Money fund yields moved higher in October following the Fed's 8th quarter-point rate hike at the end of September, bringing our Crane 100 Money Fund Index up to the 2.0% level for the first time in 10 years. (Our Crane 100 MF Index measures the average yield of the 100 largest taxable money market funds.) Yields have moved up from 1.88% at the start of October and up from 1.12% at the start of 2018 and 0.43% at the start of 2017. We briefly discuss recent yields, and we also review the ICI's latest Trends and Portfolio Composition releases.

Our broad Crane Money Fund Average, a simple average of 692 taxable money market mutual funds, currently yields 1.82%, up from 1.69% on 9/30/18, and up from 0.92% on Dec. 31, 2017 and 0.26% on Dec. 31, 2016. Prime Institutional MFs yield 2.00% on average, while Government Inst MFs yield 1.91%, a spread of a mere 9 basis points. (Treasury Inst MFs yield 1.89% as of Oct. 29.) Prime Retail MFs yield 1.86% vs. 1.56% for Govt Retail MFs (a much more generous spread of 30 bps). Tax Exempt MFs average a 7-day yield of 1.14% currently. (See our Money Fund Intelligence Daily for the latest yields and averages.)

The top-yielding money funds currently are paying annualized rates of 2.25% and higher. Internal (not available to outside investors) funds Fidelity Money Market Central Fund (FID03) and BlackRock Cash Inst MMF SL (BRC01) are yielding 2.41 and 2.38%, respectively, while DWS ESG Liquidity Cap (ESIXX) yields 2.35%. State Street Inst Liquid Reserves Prem (SSIXX) is yielding 2.34%, Goldman Sachs FS MM Inst (FSMXX) is yielding 2.32%, and (the internal) Vanguard Market Liquidity Fund (VAN01) yields 2.31%. Federated Inst Prime Obligs IS (POIXX) yields 2.30%, Morgan Stanley Inst Liq Prime Inst (MPFXX) yields 2.29%, and Wells Fargo Cash Inv Select (WFQXX) yields 2.29%. Yields should continue inching higher in coming days as the remainder of the Fed's recent move gets passed through.

In other news, the Investment Company Institute released its latest monthly "Trends in Mutual Fund Investing" report yesterday. It shows a $3.4 billion decrease in money market fund assets in September to $2.864 trillion, which follows a $31.6 billion increase in August, a $14.9 billion increase in July, and a $30.1 billion drop in June. In the 12 months through Sept. 30, money fund assets have increased by $115.9 billion, or 4.2%. (Month-to-date in October through 10/29, assets have increased by $30.3 billion, $14.1 billion of which is from Prime MMFs, according to our MFI Daily.)

The monthly "Trends" report states, "The combined assets of the nation's mutual funds decreased by $43.77 billion, or 0.2 percent, to $19.42 trillion in September, 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 $11.26 billion in September, compared with an inflow of $13.05 billion in August.... Money market funds had an outflow of $6.61 billion in September, compared with an inflow of $28.87 billion in August. In September funds offered primarily to institutions had an outflow of $13.21 billion and funds offered primarily to individuals had an inflow of $6.60 billion."

The latest "Trends" shows that Taxable MMFs lost assets and Tax Exempt MMFs gained assets last month. Taxable MMFs decreased by $3.8 billion in September to $2.732 trillion, after increasing by $32.0 billion in August, increasing by $19.3 billion in July, and decreasing by $27.1 billion in June. Tax-Exempt MMFs increased $0.5 billion in September to $131.3 billion. Over the past year through 9/30/18, Taxable MMF assets increased by $111.8 billion (4.3%) while Tax-Exempt funds rose by $4.1 billion over the past year (3.2%). Bond fund assets increased by $0.3 billion in September to $4.166 trillion; they've risen by $175.9 billion (4.4%) over the past year.

Money funds continue to represent 14.7% of all mutual fund assets (the same level as the previous month), while bond funds also still represent 21.4%, according to ICI. The total number of money market funds was still unchanged at 383 in September, but this total is down from 405 a year ago. Taxable money funds were also unchanged at 299 funds, and tax-exempt money funds were unchanged at 84 funds over the last month.

ICI also released its latest "Month-End Portfolio Holdings of Taxable Money Funds," which showed a drop in Agencies and Treasuries in September. Repurchase Agreements remained in first place among composition segments; they decreased by $3.7 billion, or -0.4%, to $920.1 billion, or 33.7% of holdings. Repo holdings have risen by $10.5 billion, or 1.2%, over the past year. (For more, see our October 11 News, "October MF Portfolio Holdings: Treasury, Agency Down; FICC Repo Up.")

Treasuries fell by $10.0 billion, or -1.3%, to $765.0 billion, or 28.0% of holdings. Treasury securities have increased by $114.5 billion over the past 12 months, or 17.6%. U.S. Government Agency securities were the third largest segment; they fell by $13.3 billion, or -2.1%, to $620.4 billion, or 22.7% of holdings. Agency holdings have fallen by $45.9 billion, or -6.9%, over the past 12 months.

Certificates of Deposit (CDs) stood in fourth place; they increased $4.0 billion, or 2.1%, to $196.9 billion (7.2% of assets). CDs held by money funds have fallen by $6.6 billion, or -3.3%, over 12 months. Commercial Paper remained in fifth place, increasing $73 million, or 0.0%, to $190.0 billion (7.0% of assets). CP has increased by $56.7 billion, or 42.6%, over one year. Notes (including Corporate and Bank) were up by $1.4 billion, or 21.8%, to $7.8 billion (0.3% of assets), and Other holdings increased to $32.2 billion.

The Number of Accounts Outstanding in ICI's series for taxable money funds increased by 176.5 thousand to 32.538 million, while the Number of Funds remained at 299. Over the past 12 months, the number of accounts rose by 5.901 million and the number of funds decreased by 13. The Average Maturity of Portfolios was 33 days in September, up 3 day from August. Over the past 12 months, WAMs of Taxable money funds have increased by 1 day.

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