Money market mutual fund assets showed major increases for the seventh week in a row, breaking the $4.5 trillion level and hitting yet another record, though inflows were smaller than the gigantic jumps of mid-March and early April. ICI's latest weekly "Money Market Fund Assets" report explains, "Total money market fund assets increased by $49.10 billion to $4.52 trillion for the week ended Wednesday, April 15, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $38.80 billion and prime funds increased by $6.97 billion. Tax-exempt money market funds increased by $3.32 billion." ICI's stats show Institutional MMFs rising $44.1 billion and Retail MMFs increasing $5.0 billion. Total Government MMF assets, including Treasury funds, were $3.715 trillion (82.2% of all money funds), while Total Prime MMFs were $668.3 billion (14.8%). Tax Exempt MMFs totaled $139.4 billion, 3.1%. Money fund assets are up $890 billion, or 24.5%, year-to-date in 2020. Over the past 52 weeks, ICI's money fund asset series has increased by $1.479 trillion, or 48.6%, with Retail MMFs rising by $341 billion (28.3%) and Inst MMFs rising by $1.139 trillion (61.9%).
They explain, "Assets of retail money market funds increased by $5.01 billion to $1.54 trillion. Among retail funds, government money market fund assets increased by $490 million to $985.93 billion, prime money market fund assets increased by $1.66 billion to $432.51 billion, and tax-exempt fund assets increased by $2.86 billion to $124.78 billion." Retail assets account for over a third of total assets, or 34.1%, and Government Retail assets make up 63.9% of all Retail MMFs.
ICI adds, "Assets of institutional money market funds increased by $44.09 billion to $2.98 trillion. Among institutional funds, government money market fund assets increased by $38.31 billion to $2.73 trillion, prime money market fund assets increased by $5.31 billion to $235.83 billion, and tax-exempt fund assets increased by $463 million to $14.58 billion." Institutional assets accounted for 65.9% of all MMF assets, with Government Institutional assets making up 91.6% of all Institutional MMF totals. (Note: Crane Data has its own separate, and larger, daily and monthly asset series.)
In related news, ICI also released its monthly "Money Market Fund Holdings" summary earlier this week, which reviews the aggregate daily and weekly liquid assets, regional exposure, and maturities (WAM and WAL) for Prime and Government money market funds. (See our April 13 News, "April MF Portfolio Holdings: Govt Securities Skyrocket; CDs, CP Down.")
The MMF Holdings release says, "The Investment Company Institute (ICI) reports that, as of the final Friday in March, prime money market funds held 33.8 percent of their portfolios in daily liquid assets and 44.9 percent in weekly liquid assets, while government money market funds held 63.3 percent of their portfolios in daily liquid assets and 77.0 percent in weekly liquid assets." Prime DLA increased from 27.1% in February, and Prime WLA increased from 41.2%. Govt MMFs' DLA increased from 61.1% in February and Govt WLA decreased from 78.2% from the previous month.
ICI explains, "At the end of March, prime funds had a weighted average maturity (WAM) of 34 days and a weighted average life (WAL) of 66 days. Average WAMs and WALs are asset-weighted. Government money market funds had a WAM of 37 days and a WAL of 97 days." Prime WAMs were up one from the previous month and WALs decreased by five days from the previous month. Govt WAMs increased by five day while WALs were up three days from the previous month.
Regarding Holdings By Region of Issuer, the release tells us, "Prime money market funds’ holdings attributable to the Americas declined from $340.25 billion in February to $292.40 billion in March. Government money market funds’ holdings attributable to the Americas rose from $2,187.10 billion in February to $3,102.40 billion in March."
The Prime Money Market Funds by Region of Issuer table shows Americas-related holdings at $292.4 billion, or 44.8%; Asia and Pacific at $120.8 billion, or 18.5%; Europe at $230.1 billion, or 35.3%; and, Other (including Supranational) at $9.2 billion, or 1.4%. The Government Money Market Funds by Region of Issuer table shows Americas at $3.102 trillion, or 86.5%; Asia and Pacific at $139.3 billion, or 3.9%; Europe at $326.5 billion, or 9.1%, and Other (Including Supranational) at $19.8 billion, or 0.6%."
Finally, a press release entitled, "Vanguard Closes Treasury Money Market Fund to New Investors" tells us, "Vanguard ... closed its $39.5 billion Treasury Money Market Fund (VUSXX) to new shareholder accounts. The company is seeking to protect existing Fund shareholders from high levels of cash flow that could potentially accelerate reductions to the Fund's yield. Existing shareholders of the Fund can continue to make purchases with no limits."
It explains, "Vanguard believes that money market funds provide significant value to investors as a stable and convenient cash equivalent instrument. However, an increase in demand for high-quality government money market funds, combined with extremely low yields on U.S. Treasury securities, may have the effect of reducing the Fund's yield, as new cash flow is invested in lower-yielding securities."
The release says, "Vanguard is taking this prudent step to temper cash flows and will continue to monitor the Fund and employ additional measures if needed. Vanguard has taken similar pre-emptive measures during prolonged low-interest rate environments."
Finally, it adds, "Prospective investors will continue to have access to other portfolios in Vanguard's $414 billion low-cost lineup of money market funds, including Vanguard Prime Money Market Fund, Vanguard Federal Money Market Fund, and Vanguard's national and state-specific tax-exempt money market funds. Vanguard continues to manage its money market funds very conservatively, focusing only on the highest-quality short-term money market instruments."
Vanguard, the 2nd largest manager of MMFs, is the second fund family to take steps to limit inflows into its Treasury funds. See our March 31 Link of the Day, "Fidelity (Soft) Closes Treasury MMFs," and see these Crane Data News articles on previous Treasury MMF "soft" closings: More on Ultra-Low Treasury Rates, Fee Waivers and Negative Yields (1/7/09), Flurry of Fund Filings on Treasury Funds Closings, Waivers, Insurance (1/14/09), MarketWatch Writes Treasury Money-Market Funds Shutting The Door (1/27/09), Vanguard Merges Treasury Money Funds, Closes Federal Money Market (6/3/09) and Schwab Q and A on Closing of U.S. Treasury Money Fund to Sweeps (10/6/11).
