Money fund assets rose for the 3rd week in a row and the 17th week out of the past 18 weeks, reaching their highest level since October 2009. ICI's latest "Money Market Fund Assets" report shows that MMF totals have increased by $334.9 billion, or 11.0%, since April 17, and they've increased by $330 billion, or 10.8%, year-to-date. Over the past 52 weeks, ICI's money fund asset series has increased by $514 billion, or 17.9%, with Retail MMFs rising by $224 billion (21.3%) and Inst MMFs rising by $290 billion (16.0%). (See also our News from yesterday, "SEC: Money Fund Assets Approach $3.7 Trillion, Up 13th Month in a Row," which reviews the SEC's separate, broader asset series.)
ICI writes, "Total money market fund assets increased by $23.45 billion to $3.38 trillion for the week ended Wednesday, August 21, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $16.17 billion and prime funds increased by $7.77 billion. Tax-exempt money market funds decreased by $494 million." ICI's weekly series shows Institutional MMFs rising $15.36 billion and Retail MMFs increasing $8.09 billion. Total Government MMF assets, including Treasury funds, were a record $2.528 trillion (74.8% of all money funds), while Total Prime MMFs were $714.9 billion (21.2%). Tax Exempt MMFs totaled $135.0 billion, 4.0%.
They explain, "Assets of retail money market funds increased by $8.09 billion to $1.27 trillion. Among retail funds, government money market fund assets increased by $6.66 billion to $728.90 billion, prime money market fund assets increased by $1.56 billion to $421.40 billion, and tax-exempt fund assets decreased by $127 million to $124.59 billion." Retail assets account for over a third of total assets, or 37.7%, and Government Retail assets make up 57.2% of all Retail MMFs.
The release adds, "Assets of institutional money market funds increased by $15.36 billion to $2.10 trillion. Among institutional funds, government money market fund assets increased by $9.51 billion to $1.80 trillion, prime money market fund assets increased by $6.22 billion to $293.50 billion, and tax-exempt fund assets decreased by $367 million to $10.37 billion." Institutional assets accounted for 62.3% of all MMF assets, with Government Institutional assets making up 85.6% of all Institutional MMF totals.
In other news, mutual fund news source ignites published the article, "Which Brokerage Clients Clean Up in Cash Sweeps." They explain, "Fidelity earlier this month announced that it had made its high-yielding Government Money Market Fund the default cash sweep vehicle for brokerage and retirement accounts, no matter what size."
The piece continues, "The Boston-based custodian's new default posted a seven-day yield of 1.82% as of Aug. 14, according to data posted on its website. That rate is more than a percentage point higher than any other cash sweep default assigned by any of the 10 brokerages tracked by Crane Data's Brokerage Sweep Intelligence Report."
They quote Pete Crane, president of Crane Data, "the Westboro, Mass.-based money market and cash sweep data and research shop," "Presumably, [Fidelity] intends to gain market share to gain wallet share.... They also want to have more happy customers that do more business."
The ignites article comments, "Fidelity is one of the only major brokerages that use a money market fund as their default, he says. These vehicles typically have higher returns than bank and other sweep products. Industrywide, the money market funds tracked through the Crane 100 Money Fund Index reported an average seven-day yield of 2.13% during the period ending July 31. Sweep options, meanwhile, returned just 0.25%."
It also tells us, "Ameriprise clients can choose from a number of options to invest the cash in their accounts, including money market funds and brokered CDs, or they can leave their uninvested cash in one of our sweep options.... Other brokerages, such as E*Trade, RW Baird and UBS, also allow certain investors to pick money market funds as places to park cash they earn from their investments, company websites show."
The piece adds, "About two thirds of industry professionals surveyed by Ignites believe that Fidelity's recent actions might spur other brokerages to change their cash sweep default to a money market fund. In all, 163 readers voted. However, Crane says it's unlikely that money market funds will become the widespread default. Many firms will likely wait to see how investors react to Fidelity's swap." "The trend has been to move the deposits and for the brokerages to earn money off the sweep, not the investors," he says. "Fidelity is an outlier for now."
For more on the recent brokerage sweep news, see these Crane Data News articles: Fitch Reviews French MMFs: Standard Not Really; More Sweep Coverage (8/21), IBD on Brokerage Sweep Accounts (8/20), Cash Stories: Barron's Explains Brokerage Sweeps; Bloomberg on Assets (8/19), Cash of the Titans: Schwab vs. Fidelity; MF Yields Dip Below 2.0 Percent (8/13), Barron's Clarifies Fidelity Sweep Push (8/12), WSJ on Fidelity: Cash's Sweeping Giant (8/9) and Fidelity Now Sweeps to Money Fund (8/8).
