Money fund assets fell in the latest week after a record-setting 14 straight weeks of increases. The Investment Company Institute's latest "Money Market Fund Assets" report shows that MMF totals have increased by $235.7 billion, or 7.7%, since April 17, and they've increased by $231 billion, or 7.6%, year-to-date. Over the past 52 weeks, ICI's money fund asset series has increased by $427 billion, or 15.0%, with Retail MMFs rising by $212 billion (20.4%) and Inst MMFs rising by $211 billion (11.6%). We review the latest money fund asset totals below, and we quote from a new FT article on the company with the largest cash hoard.
They write, "Total money market fund assets decreased by $5.51 billion to $3.28 trillion for the week ended Wednesday, July 31, the Investment Company Institute reported today. Among taxable money market funds, government funds decreased by $3.17 billion and prime funds decreased by $952 million. Tax-exempt money market funds decreased by $1.39 billion." ICI's weekly series shows Institutional MMFs falling $8.2 billion and Retail MMFs rising $2.6 billion. Total Government MMF assets, including Treasury funds, stood at $2.446 trillion (74.6% of all money funds), while Total Prime MMFs rose to $696.5 billion (21.2%). Tax Exempt MMFs totaled $135.8 billion, or 4.1%.
ICI states, "Assets of retail money market funds increased by $2.64 billion to $1.26 trillion. Among retail funds, government money market fund assets increased by $1.98 billion to $713.13 billion, prime money market fund assets increased by $1.92 billion to $417.89 billion, and tax-exempt fund assets decreased by $1.26 billion to $125.01 billion." Retail assets account for over a third of total assets, or 38.3%, and Government Retail assets make up 56.8% of all Retail MMFs.
The release adds, "Assets of institutional money market funds decreased by $8.15 billion to $2.02 trillion. Among institutional funds, government money market fund assets decreased by $5.15 billion to $1.73 trillion, prime money market fund assets decreased by $2.88 billion to $278.58 billion, and tax-exempt fund assets decreased by $127 million to $10.78 billion." Institutional assets accounted for 61.7% of all MMF assets, with Government Institutional assets making up 86.0% of all Institutional MMF totals.
When we asked whether the 14-week inflow streak (which just ended) was a record, a spokeswoman for ICI tells us that another week of inflows (15) would have made it the longest period of increases since they started tracking weekly money market fund assets in January 2007. ICI's series shows just one other time with 14 straight weeks of inflows -- from 12/26/07 to 3/26/2008. But they tell us that the total inflows during that prior 14-week streak were $375.8 billion vs. the current streak's the (4/24/19-7/24/19) $241.2 billion. Thus, the period just ended tied the record for the longest inflow streak, but not for the largest.
Crane Data's separate and broader Money Fund Intelligence Daily series shows money fund assets falling by $7.5 billion to $3.425 trillion in the week ended July 31, 2019. Month-to-date through 7/31, money fund assets have risen a stunning $97.2 billion, still 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, even following the Fed's 1/4-point rate cut.
In other news, the Financial Times writes about the companies with the largest cash positions in its piece, "Alphabet/Apple: cash me if you can." They tell us, "While many mega-cap companies maintain even modest leverage, the tech giants have preferred to build staggering net cash totals. At the end of the most recent quarter, Apple, Google parent Alphabet, Microsoft and Facebook have cash, net of debt, balances between $40bn and nearly $120bn. This raises an intriguing question. Does where that cash resides -- in pockets of shareholders or on companies' balance sheets -- really matter when it comes to assessing the ultimate value of the business?"
The FT article continues, "Carl Icahn years ago browbeat Apple into sending much more of its cash to shareholders. The company also began to tap the debt markets to add to leverage. At the end of its most recent quarter it had total cash of $210bn and total debt of $108bn. That net cash figure has dropped sharply enough that Alphabet -- with its net cash of $117bn -- is now the most cash-abundant company in the world. Unlike Apple, which is paying a modest dividend (its yield is less than 2 per cent), Alphabet has not initiated a regular payout. It has, however, recently decided to up its share buyback authorisation to nearly $40bn."
It adds, "All tech companies say the right thing about investing heavily in added computing power and moonshot projects. Still their core businesses churn out so much cash that they literally cannot spend it fast enough. This group's cash flow from operations less capex still ranged in the several billions of dollars in the most recent quarter."
The FT concludes, "Returning cash to shareholders becomes its own fraught calculus. Buybacks are difficult because companies risk paying too much for their shares in the open market. Dividends require commitment and can signal maturity and growth slowing. Special dividends -- one time large distributions -- may strike the right balance. Yet the tech paranoia seems to endure. Obsolescence may be just around the corner. Finance equations aside, cash accumulation for a rainy day will continue."
For comparison's sake, Crane Data shows the 10 Largest Money Fund Portfolios (with symbols and assets as of June 30, 2019). These include: JPMorgan US Govt MM (OGVXX) $144.7 billion, Fidelity Govt Cash Reserves (FDRXX) $143.9, Fidelity Government MM Cap Res (FZAXX) $125.2B, Vanguard Federal Money Mkt Fund (VMFXX) $125.2B, Vanguard Prime MMF (VMMXX) $122.7B, Fidelity Inv MM: Govt Port (FIGXX) $117.0B, American Funds Central Cash (CMQXX) $113.4B, Goldman Sachs FS Govt (FSOXX) $108.0B, Schwab Value Adv MF (SWVXX) $99.3B and BlackRock Lq FedFund (BLFXX) $98.3B. Thus, Aphabet would rank as the 6th largest money fund portfolio (along w/FIGXX), while Apple would rank as the ninth largest (if their cash pools were money market funds).
