The Investment Company Institute released its latest monthly "Trends in Mutual Fund Investing" reports yesterday. Their numbers confirm a sharp drop in money fund assets in January, following jumps in December and November and a dip in October. ICI's "January 2018 - Trends" shows a $47.8 billion decrease in money market fund assets in January to $2.800 trillion. This follows a $51.8 billion increase in December, a $57.9 billion increase in November, a $8.8 billion decrease in October, a $28.8 billion increase in Sept., and a $71.8 billion increase in August. In the 12 months through January 31, money fund assets have increased by $118.0 billion, or 4.4%. We review ICI's latest reports below, and we also quote the lone mention of money funds in Fidelity's "2017 Annual Shareholder Update".
ICI's monthly report states, "The combined assets of the nation's mutual funds increased by $576.21 billion, or 3.1 percent, to $19.32 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."
It explains, "Bond funds had an inflow of $47.05 billion in January, compared with an inflow of $13.42 billion in December.... Money market funds had an outflow of $50.89 billion in January, compared with an inflow of $49.40 billion in December. In January funds offered primarily to institutions had an outflow of $41.92 billion and funds offered primarily to individuals had an outflow of $8.97 billion."
The latest "Trends" shows that Taxable MMF assets fell but Tax Exempt MMF rose last month. Taxable MMFs decreased by $54.1 billion in January, after increasing by $49.3 billion in December and $57.4 billion in November. They decreased $9.4 billion in October, but increased $30.1 billion in September and $73.5 billion in August. Tax-Exempt MMFs increased $6.3 billion in January, after increasing $2.5 billion in December, $0.5 billion in November and $0.9 billion in October. Tax-exempt MMFs decreased $1.3 billion in September. Over the past year through 1/31/18, Taxable MMF assets increased by $111.0 billion (4.4%) while Tax-Exempt funds rose by $7.0 billion over the past year (5.4%).
Money funds now represent 14.5% (down from 15.2% the previous month) of all mutual fund assets, while bond funds represent 21.2%, according to ICI. The total number of money market funds decreased by 2 to 380 in January, down from 420 a year ago. (Taxable money funds fell by 1 to 298 and Tax-exempt money funds were down one to 82 over the last month.)
ICI also released its latest "Month-End Portfolio Holdings of Taxable Money Funds," which confirmed a plunge in Repo and a jump in CDs in January. Repo remained the largest portfolio segment, but it was down $63.8 billion, or -6.7%, to $892.5 billion or 33.5% of holdings. Repo has increased by $126.9 billion over the past 12 months, or 16.6%. (See also our Feb. 12 News, "Feb. Money Fund Portfolio Holdings: TD, CP, CDs Jump; Repo Plummets.")
Treasury Bills & Securities remained in second place among composition segments; they fell by $6.5 billion, or -0.9%, to $695.6 billion, or 26.1% of holdings. Treasury holdings have fallen by $64.2 billion, or -8.5%, over the past year. U.S. Government Agency Securities remained in third place; they rose by $25.2 billion, or 3.7%, to $707.7 billion, or 26.6% of holdings. Agency holdings have fallen by $6.3 billion, or -0.9%, over the past 12 months.
Certificates of Deposit (CDs) stood in fourth place; they increased $21.2 billion, or 11.9%, to $199.9 billion (7.5% of assets). CDs held by money funds have risen by $26.6 billion, or 15.3%, over 12 months. Commercial Paper remained in fifth place, increasing $15.4B, or 10.4%, to $163.6 billion (6.1% of assets). CP has increased by $52.8 billion, or 47.6%, over one year. Notes (including Corporate and Bank) were down by $1.1 billion, or -14.8%, to $6.3 billion (0.2% of assets), and Other holdings decreased to $4.1 billion.
The Number of Accounts Outstanding in ICI's series for taxable money funds increased by 4.15 million to 31.035 million, while the Number of Funds declined by 2 to 298. Over the past 12 months, the number of accounts rose by 5.811 million and the number of funds decreased by 21. The Average Maturity of Portfolios was 30 days in December, down 2 days from December. Over the past 12 months, WAMs of Taxable money funds have shortened by 12 days.
In other news, Fidelity Investments' just-released "2017 Annual Shareholder Update" barely mentions money funds this year. The report says, "Fidelity's active investment-grade bond funds continued to provide shareholders with strong risk-adjusted performance in 2017, outperforming their benchmarks on an aggregate basis and topping 72%, 76%, and 76% of their peers over the trailing one-, three-, and five-year periods. With Fidelity's equity and bond funds providing solid building blocks, asset-allocation funds also outperformed. For example, following enhancements to Fidelity's target date product line in recent years, the flagship actively managed target date Fidelity Freedom Funds beat 92%, 93%, and 78% of their peers for the trailing one-, three-, and five year periods. In addition, Fidelity's money market funds continued to provide shareholders with stability, liquidity, and competitive yields for their short-term cash holdings."
According to a table, Fidelity's Money Market Funds outperformed 81% of their peers over 1 year, 84% of their peers over 3 years, and 82% of their peers over 5 years. (The table says they use Lipper data and describes it as "Weighted % of peers outperformed.")
