Money funds rose for the 3rd week in a row and for the 20th week out of the past 22 weeks, retaking the $3.4 trillion level for the first time since October 2009. Assets jumped Tuesday and Wednesday after seeing big outflows Monday and the previous Friday due to quarterly tax payments; they ended the week just slightly higher. ICI's latest "Money Market Fund Assets" report shows that assets have increased by $355 billion, or 11.6%, year-to-date. Over the past 52 weeks, ICI's money fund asset series has increased by $537 billion, or 18.7%, with Retail MMFs rising by $239 billion (22.5%) and Inst MMFs rising by $298 billion (16.5%).

ICI writes, "Total money market fund assets increased by $4.91 billion to $3.40 trillion for the week ended Wednesday, September 18, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $3.48 billion and prime funds increased by $2.05 billion. Tax-exempt money market funds decreased by $611 million." ICI's weekly series shows Institutional MMFs falling $2.43 billion and Retail MMFs increasing $7.34 billion. Total Government MMF assets, including Treasury funds, were a record $2.537 trillion (74.6% of all money funds), while Total Prime MMFs were $731.26 billion (21.5%). Tax Exempt MMFs totaled $133.83 billion, or 3.9%.

They explain, "Assets of retail money market funds increased by $7.34 billion to $1.30 trillion. Among retail funds, government money market fund assets increased by $5.04 billion to $744.77 billion, prime money market fund assets increased by $3.20 billion to $433.26 billion, and tax-exempt fund assets decreased by $908 million to $123.46 billion." Retail assets account for over a third of total assets, or 38.3%, and Government Retail assets make up 57.2% of all Retail MMFs.

The release adds, "Assets of institutional money market funds decreased by $2.43 billion to $2.10 trillion. Among institutional funds, government money market fund assets decreased by $1.57 billion to $1.79 trillion, prime money market fund assets decreased by $1.16 billion to $298.00 billion, and tax-exempt fund assets increased by $297 million to $10.37 billion." Institutional assets accounted for 61.7% of all MMF assets, with Government Institutional assets making up 85.3% of all Institutional MMF totals.

Crane Data's separate and broader Money Fund Intelligence Daily series confirms the move higher, showing money fund assets rising by $4.4 billion to $3.726 trillion in the week ended Sept. 18. Assets increased by $23.0 billion on Wednesday (9/18) and $14.1 billion on Tues. (9/17), which made up for declines of $13.9 billion on Monday (9/16), the date of the big repo squeeze, and $20.4 billion on Friday (9/13). Month-to-date through 9/18, money fund assets have risen a total of $28.7 billion. Our latest Money Fund Intelligence XLS, which track an even broader set of funds than our MFI Daily, showed assets rising $85.3 billion to $3.568 trillion in August.

Despite the Fed's rate cut on Wednesday, money fund yields have moved higher due to this week's anomaly in the repo market. Our Crane 100 Money Fund Index, an average of the 100 largest Taxable MMFs, yielded 1.92% a week ago and now yields 2.08%, a jump of 16 bps, according to our MFI Daily. The broader Crane Money Fund Average yields also increased by 16 bps to 1.95%. Yields may continue to rise as the repo-spike works its way through but we assume they'll eventually move lower.

In other news, the Bottom Line Personal newsletter interviewed our Peter Crane, in a brief, entitled, "Higher Yields on Cash Accounts." The article says, "In the latest battle among brokerages, Fidelity, Charles Schwab and Vanguard have been offering unusually high yields of around 2% on cash. But investors should be careful to figure out what's really the best deal. Fidelity has started offering the Fidelity Government Money Market Fund as its 'sweep' account, providing a 1.83% yield recently.... That applies to new brokerage customers at Fidelity and to new and most existing retirement account holders but not automatically to existing brokerage customers."

It continues, "Their default sweep account is Fidelity Cash Management, which recently yielded 1.08%. However, customers can request the higher-yielding fund to be designated as the sweep account instead. The Fidelity yields are much higher than the recent average of 0.25% among all sweep accounts at brokerages."

Bottom Line tells readers, "Don't be fooled by Schwab's response to Fidelity's push. Schwab began promoting its Schwab Government Money Market Fund, recently yielding 1.86%, even though it is not available as a sweep account. Schwab's default sweep accounts recently yielded as low as 0.18%. Each time a customer wants to shift the cash from those accounts to the higher-paying account, the customer must contact Schwab."

The article adds, "Despite the promotions, neither Fidelity nor Schwab is offering the highest yields on cash accounts. Vanguard has long offered the Vanguard Federal Money Market Fund as its default sweep account, recently yielding 2.14%. Some online banks and brokerages, such as Betterment and Wealthfront, offer 2.3% or more."

Finally, safe travels to those heading across the pond for our European Money Fund Symposium, which starts Monday in Dublin, Ireland. The latest agenda is available and registrations are still being taken for the largest money market fund gathering in Europe. Contact us for more information, or feel free to stop by the Hilton if you're in Dublin. See you Monday!

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