The Federal Reserve updated its "Money Market Funds: Investment Holdings Detail," a recent addition to its "Financial Accounts Guide" portion of the Fed's Z.1 (formerly Flow of Funds) data series. The Fed writes, "These tables provide additional detail on the investment holdings of U.S. money market funds, based on a monthly dataset of security-level holdings for all U.S. money market funds. Table 1 reports the aggregate dollar amount of investments of U.S. money market funds since 2010, by the world region and country of the security issuer.... U.S. investments are subcategorized into Treasury securities, agency and GSE securities, Federal Reserve reverse repurchase agreements, municipal securities, and other U.S. investments."
They continue, "Table 2 provides a finer level of detail by month, showing, for each country of issuer, the aggregate dollar amount of investments of U.S. money market funds by type of money fund (i.e., prime, government, and municipal bond funds), type of security (i.e., direct debt and deposits, repurchase agreement, asset-backed commercial paper, and other), and by maturity of the security. The first figure depicts the asset allocation of U.S. money market fund portfolios over time. Figures 2, 3, and 4 show the asset allocation of prime, government, and tax-exempt money market funds, respectively, over time.... Figures 5 and 6 report additional detail on the repurchase agreement holdings and the commercial paper holdings, respectively, for U.S. money market funds."
Tables now provided by the Fed include: Table 1. U.S. Money Market Fund Investment Holdings by Country of Issuance, Table 2. U.S. Money Market Fund Investment Holdings by Country of Issuance, Fund Type, Instrument, and Maturity.
They also include the following Charts: Figure 1. Total Money Market Fund Investment Holdings by Instrument, Figure 2. Prime Money Market Fund Investment Holdings by Instrument, Figure 3. Government Money Market Fund Investment Holdings by Instrument, Figure 4. Tax-exempt Money Market Fund Investment Holdings by Instrument:, Figure 5. Money Market Fund Repo Holdings, and, Figure 6. Money Market Fund Commercial Paper (CP) Holdings.
The Fed explains in its "Documentation," "The data on money market fund investments are taken from the SEC form N-MFP filings. The reported values are the sums of the investments of all U.S. money market funds for the respective category. The country labels represent the country of domicile of the security issuer. The data are available at a monthly frequency beginning in December 2010. Total assets reported differ slightly from the number reported in Table L.121 of the Financial Accounts of the United States. The main difference is due to the fact that the data presented on this page include money market funds that are not marketed to the public, which are excluded from Table L.121."
In other news, a new study on the $4.9 trillion in 401(k) plans, entitled, "The BrightScope/ICI Defined Contribution Plan Profile: A Close Look at 401(k) Plans, 2014," analyzes "the most recent detailed data available from the Department of Labor on a wide range of private-sector 401(k) plans." It says, "Mutual funds were the most common 401(k) investment vehicle, holding 46 percent of 401(k) plan assets in the sample in 2014.... Equity funds accounted for the largest share of assets in 401(k) plans. In 2014, 44 percent of assets were held in equity funds, 21 percent was held in balanced funds (with most of that being held in target date funds), and 8 percent was held in bond funds. GICs and money funds accounted for 11 percent of assets."
They wrote, "[D]omestic equity funds, international equity funds, and domestic bond funds were the most likely investment options to be offered in 401(k) plans in 2014. Nearly all plans offered these types of funds.... About half of 401(k) plans offered money funds and seven in 10 offered guaranteed investment contracts (GICs).... More than 30 percent of 401(k) plans had international bond funds in their investment lineups.... However, larger plans were more likely to offer other investments (which include company stock) and money funds."
The table, "Average Number of Investment Options in 401(k) Plans by Type of Investment" shows domestic bond funds averaging 3.7 choices in all of the plans, international bond funds 0.4, money funds averaging 0.6, and guaranteed investment contracts 0.8. Another table that shows the "percentage of total assets among plans with audited 401k filings" estimates that domestic bond fund had 7.5% of assets, international bond funds 0.3%, money funds 2.1%, and guaranteed investment contracts 8.9%. Thus, money funds represent approximately $102.9 billion of 401(k) plan assets, bond funds would be $382.2 billion and GICs about $436.1 billion. Lastly, a table on "Average Expense Ratios of Mutual Funds in 401(k) Plans, 2014" shows that domestic bond funds averaged 0.39% in expenses, international bond funds averaged 0.71%, and money market mutual funds averages 0.14%.
Also, a press release entitled, "Weitz Funds Reduces Expenses and Repositions Fixed Income Offerings," tells us, "Weitz Investment Management, Inc. (weitzinvestments.com), advisor to the Weitz Funds, has reduced expenses for its suite of fixed income Funds, including the Short Duration Income Fund, Core Plus Income Fund and Ultra Short Government Fund.... `The fee caps for the Short Duration Income Fund (formerly the Short-Intermediate Income Fund) have been reduced for the Institutional Class (WEFIX) from 0.62% to 0.48% and the Investor Class (WSHNX) from 0.85% to 0.68%."
The release adds, "Weitz also converted its Government Money Market Fund to the Ultra Short Government Fund (SAFEX) in an effort to better align fixed income offerings, provide more clarity and streamline fixed income solutions for its investors. The Fund will no longer operate as a 'money market fund' under Rule 2a-7 of the Investment Company Act of 1940."
Weitz Investment Management President Ken Stoll tells us, "Regulations and requirements for money market funds have become progressively more onerous. We evaluated various options and believe the best solution for our shareholders was to convert our money market fund to the Ultra Short Government Fund, retaining the investment objective of current income consistent with the preservation of capital and maintenance of liquidity."
Finally, in other news, a statement entitled, "New York Fed updates reverse repo counterparties list says, "Northern Funds - U.S. Government Money Market Fund has been added to the list of reverse repo counterparties, effective December 27, 2016."
