The Federal Reserve released its latest quarterly "Z.1 Financial Accounts of the United States" statistical survey (formerly the "Flow of Funds") late last week. Among the 4 tables it includes on money market mutual funds, the Third Quarter, 2018 edition shows that Total MMF Assets increased by $46 billion to $2.867 trillion in Q3. The Household Sector saw assets move higher; it remained the largest investor segment with $1.614 trillion. The next largest segment, Nonfinancial Corporate Businesses also saw assets increase in the third quarter, as did Funding Corporations' (which we believe is primarily securities lending reinvestment cash) holdings of money funds. We review the latest Z.1 stats below.
The Fed's latest Z.1 numbers, which contain one of the few looks at money fund investor segments available, also show assets inching higher for the Rest of the World and Nonfinancial Noncorporate Business categories in Q3 2018. Property-Casualty Insurance, Life Insurance Companies, Private Pension Funds and State & Local Govt Retirements all saw assets fall slightly in Q3. Over the past 12 months, the Household Sector, Funding Corporations and Nonfinancial Corporate Businesses showed increases in assets, while the State and Local Government Retirement, Life Insurance Companies and Private Pension Funds categories showed decreases.
The Fed's "Table L.206," "Money Market Mutual Fund Shares," shows that total assets increased by $46 billion, or 1.6%, in the third quarter to $2.867 trillion. Over the year through Sept. 30, 2018, assets were up $116 billion, or 4.2%. The largest segment, the Household sector, totals $1.614 trillion, or 56.3% of assets. The Household Sector increased by $28 billion, or 1.8%, in the quarter, after increasing $15 billion in Q2'18. Over the past 12 months through Q3'18, Household assets were up $63 billion, or 4.1%.
Nonfinancial Corporate Businesses, the second largest segment according to the Fed's data series, held $479 billion, or 16.7% of the total. Assets here rose by $8 billion in the quarter, or 1.6%, and they've increased by $17 billion, or 3.8%, over the past year. Funding Corporations were the third largest investor segment with $273 billion, or 9.5% of money fund shares. They rose by $22 billion, or 8.9%, in the latest quarter. Funding Corporations have increased by $35 billion, or 14.7%, over the previous 12 months.
The fourth largest segment, Private Pension Funds held 5.4% of money fund assets ($154 billion) -- down $1 billion, or -0.3%, for the quarter, and down $3 billion, or -1.7%, for the year. Nonfinancial Noncorporate Businesses, which held $110 billion (3.8%), were in 5th place. The Rest Of The World category remained in sixth place in market share among investor segments with 3.4%, or $97 billion, while Life Insurance Companies held $45 billion (1.6%), State and Local Government Retirement Funds held $50 billion (1.7%), State and Local Governments held $24 billion (0.8%) and Property-Casualty Insurance held $21 billion (0.7%), and 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 $1.724 trillion, or 60.1% of the total. Debt securities includes: Open market paper ($195 billion, or 6.8%; we assume this is CP), Treasury securities ($767 billion, or 26.8%), Agency and GSE backed securities ($621 billion, or 21.7%), Municipal securities ($131 billion, or 4.6%), and Corporate and foreign bonds ($9 billion, or 0.3%).
Other large holdings positions in the Fed's series include Security repurchase agreements ($920 billion, or 32.1%) and Time and savings deposits ($195 billion, or 6.8%). Money funds also hold minor positions in Foreign deposits ($2 billion, or 0.1%), Miscellaneous assets ($7 billion, or 0.3%), and Checkable deposits and currency ($19 billion, 0.7%). Note: The Fed also lists "Variable Annuity Money Funds;" they currently total $32 billion in the quarter.
During Q3, Debt Securities were up $14 billion. This subtotal included: Open Market Paper (up $21 billion), Treasury Securities (up $114 billion), Agency- and GSE-backed Securities (down $42 billion), Municipal Securities (down $5 billion), and Corporate and Foreign Bonds (up $2 billion). In the third quarter of 2018, Security Repurchase Agreements were up $11 billion, Foreign Deposits were down $1 billion, Checkable Deposits and Currency were up $4 billion, Time and Savings Deposits were up $18 billion, and Miscellaneous Assets were unchanged.
Over the 12 months through 9/30/18, Debt Securities were up $128B, which included Open Market Paper up $57B, Treasury Securities up $114B, Agencies down $46B, Municipal Securities (up $5B), and Corporate and Foreign Bonds (up $2B). Foreign Deposits were down $3B, Checkable Deposits and Currency were down $17B, Time and Savings Deposits were down $4B, Securities repurchase agreements were up $11B, and Miscellaneous Assets were up $1B.
Note that the Federal Reserve changed its numbers related to money market funds substantially in the second quarter of 2018. A statement entitled, "Release Highlights Second Quarter 2018," tells us, "New source data for money market funds from the U.S. Securities and Exchange Commission's (SEC) form N-MFP have been incorporated into the sector's asset holdings (tables F.121 and L.121). Money market funds not available to the public, which are included in the SEC data, are excluded from Financial Accounts' estimates. Data revisions begin 2013:Q1. Holdings of money market fund shares by households and nonprofit organizations, state and local governments, and funding corporations (tables F.206 and L.206) have been revised due to a change in methodology based on detail from the Investment Company Institute. Data revisions begin 1976:Q1."
