ICI's latest weekly "Money Market Fund Assets" report shows money fund assets rising again in the past week, the 3rd increase in the past 4 weeks. Over the past 52 weeks, money fund assets are up by $43 billion, or 0.9%, with Retail MMFs rising by $175 billion (12.2%) and Inst MMFs falling by $131 billion (-4.2%). ICI shows assets down by $64 billion, or -1.4%, year-to-date, with Institutional MMFs down $206 billion, or -6.4% and Retail MMFs up $142 billion, or 9.6%. (Note: Register soon for our upcoming Money Fund University, which will be Dec. 15-16 in Boston.)
The weekly release says, "Total money market fund assets increased by $16.12 billion to $4.64 trillion for the six-day period ended Tuesday, November 22, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $7.29 billion and prime funds increased by $10.30 billion. Tax-exempt money market funds decreased by $1.47 billion." ICI's stats show Institutional MMFs rising $7.7 billion and Retail MMFs increasing $8.4 billion in the latest week. Total Government MMF assets, including Treasury funds, were $3.926 trillion (84.6% of all money funds), while Total Prime MMFs were $603.2 billion (13.0%). Tax Exempt MMFs totaled $111.6 billion (2.4%).
ICI explains, "Assets of retail money market funds increased by $8.38 billion to $1.61 trillion. Among retail funds, government money market fund assets increased by $779 million to $1.15 trillion, prime money market fund assets increased by $8.90 billion to $365.80 billion, and tax-exempt fund assets decreased by $1.30 billion to $99.14 billion." Retail assets account for over a third of total assets, or 34.7%, and Government Retail assets make up 71.1% of all Retail MMFs. They add, "Assets of institutional money market funds increased by $7.74 billion to $3.03 trillion. Among institutional funds, government money market fund assets increased by $6.51 billion to $2.78 trillion, prime money market fund assets increased by $1.40 billion to $237.37 billion, and tax-exempt fund assets decreased by $175 million to $12.46 billion." Institutional assets accounted for 65.3% of all MMF assets, with Government Institutional assets making up 91.8% of all Institutional MMF totals.
(Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're over $400 billion lower than Crane's asset series.) For the month of November through 11/23, MMF assets increased by $25.7 billion to $5.080 trillion according to Crane's MFI XLS, which tracks a broader universe of funds than ICI. Crane Data's Prime asset totals, which broke the $1.0 trillion level three weeks ago, increased $32.0 billion MTD (and $26.8 billion in October) to $1.027 trillion. Given that November and December are the two strongest months of the year seasonally, we expect big inflows in the coming weeks.
In other news, ignites wrote earlier this month a piece called, "Fidelity: We Offer 8x Competitors' Yields on Cash," which tells us, "Fidelity has started a new ad campaign, plugging the yield it offers on investors' cash as '8x the industry average rate.' The ad features a giant green '8x' in a field with the sun shining behind it. 'A really big deal for your cash,' the ad reads. The ad is being served up on Instagram and other social media platforms, a spokesperson said."
The article continues, "The campaign underscores the steady climb of short-term yields that money market funds and other cash vehicles have experienced since the Federal Reserve began a series of rates hikes in March.... Investors who click through the ad to Fidelity's website ... see the firm's comparison of the seven-day yield on its $239 billion Government Money Market Fund with 'the industry average rate' for a default sweep product: 2.65% for the period ended Oct. 28, versus 0.20% for the industry."
It explains, "Fidelity also includes the rate a brokerage client on Schwab's platform would get through its default sweep product: 0.40%. Fidelity in 2019 made the Government Money Market Fund its cash sweep default for brokerage and retirement accounts. Schwab, meanwhile, transitioned away from using money market funds as brokerage sweep products, completing the shift several years ago."
A Schwab spokesperson tells ignites, "[W]e do not believe clients should leave money they intend for long-term savings and investments in any sweep vehicle -- whether it is a cash sweep feature like we offer at Schwab, or a default sweep money market funds at another provider.' Investors can get a better return in the current market environment by moving that cash into what Schwab calls 'purchased' money market funds, FDIC-insured certificates of deposit or even savings accounts, he said. '[W]e encourage them to do just that, and make it easy for them,' he said, adding that some of Schwab's money funds have seven-day yields up to 3.85%, 'well over the sweep money market fund yields investors may find elsewhere.'"
The piece states, "A Fidelity spokesperson compared the Government Money Market Fund's yield to that of other brokerage sweep accounts, rather than other money market funds. Crane Data's index of brokerage sweep accounts had a seven-day yield of 0.32% for balances below $100,000 as of Nov. 4. For higher account balances, the seven-day yield for sweep accounts ranged from 0.34% to 0.89%. The 100 largest taxable money funds tracked by Crane Data had an average seven-day yield of 3.45% as of Nov. 10."
Finally, it quotes Crane Data's Peter Crane, "Cash is getting hot. So any marketing that focuses on cash is going to get more attention.... Three percent [yield] is the headline. It's not 'times whatever." ignites adds, "It's not the first time that Fidelity has called attention to its use of money market funds as the default sweep option, rather than lower-yielding deposit accounts. In August 2019, the firm took out a full-page Wall Street Journal ad, taking aim at Schwab, E*Trade and TD Ameritrade. 'Your cash never had it so good,' the ad said. Schwab then responded in kind with a full-page ad in the Sunday New York Times for its brokerage services. Crane Data dubbed it 'Cash of the Titans.'" (See Crane Data's August 13, 2019 News "`Cash of the Titans: Schwab vs. Fidelity; MF Yields Dip Below 2.0 Percent.")
