After dropping below the 1.0% level two weeks ago, average yields on money market funds dropped to the 0.5% level in the latest week. Yields on Government money market funds plunged, and some Treasury funds began closing to new investors. Our flagship Crane 100 Money Fund Index fell 22 basis points to 0.50%, according to Money Fund Intelligence Daily (data as of Friday, 3/27). The Crane 100 is down from 1.46% at the start of the year and down 1.73% from the beginning of 2019 (2.23%). Our Crane Brokerage Sweep Index remained at 0.02% (for balances of $100K), the same as a week ago and down 26 bps from the end of 2018 (0.28%), as most brokerages have already hit the 0.01% floor. Our latest Brokerage Sweep Intelligence, with data as of March 27, shows three out of 11 major brokerages cut rates in the past week, and ten out of 11 major brokerages now offer rates of 0.01% for balances of $100K.
The Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 674), shows a 7-day yield of 0.50%, down 17 basis points in the week through Friday, March 27. Prime Inst MFs were down 9 bps to 0.92% in the latest week, while Government Inst MFs fell by 21 bps to 0.46% and Treasury Inst MFs dropped by 23 bps to 0.36%. Treasury Retail MFs currently yield 0.11%, (down 19 bps), Government Retail MFs yield 0.31% (down 17 bps), and Prime Retail MFs yield 0.82% (down 9 bps), Tax-exempt MF 7-day yields increased 1.02% to 3.61%.
Yesterday's Brokerage Sweep Intelligence shows that RW Baird lowered rates across the board in the past week, while Ameriprise and TD Ameritrade dropped their higher tier rates. RW Baird cut rates through their $100K balance by 0.09%; their 100K balance dropped to 0.01%. RW Baird cut their $250K, $500K, $1M and >$5M balances by 11 bps, 11 bps, 14 bps and 19 bps, respectively. Ameriprise and TD Ameritrade both dropped their upper tiers, while both of their $100K balances remained at 0.01%. No brokerage sweep rates or money fund yields have dropped to zero or gone negative to date, but this could become a distinct possibility in coming weeks or months.
Crane's Brokerage Sweep Index remained unchanged at 0.02% in the week ended March 27 (for balances of $100K.) Ameriprise, E*Trade, TD Ameritrade, Merrill Lynch, Morgan Stanley, Raymond James, Schwab, UBS, Wells Fargo and RW Baird all currently have the lowest rate (0.01%) for balances at the $100K level. Fidelity is the only major brokerage firm paying more than 0.01% on $100K balances; their $100K balance is 0.07%.
In other news, the Investment Company Institute released its latest monthly "Trends in Mutual Fund Investing – February 2020" and "Month-End Portfolio Holdings of Taxable Money Funds." These reports shows that money fund assets increased by $32.9 billion to $3.647 trillion in February. Last month's increase follows a decrease of $18.1 billion in January and increases of $67.0 billion in December and $47.0 billion in November. For the 12 months through Feb. 29., 2020, money fund assets have increased by $556.0 billion, or 18.0%. (Our MFI Daily shows assets up by as massive $612.1 billion in March to $4.578 trillion through 3/27.)
ICI's monthly "Trends" release states, "The combined assets of the nation's mutual funds decreased by $833.69 billion, or 3.9 percent, to $20.41 trillion in February, according to the Investment Company Institute's official survey of the mutual fund industry. In the survey, mutual fund companies report actual assets, sales, and redemptions to ICI."
It explains, "Bond funds had an inflow of $12.75 billion in February, compared with an inflow of $57.16 billion in January.... Money market funds had an outflow of $30.30 billion in February, compared with an outflow of $21.29 billion in January. In February funds offered primarily to institutions had an inflow of $5.25 billion and funds offered primarily to individuals had an inflow of $25.06 billion."
ICI's latest statistics show that Taxable MMFs gained assets while Tax Exempt MMFs lost assets last month. Taxable MMFs increased by $34.3 billion in February to $3.512 trillion. Tax-Exempt MMFs decreased $1.4 billion in February to $134.7 billion. Taxable MMF assets increased year-over-year by $559.6 billion (19.0%). Tax-Exempt funds fell by $3.6 billion over the past year (-0.02%). Bond fund assets increased by $53.2 billion in February (0.01%) to $4.884 trillion; they've risen by $698.4 billion (16.7%) over the past year.
Money funds represent 17.9% of all mutual fund assets (up 0.9% from the previous month), while bond funds account for 23.9%, according to ICI. The total number of money market funds was 361, down three from the month prior and down from 367 a year ago. Taxable money funds numbered 281 funds, and tax-exempt money funds numbered 80 funds.
ICI's "Month-End Portfolio Holdings" update confirms a jump in Repo and increases in Agencies and Treasuries last month. Repurchase Agreements remained in first place among composition segments; they increased by $15.2 billion, or 1.2%, to $1.260 trillion, or 35.9% of holdings. Repo holdings have risen $218.3 billion, or 21.0%, over the past year. (See our Mar. 11 News, "March MF Portfolio Holdings: Repo, Treas Up, Agencies, CDs, CP Down.")
Treasury holdings in Taxable money funds increased by $4.9 billion, or 0.5%, to $959.0 billion, or 27.3% of holdings. Treasury securities have increased by $127.4 billion, or 15.3%, over the past 12 months. U.S. Government Agency securities were the third largest segment; they increased $7.1 billion, or 1.0%, to $725.1 billion, or 20.6% of holdings. Agency holdings have risen by $82.4 billion, or 12.8%, over the past 12 months.
Certificates of Deposit (CDs) stood in fourth place; they decreased by $3.9 billion, or -1.2%, to $306.8 billion (8.7% of assets). CDs held by money funds have grown by $73.8 billion, or 31.7%, over 12 months. Commercial Paper remained in fifth place, up $1.3 billion, or 0.5%, to $238.0 billion (6.8% of assets). CP has increased by $29.7 billion, or 14.3%, over one year. Notes (including Corporate and Bank) were down $1.4 billion, or-12.1%, to $10.5 billion (0.3% of assets), while Other holdings increased $489 million to $12.9 billion.
The Number of Accounts Outstanding in ICI's series for taxable money funds increased by 417.8 thousand to 38.115 million, while the Number of Funds decreased three to 281. Over the past 12 months, the number of accounts rose by 4.122 million and the number of funds decreased by five. The Average Maturity of Portfolios was 32 days, one less than in January. Over the past 12 months, WAMs of Taxable money have increased by three.
