The Federal Reserve released its latest quarterly "Z.1 Financial Accounts of the United States" statistical survey (formerly the "Flow of Funds") yesterday. Among the 4 tables it includes on money market mutual funds, the Second Quarter, 2017 edition shows that the Household Sector remains the largest investor segment; assets here fell in Q2 after rising in Q1. The next largest segments, Funding Corporations (primarily Securities Lending money) and Nonfinancial Corporate Businesses, also saw assets decline in the second quarter. State & Local Governments, Private Pension Funds, Nonfinancial Noncorporate Business and State & Local Govt Retirement all saw assets rise slightly in Q2, while the Rest of World and Life Insurance Companies categories saw assets inch lower in the latest quarter. Over the past 12 months, Nonfinancial Corporate Businesses and Life Insurance Companies showed big decreases, while Funding Corporations and State & Local Govt Retirement holdings increased over the past year. We review the latest Fed Z.1 numbers, and we also review the ICI's latest money fund numbers, which show that the gains in Prime MMFs continue, below.
The Fed's "Table L.206," "Money Market Mutual Fund Shares," shows total assets decreasing by $31 billion, or -1.2%, in the second quarter to $2.633 trillion. Over the year through June 30, 2017, assets are down $69 billion, or -2.6%. The largest segment, the Household sector, totals $977 trillion, or 37.1% of assets. The Household Sector decreased by $21 billion, or 2.1%, in the quarter, after decreasing $25 billion in Q1'17 and increasing $50 billion in Q4'16. Over the past 12 months through June 30, Household assets are down $9 billion, or 0.9%.
Funding Corporations, which became the second largest segment last quarter according to the Fed's data series, held $522 billion, or 19.8% of the total. Securities lending reinvestment assets in money funds decreased $8 billion in the quarter, or -1.6%, but they've increased by $59 billion over the past year, or 12.7%. Nonfinancial Corporate Businesses remained the third largest investor segment with $463 billion, or 17.6% of money fund shares. They fell by $6 billion, or 1.3%, in the latest quarter after plunging in Q1'17 (down $114 billion). Corporate money fund holdings decreased $114 billion, or 19.8%, over the previous 12 months.
The fourth largest segment, State and Local Governments held 7.0% of money fund assets ($184 billion) -- up $1 billion, or 0.5%, for the quarter, and up $4 billion, or 2.2%, for the year. Private Pension Funds, which held $151 billion (5.7%), remained in 5th place. Rest Of The World category was the sixth largest segment in market share among investor segments with 4.0%, or $105 billion, while Nonfin Noncorp Business held $100 billion (3.8%), State and Local Government Retirement Funds held $73 billion (2.8%), Life Insurance Companies held $43 billion (1.6%), and Property-Casualty Insurance held $16 billion (0.6%), 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 $1.541 trillion, or 58.5%. Debt securities includes: Open market paper ($125 billion, or 4.7%; we assume this is CP), Treasury securities ($624 billion, or 23.7%), Agency and GSE backed securities ($643 billion, or 24.4%), Municipal securities ($142 billion, or 5.4%), and Corporate and foreign bonds ($7 billion, or 0.3%).
Other large holdings positions in the Fed's series include Security repurchase agreements ($894 billion, or 34.0%) and Time and savings deposits ($177 billion, or 6.7%). Money funds also hold minor positions in Foreign deposits ($3 billion, or 0.1%), Miscellaneous assets ($3 billion, or 0.1%), and Checkable deposits and currency ($15 billion, 0.6%). Note: The Fed also recently added a new breakout line to this table which lists "Variable Annuity Money Funds;" they currently total $35 billion, up $1 billion in the quarter.
During Q2, Treasury Securities (down $116 billion), Municipal Securities (down $12 billion), Time and Savings Deposits (down $2 billion), and Agency- and GSE-Backed Securities (down $1 billion), showed decreases. Security Repurchase Agreements (up $86 billion), Open market paper (up $15 billion), and Checkable Deposits and Currency (up $1 billion) showed gains.
Over the 12 months through 6/30/17, Time and Savings Deposits (down $249B), Open Market Paper (down $148B), and Municipal Securities (down $72B) all showed big declines due to the massive shift from Prime and Tax-Exempt money funds to Government MMFs. Security Repurchase Agreements (up $253B), Treasury Securities (up $106B) and Agency- and GSE-Backed Securities (up $77B) all showed big gains over the 12 months through Q2'17.
In other news, the Investment Company Institute's latest "Money Market Fund Assets" report show Prime money market funds rising for the 7th week in a row, the 13th week in the past 14, and the 17th week in the past 20 (up $41.0, or 10.2%). They've now increased by $72.6 billion, or 19.5%, year-to-date.
ICI writes, "Total money market fund assets decreased by $14.57 billion to $2.72 trillion for the week ended Wednesday, September 20, the Investment Company Institute reported today. Among taxable money market funds, government funds decreased by $16.69 billion and prime funds increased by $2.05 billion. Tax-exempt money market funds increased by $76 million." Total Government MMF assets, which include Treasury funds too, stand at $2.152 trillion (79.0% of all money funds), while Total Prime MMFs stand at $444.6 billion (16.3%). Tax Exempt MMFs total $128.2 billion, or 4.7%.
They explain, "Assets of retail money market funds increased by $1.87 billion to $972.88 billion. Among retail funds, government money market fund assets increased by $1.06 billion to $589.24 billion, prime money market fund assets increased by $890 million to $261.38 billion, and tax-exempt fund assets decreased by $81 million to $122.26 billion." Retail assets account for over a third of total assets, or 35.7%, and Government Retail assets make up 60.6% of all Retail MMFs.
ICI's release adds, "Assets of institutional money market funds decreased by $16.44 billion to $1.75 trillion. Among institutional funds, government money market fund assets decreased by $17.75 billion to $1.56 trillion, prime money market fund assets increased by $1.16 billion to $183.18 billion, and tax-exempt fund assets increased by $157 million to $5.96 billion." Institutional assets account for 64.3% of all MMF assets, with Government Inst assets making up 89.2% of all Institutional MMFs.
