Money fund assets dipped in the latest week on month-end, after rising for 3 weeks in a row, according to the Investment Company Institute's latest "Money Market Fund Assets" report. Prime assets showed their sharpest drop in over a year. ICI writes, "Total money market fund assets decreased by $2.04 billion to $2.84 trillion for the week ended Wednesday, February 28, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $6.90 billion and prime funds decreased by $6.67 billion. Tax-exempt money market funds decreased by $2.27 billion." Total Government MMF assets, which include Treasury funds too, stand at $2.248 trillion (79.1% of all money funds), while Total Prime MMFs stand at $458.6 billion (16.1%). Tax Exempt MMFs total $136.0 billion, or 4.8%. We review ICI's latest numbers below, and also quote from a Bloomberg article on Chinese money market funds.
ICI's weekly press release explains, "Assets of retail money market funds decreased by $6.18 billion to $1.01 trillion. Among retail funds, government money market fund assets decreased by $2.74 billion to $615.76 billion, prime money market fund assets decreased by $1.31 billion to $263.43 billion, and tax-exempt fund assets decreased by $2.13 billion to $129.16 billion." Retail assets, which were at their highest levels in 2 years last week, account for over a third of total assets, or 35.5%, and Government Retail assets make up 61.1% of all Retail MMFs.
It adds, "Assets of institutional money market funds increased by $4.14 billion to $1.83 trillion. Among institutional funds, government money market fund assets increased by $9.64 billion to $1.63 trillion, prime money market fund assets decreased by $5.35 billion to $195.19 billion, and tax-exempt fund assets decreased by $148 million to $6.81 billion." Institutional assets account for 64.5% of all MMF assets, with Government Inst assets making up 89.0% of all Institutional MMFs.
For February, Crane Data's Money Fund Intelligence Daily data series shows money market fund assets up by $35.0 billion but all Prime MMFs down by $6.1 billion. Over the past week, the largest asset declines were shown by Dreyfus Inst Treas & Agen Liq MMF (down $2.3B to $11.7B), Schwab Cash Reserves Fund (down $2.0B to $24.6B), JPMorgan Prime MM Capital (down $1.9B to $24.6B), Northern Trust Treasury MMkt Prem (down $1.7B to $33.7B), BlackRock Lq TempFund In (down $1.6B to $10.5B), Fidelity Inv MM: Govt Port Inst (down $1.1B to $103.6B), Wells Fargo Govt MM Sel (down $1.1B to $48.9B), and First American Treas Obligs Z (down $1.1B to $5.3B).
Offshore USD assets have declined by $15.6 billion in February to $444.4 billion, according to our `Money Fund Intelligence International. Overall offshore assets fell by $18.2 billion for the month to $851.6B. (This translates the E89.8 billion in Euro MMFs and L209.1 billion in Pound Sterling MMFs into U.S. dollars.) Year-to-date, USD MMFs remain up by $19 billion. While we've yet to see substantial flows related to "repatriation," we have seen several mini bubbles of USD asset buildups then distributions in December, January and now February.
In other news, Bloomberg writes "China Plans Curbs on $1 Trillion in Money-Market Funds." It says, "China plans to expand its unprecedented crackdown on financial risk to money-market funds by capping how much investors can redeem in a day, people familiar with the matter said."
The article explains, "The limit for same-day redemption will be set at 10,000 yuan ($1,580), said the people, who asked not to be identified as they're not authorized to speak publicly. The same restriction will apply when investors use their assets in money-market funds directly for payment and consumption, the people said. The move by regulators brings them into areas once seen as less risky. The country's money-market funds expanded to a total value of almost $1.1 trillion by the end of 2017, up from $680 billion the previous year, according to the Asset Management Association of China."
Bloomberg tells us, "Some Chinese money-market funds allow investors to use the money they hold in the fund directly for purchasing online and in traditional retail stores, such as the Ant Financial-controlled Tianhong Yu'E Bao Money Market Fund, China's largest such entity."
The piece continues, "The central bank last year urged Ant, a financial affiliate of Alibaba Group Holding Ltd., to reduce the maximum amount individuals can invest in Yu'E Bao to limit financial market risk, people with knowledge of the matter said in May."
Finally, Bloomberg adds, "The PBOC revised the statistics methodology for calculating the M2 broad money supply last month to better gauge the scale of money market funds."
