billion in the latest quarter and increased $13 billion over the previous 12 months.
The fourth largest segment, State and Local Governments held 6.8% of money fund assets ($182 billion) -- up $2 billion, or 1.3%, for the quarter, and up $8 billion, or 4.7%, for the year. Private Pension Funds, which held $154 billion (5.8%), remained in 5th place. Rest Of The World category was the sixth largest segment in market share among investor segments with 4.2%, or $111 billion, while Nonfin Noncorp Business held $96 billion (3.6%), Life Insurance Companies held $54 billion (2.0%), State and Local Government Retirement Funds held $51 billion (1.9%), and Property-Casualty Insurance held $20 billion (0.7%), according to the Fed's Z.1 breakout.
The Fed's "Flow of Funds" Table L.121 shows "Money Market Mutual Funds" largely invested in "Debt Securities," or Credit Market Instruments, with $1.559 trillion, or 58.3%. Debt securities includes: Open market paper ($113 billion, or 4.2%; we assume this is CP), Treasury securities ($635 billion, or 23.8%), Agency and GSE backed securities ($643 billion, or 24.1%), Municipal securities ($157 billion, or 5.9%), and Corporate and foreign bonds ($11 billion, or 0.4%).
Other large holdings positions in the Fed's series include Security repurchase agreements ($856 billion, or 32.0%) and Time and savings deposits ($193 billion, or 7.2%). Money funds also hold minor positions in Foreign deposits ($4 billion, or 0.2%), Miscellaneous assets ($10 billion, or 0.4%), and Checkable deposits and currency ($49 billion, 1.8%). Note: The Fed also recently added a new breakout line to this table which lists "Variable Annuity Money Funds;" they currently total $35 billion, down $1.1 billion in the quarter.
During Q3, Security Repurchase Agreements (up $214 billion), Treasury Securities (up $117 billion), Agency- and GSE-Backed Securities (up $77 billion), and Checkable Deposits and Currency (up $36 billion) showed increases. Time and Savings Deposits (down $233 billion), Open Market Paper (down $159 billion), and Municipal Securities (down $57 billion) all showed large declines.
In other news, Northern Trust said in a filing, "The GFS Shares class ("GFS Shares") of the Prime Obligations Portfolio (the "Portfolio") was terminated on November 17, 2016. All disclosure information relating to the GFS Shares of the Portfolio in each Prospectus and SAI is hereby deleted in its entirety." The manager also liquidated its Northern Institutional Tax-Exempt Portfolio two months ago.
Also, a statement entitled, "First American Institutional Prime Obligations Fund Announces Share Class Conversions," explains, "Effective October 25, 2016, Class A and Class D shares of First American Institutional Prime Obligations Fund (the "Fund") are closed to new investors in preparation for share class conversions. Current Class A and Class D investors in the Fund can continue to transact normally. On December 8, 2016, any holdings of Class A and Class D shares of the Fund will automatically convert to Class Y shares. No action is required by shareholders of Classes A and D. The Fund's Class A, D and Y shares have identical provisions, rights and privileges, except that Class Y shares' total annual fund operating expenses are lower than Classes A and D shares. The share class conversions are being done to streamline the Fund's offerings."
Western Asset Management liquidated its "S" shares recently. Western Institutional Cash Reserves' filing says, "Please note that effective November 9, 2016, the Fund will no longer offer Class S shares. Effective as of that date, the share class will be closed to all incoming purchases and exchanges."
Finally, BlackRock liquidated its "offshore" Cayman Islands-domiciled International Dollar Reserve Fund due to "changes in the U.S. tax code," according to a client letter. This fund was removed from our Money Fund Intelligence International this week. (For more recent changes, see the "Changes" tab on our Money Fund Intelligence XLS.)
