ICI released its latest monthly "Trends in Mutual Fund Investing" and "Month-End Portfolio Holdings of Taxable Money Funds" updates yesterday. The first report showed that `money fund assets declined in January, and MMFs assets were down slightly over the 12 months through 1/31/17. ICI's second report confirmed that Treasury and Repo holdings plunged while Agencies and CDs jumped last month. (See our Feb. 10 News, "Feb. Money Fund Portfolio Holdings Show Repo Drop, Credit Rebound.") We review these latest reports, as well as a couple recent fund filings, below.
ICI's latest "Trends in Mutual Fund Investing - January 2017" shows a $46.6 billion decrease in money market fund assets in January to $2.682 trillion. The increase follows an increase of $6.5 billion in December and $55.3 billion in November, but a decrease of $12.1 billion in Oct. and $51.1 billion in Sept. In the 12 months through Jan. 31, money fund assets were down $54.4 billion, or 2.0%. (Month-to-date in February through 2/24/17, our Money Fund Intelligence Daily shows total assets up by $9.4 billion. `Govt MMFs are up $1.6 billion, while Prime MMFs are up $8.8 billion and Tax Exempt MMFs are down $881 million.)
The monthly report states, "The combined assets of the nation's mutual funds increased by $237.72 billion, or 1.5 percent, to $16.58 trillion in January, 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 $21.55 billion in January, compared with an outflow of $10.19 billion in December.... Money market funds had an outflow of $48.08 billion in January, compared with an inflow of $5.85 billion in December. In January funds offered primarily to institutions had an outflow of $38.47 billion and funds offered primarily to individuals had an outflow of $9.61 billion <b:>`_."
The latest "Trends" shows that Taxable MMFs fell sharply while Tax-Exempt MMFs increased slightly in January 2017. Taxable MMFs decreased by $46.8 billion, after rising $6.3 billion in Dec. and $53.4 billion in Nov., and dropping $11.7 billion the prior month. Tax-Exempt MMFs added $0.1 billion in Jan., after rising $0.3 billion in Dec. and $1.9 billion in Nov., after falling $0.4 billion in October.
Over 12 months through 1/31/17, MMFs showed $48.1 billion in outflows, with $48.2 billion flowing out of Taxable funds and $172 million flowing into Tax-Exempt funds. Money funds now represent 16.2% (down from 16.7% last month) of all mutual fund assets, while bond funds represent 22.3%. The total number of money market funds was down 1 to 420 in January, and down from 483 a year ago. (Tax exempt money funds have declined from 144 to 101 over the last year.)
ICI's Portfolio Holdings confirms a huge drop in Treasuries and Repo in January. Repo fell sharply but remained the largest portfolio segment, down by $35.6 billion, or 4.4%, to $764.6 billion or 30.0% of holdings. Repo increased by $227.1 billion over the past 12 months, or 42.3%. Treasury Bills & Securities remained in second place among composition segments, declining $36.1 billion, or -4.5%, to $760.0 billion, or 29.8% of holdings. Treasury holdings rose by $283.8 billion, or 59.6%, over the past year. U.S. Government Agency Securities remained in third place, rising $34.7 billion, or 5.1%, to $712.5 billion or 27.9% of holdings. Govt Agency holdings rose by $240.6 billion, or 51.0%, over the past 12 months.
Certificates of Deposit (CDs) stood in fourth place; they increased $26.7 billion, or 18.1%, to $174.5 billion (6.8% of assets). CDs held by money funds fell by $402.4 billion, or 69.7%, over 12 months. Commercial Paper remained in fifth place but increased $8.2B, or 7.9%, to $112.0 billion (4.4% of assets). CP plummeted by $199.1 billion, or 64.0%, over one year. Notes (including Corporate and Bank) were up by $537 million, or 8.7%, to $6.7 billion (0.3% of assets), and Other holdings inched down to $20.8 billion.
The Number of Accounts Outstanding in ICI's series for taxable money funds decreased by 11.5 thousand to 25.317 million, while the Number of Funds was flat at 319. Over the past 12 months, the number of accounts rose by 2.563 million and the number of funds declined by 20. The Average Maturity of Portfolios was 42 days in Jan., down 2 days from Dec. Over the past 12 months, WAMs of Taxable money funds have lengthened by 5 days.
In other news, a filing for Vanguard Ohio Tax-Exempt Money Market Fund says about the "Liquidation of Vanguard Ohio Tax-Exempt Money Market Fund," "On November 17, 2016, the board of trustees for Vanguard Ohio Tax-Exempt Money Market Fund (the Fund) approved a proposal to liquidate the Fund. Effective as of the close of business on February 15, 2017, the liquidation of the Fund is complete. In connection with the liquidation, shareholders may receive proceeds that are taxable. For most accounts, annual tax forms to assist you in preparing your income tax returns are distributed for each calendar year early in the following year. Please consult your tax advisor for detailed information about any tax consequences for you."
Another filing for the recently liquidated Trust for Credit Unions tells us, "At an in-person meeting held on February 10, 2017, the Board of Trustees of Trust for Credit Unions ... unanimously voted to change the investment adviser to ALM First Financial Advisors, LLC effective April 16, 2017.... At that meeting, the Board of Trustees of the Trust also approved an interim investment advisory agreement and a new investment advisory agreement with ALM First, on behalf of the Ultra-Short Duration Government Portfolio and Short Duration Portfolio.... The new investment advisory agreement contains substantially similar terms as the current investment advisory agreement with Goldman Sachs Asset Management, L.P., but includes lower investment advisory fees for the Portfolios of 0.12% of the first $250 million in assets, 0.10% of the assets between $250 million and $500 million, and 0.07% of the assets above $500 million, based on the aggregate average daily net assets of the Portfolios."
It adds, "The Board of Trustees of the Trust has also approved ALM First as the investment advisor pursuant to an investment advisory agreement for the Trust's Government Money Market Portfolio, effective as of the Effective Date. The Government Money Market Portfolio suspended its operations as of the close of business on May 30, 2014. For its services to the Government Money Market Portfolio, ALM First will be entitled to a fee of 0.10% of the first $50 million and 0.05% of the assets above $50 million, based on the average daily net assets of the Government Money Market Portfolio."
