Money fund assets rose for the 14th week in a row, hitting their highest levels in a decade. The Investment Company Institute's latest "Money Market Fund Assets" report shows that MMF assets have increased by $241.2 billion, or 7.9%, since April 17, and they've increased by $237 billion, or 7.8%, year-to-date. Over the past 52 weeks, ICI's money fund asset series has increased by $442 billion, or 15.5%, with Retail MMFs rising by $217 billion (20.9%) and Inst MMFs rising by $225 billion (12.5%). We review the latest money fund asset totals below, and we also mention yet another longshot lawsuit over money market funds in 401k plans.
They write, "Total money market fund assets increased by $22.33 billion to $3.28 trillion for the week ended Wednesday, July 24, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $2.0 billion and prime funds increased by $5.41 billion. Tax-exempt money market funds decreased by $1.52 billion." ICI's weekly series shows Institutional MMFs rising $20.0 billion and Retail MMFs rising $2.3 billion. Total Government MMF assets, including Treasury funds, stood at $2.4 trillion (74.1% of all money funds), while Total Prime MMFs rose to $692.0 billion (21.1%). Tax Exempt MMFs totaled $138.7 billion, or 4.2%.
ICI states, "Assets of retail money market funds increased by $2.33 billion to $1.25 trillion. Among retail funds, government money market fund assets decreased by $32 million to $711.15 billion, prime money market fund assets increased by $3.38 billion to $415.97 billion, and tax-exempt fund assets decreased by $1.02 billion to $126.28 billion." Retail assets account for over a third of total assets, or 38.1%, and Government Retail assets make up 61.8% of all Retail MMFs.
The release adds, "Assets of institutional money market funds increased by $20.00 billion to $2.03 trillion. Among institutional funds, government money market fund assets increased by $18.48 billion to $1.74 trillion, prime money market fund assets rose by $2.03 billion to $281.46 billion, and tax-exempt fund assets decreased by $499 million to $10.90 billion." Institutional assets accounted for 61.8% of all MMF assets, with Government Institutional assets making up 85.6% of all Institutional MMF totals.
Crane Data's separate and broader Money Fund Intelligence Daily series shows money fund assets rising by $26.3 billion to $3.433 trillion in the week ended July 24, 2019. Month-to-date through 7/24, money fund assets have risen a stunning $104.6 billion, on pace for one of their strongest monthly gains ever. Our latest Money Fund Intelligence and MFI XLS, which track a broader set of funds than our MFI Daily, showed assets rising $78.3 billion to $3.407 trillion in June. We expect asset inflows to remain strong in coming months, particularly in the fourth quarter.
In other news, Website Alabama.com writes "Lawsuit claims BBVA investments like 'stuffing cash in a mattress'." They explain, "A lawsuit filed Thursday against BBVA called its 401(k) plan 'the investment equivalent of stuffing cash into a mattress.' The proposed class action lawsuit, filed in the Northern District of Alabama against BBVA Compass Bancshares, deals with the Compass SmartInvestor 401(k) Plan. The suit was filed on behalf of two Alabama residents who were members of the plan. According to the suit, the plan had more than $931 million in assets and 13,145 participants with account balances, as of the end of 2017."
The brief explains, "The 88-page lawsuit alleges that BBVA failed to monitor its money market fund and mutual fund plans to see that they were drawing sufficient interest. In some cases, the returns were 'woefully inadequate,' the suit states, calculating the participants lost out on as much as $54 million in potential returns if the plans were 'properly invested.'"
The piece adds, "According to the lawsuit, BBVA's plan ... consisted, according to the suit, of company stock; a money market fund; a series of blended mutual funds; a single bond mutual fund and various other fund options. The lawsuit says that, during the period in question, from 2013 to 2018, when ultra-short-term rates were at historic lows, the use of a money market fund was 'imprudent' as the returns would have been virtually nothing."
The suit states, "For the six years preceding the filing of this lawsuit, the Plan's money market funds returned 0.01 percent or less per year, close to nothing. Indeed, accounting for inflation, participants invested in these options actually lost money."
