Both ICI's weekly asset series and Crane Data's MFI Daily asset collection continued to hit record highs this week. The Investment Company Institute's latest "Money Market Fund Assets" report shows money fund totals hitting record levels for the 5th week in a row and 9th out of the last 10 weeks; they've risen by $383.7 billion, or 7.8%, since March 8 and $457.0 billion, or 9.3%, since Feb. 22. The failure of Silicon Valley Bank raised concerns over uninsured bank deposits, and large investors continue shifting assets into money funds (though they've been joined by some big retail inflows). Over the past 52 weeks, money fund assets have risen $748 billion, or 16.5%, with Retail MMFs rising by $475 billion (33.2%) and Inst MMFs rising by $273 billion (8.8%). ICI shows assets up by $542 billion, or 11.5%, year-to-date in 2023, with Institutional MMFs up $317 billion, or 10.4% and Retail MMFs up $226 billion, or 13.5%. (Note: Register soon for our upcoming Money Fund Symposium, which is scheduled for June 21-23, 2023 in Atlanta, Ga.)
The weekly release says, "Total money market fund assets increased by $30.28 billion to $5.28 trillion for the week ended Wednesday, April 12, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $26.75 billion and prime funds increased by $3.33 billion. Tax-exempt money market funds increased by $198 million." ICI's stats show Institutional MMFs jumping $22.2 billion and Retail MMFs rising $8.1 billion in the latest week. Total Government MMF assets, including Treasury funds, were $4.392 trillion (83.2% of all money funds), while Total Prime MMFs were $768.6 billion (14.6%). Tax Exempt MMFs totaled $116.4 billion (2.2%).
ICI explains, "Assets of retail money market funds increased by $8.10 billion to $1.90 trillion. Among retail funds, government money market fund assets increased by $5.25 billion to $1.29 trillion, prime money market fund assets increased by $2.19 billion to $511.28 billion, and tax-exempt fund assets increased by $654 million to $104.78 billion." Retail assets account for over a third of total assets, or 36.1%, and Government Retail assets make up 67.6% of all Retail MMFs.
They add, "Assets of institutional money market funds increased by $22.17 billion to $3.37 trillion. Among institutional funds, government money market fund assets increased by $21.49 billion to $3.10 trillion, prime money market fund assets increased by $1.13 billion to $257.33 billion, and tax-exempt fund assets decreased by $455 million to $11.60 billion." Institutional assets accounted for 63.9% of all MMF assets, with Government Institutional assets making up 92.0% of all Institutional MMF totals.
According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets hit yet another record of $5.667 trillion on Wednesday, April 12. Our asset collection shows MMFs up by $8.2 billion Wednesday, up by $28.8 billion over the past week and up $57.0 billon month-to-date in April. (Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're almost $400 billion lower than Crane's asset series.)
In related news, ignites published the article, "Money Funds to Brighten Shops' First-Quarter Earnings." It explains, "A confluence of factors -- the highest short-term interest rates in more than 15 years, March's banking crisis and relatively low returns in bank deposit products -- have [pushed] money market funds [to record levels] this year. The influx of money -- about $461 billion across all money funds year-to-date through March 31, according to Crane Data -- and the fact that many shops have dropped fee waivers could improve first-quarter earnings for large sponsors of the products, or at least provide a bright spot for struggling managers."
They tell us, "Money funds' March haul of $362 billion was the third-largest in the products' history, overshadowed only by inflows at the onset of the pandemic, said Peter Crane, chief executive of Crane Data. The elevated inflows have continued in April, Crane noted. 'It's a new record every day,' he said. Investors added $56 billion to money funds on Monday, according to Crane Data. Money funds climbed to $5.6 trillion in assets as of March 31, a record high, up from $5.1 trillion at the end of December, Crane Data shows."
The piece adds, "Money funds were 'eking out' records ... prior to Silicon Valley Bank's collapse on March 10, but there was a 'super spike' in sales after that event due to market jitters about the safety of some banks, Crane said. In addition to the boost in assets, revenue generated from money funds has increased because many firms have dropped the fee waivers that they instituted in 2020. They put the waivers in place because at the time near-zero interest rates threatened to result in zero or negative yields, absent the waivers."
Morningstar writes in an earlier article, "Investors Flood Money Market Funds in Search of Yield, Not Just Bank Worries." They state, "Investors have been pouring cash into money market funds, but unlike previous episodes, it doesn't appear to be a signal of rampant fears about the outlook for the stock or bond markets. Instead, investors are moving cash out of lower-yielding bank accounts, a trend that was building even before the regional banking crisis spurred concerns among large depositors over the safety of their money."
Finally, a CNBC piece, "How the market's biggest companies, from Apple to Tesla and Microsoft, invest their cash," comments, "Silicon Valley Bank wasn't the only U.S. company with a lot of cash to put to work, but corporate America's bulging balance sheets aren't likely to cause any of the same kinds of problems. The cash balances of big companies will, though, be in focus again as another earnings season begins. U.S. companies are sitting on at least $2 trillion of cash, with a quarter of it concentrated in a few top technology companies, according to Moody's Investor Service."
