The Federal Reserve released its latest quarterly "Z.1 Financial Accounts of the United States" statistical survey (a.k.a. "Flow of Funds") late last week. Among the 4 tables it includes on money market mutual funds, the First Quarter 2023 edition shows that Total MMF Assets increased by $470 billion to $5.693 trillion in Q1'23. The Household Sector, by far the largest investor segment with $3.366 trillion, saw the biggest asset increase in Q1, followed by Nonfinancial Corporate Businesses. The Fed's latest Z.1 numbers, which contain one of the few looks at money fund investor segments available, also showed noticeable increases for the Other Financial Business (formerly Funding Corps), the Rest of World and the Mutual Fund categories in Q1 2023.
Private Pension Funds, State & Local Governments, Life Insurance Companies, Exchange-traded funds and the Nonfinancial Noncorporate Business categories saw small asset increases in Q1. The State & Local Govt Retirement and Property-Casualty Insurance categories were the only ones that saw assets decrease last quarter. Over the past 12 months, the Household Sector, Nonfinancial Corporate Business, Private Pension Funds, Rest of World and State & Local Governments categories showed the biggest asset increases, while Other Financial Business, Mutual Funds and State & Local Govt Retirement saw the biggest asset decreases.
The Fed's "Table L.206," "Money Market Mutual Fund Shares," shows that total assets increased by $470 billion, or 9.0%, in the first quarter to $5.693 trillion. The largest segment, the Household sector, totals $3.366 trillion, or 59.1% of assets. The Household Sector increased by $300 billion, or 9.8%, in the quarter. Over the past 12 months through March 31, 2023, Household assets were up $600 billion, or 21.7%.
Nonfinancial Corporate Businesses, the second-largest segment according to the Fed's data series, held $810 billion, or 14.2% of the total. Assets here increased by $71 billion in the quarter, or 9.5%, and they've increased by $44 billion, or 5.7%, over the past year. Other Financial Business was the third-largest investor segment with $435 billion, or 7.6% of money fund shares. This category jumped $53 billion, or 13.8%, in the latest quarter. Other Financial Business, which we believe includes Securities Lending, has decreased by $79 billion, or -15.4%, over the previous 12 months.
The fourth-largest segment, Private Pension Funds, held $266 billion (4.7%). Mutual Funds (a recent addition to the tables), was the 5th largest category with 4.3% of money fund assets ($237 billion); it was up by $11 billion (4.8%) for the quarter and down $62 billion, or -20.8% over the last 12 months. The Rest of World remained sixth place in market share among investor segments with 3.5%, or $200 billion, while Nonfinancial Noncorporate Business held $138 billion (2.4%), Life Insurance Companies held $77 billion (1.4%), State & Local Governments held $71 billion (1.3%), Property-Casualty Insurance held $42 billion (0.7%), Exchange-traded Funds held $29 billion (0.5%), and State & Local Govt Retirement held $22 billion (0.4%) according to the Fed's Z.1 breakout.
The Fed's "Flow of Funds" Table L.121 shows "Money Market Mutual Funds" largely invested in “Security Repurchase Agreements” with $3.235 trillion, or 56.8% and "Debt Securities," or Credit Market Instruments, with $2.207 trillion, or 38.8% of the total. Debt securities includes: Open market paper ($251 billion, or 4.4%; we assume this is CP), Treasury securities ($1.041 trillion, or 18.3%), Agency and GSE-backed securities ($792 billion, or 13.9%), Municipal securities ($114 billion, or 2.0%) and Corporate and foreign bonds ($9 billion, or 0.2%).
Another large MMF position in the Fed's series includes `Time and savings deposits ($227 billion, or 4.0%). Money funds also hold minor positions in Miscellaneous assets ($22 billion, or 0.4%) and Foreign deposits ($2 billion, 0.0%). Note: The Fed also lists "Variable Annuity Money Funds," which currently total $43 billion.
During Q1, Debt Securities were up $185 billion. This subtotal included: Open Market Paper (down $3 billion), Treasury Securities (down $23 billion), Agency- and GSE-backed Securities (up $212 billion), Corporate and Foreign Bonds (up $3 billion) and Municipal Securities (down $4 billion). In the first quarter of 2023, Security Repurchase Agreements were up $259 billion, Foreign Deposits were unchanged, Time and Savings Deposits were up by $37 billion, and Miscellaneous Assets were down $12 billion.
Over the 12 months through 3/31/23, Debt Securities were down $308 billion, which included Open Market Paper (up $18B), Treasury Securities (down $719B), Agencies (up $389B), Municipal Securities (up $1B), and Corporate and Foreign Bonds (up $4B). Foreign Deposits (unchanged), Time and Savings Deposits were up $52B, Securities repurchase agreements were up $858 billion and Miscellaneous Assets were down $1B.
The L.121 table shows `Stable NAV money market funds with $5,045 billion, or 88.6% of the total (up $455.3 or 9.9% in Q1 and up $619B or 14.0% over 1-year), and Floating NAV money market funds with $648 billion, or 11.4% (up $14.3B or 2.3% in Q1 and down $17B or -2.5% over 1-year). Government money market funds total $4.435 trillion, or 77.9% (up $371B or 9.1% in Q1 and up $284B or 6.8% over 1-year), Prime money market funds total $1.139 trillion, or 20.0% (up $99B or 9.5% in Q1 and up $295B or 34.9% over 1-year) and Tax-exempt money market funds $119B, or 2.1% (down $0.5B or -0.4% in Q1 and up $24B or 25.1% last year).
The Federal Reserve made changes to the Z.1 tables five quarters ago. Describing a "Money market funds sector data source change," the report says, "The money market mutual funds (MMF) sector (tables F.121 and L.121) has been revised beginning 2010:Q4 to reflect a change in data source to Securities and Exchange Commission Form NMFP. The level of assets and shares outstanding of the sector have increased due to the inclusion of private placement MMFs in the source data. Changes in the level due to changes in the data source in 2010:Q4 are recorded as other volume changes in the Financial Accounts."
On "Mutual funds sector holdings of money market funds," Z.1 tells us, "The mutual funds sector (tables F.122 and L.122) has been revised beginning 2010:Q4 to reflect holdings of money market funds not previously reported on the tables. In addition, holdings of repurchase agreements, commercial paper, corporate bonds, and miscellaneous assets have been revised. Additional and revised holdings are estimated using data from Morningstar and Investment Company Institute.... The exchange-traded funds sector (tables F.124 and L.124) has been revised beginning 2010:Q4 to reflect holdings of money market funds not previously reported on the tables."
