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 Second Quarter 2023 edition shows that Total MMF Assets increased by $224 billion to $5.917 trillion in Q2'23. The Household Sector, by far the largest investor segment with $3.526 trillion, saw the biggest asset increase in Q2, 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 Q2 2023. (Note: There's still time to register for our European Money Fund Symposium, which is Sept. 25-26, 2024 in Edinburgh. We hope to see you in Scotland!)
Private Pension Funds, Property-Casualty Insurance, Life Insurance Companies, State & Local Governments, Exchange-traded funds and the Nonfinancial Noncorporate Business categories saw small asset increases in Q2. The State & Local Govt Retirement category was the only one to stay unchanged and there were no categories that saw assets decreases last quarter. Over the past 12 months, the Household Sector, Nonfinancial Corporate Business, Rest of World, Property-Casualty Insurance and State & Local Governments categories showed the biggest asset increases, while Mutual Funds and Private Pension Funds saw the biggest asset decreases.
The Fed's "Table L.206," "Money Market Mutual Fund Shares," shows that total assets increased by $224 billion, or 3.9%, in the second quarter to $5.917 trillion. The largest segment, the Household sector, totals $3.526 trillion, or 59.6% of assets. The Household Sector increased by $137 billion, or 4.0%, in the quarter. Over the past 12 months through June 30, 2023, Household assets were up $707 billion, or 25.1%.
Nonfinancial Corporate Businesses, the second-largest segment according to the Fed's data series, held $844 billion, or 14.3% of the total. Assets here increased by $34 billion in the quarter, or 4.2%, and they've increased by $104 billion, or 14.0%, over the past year. Other Financial Business was the third-largest investor segment with $468 billion, or 7.9% of money fund shares. This category jumped $17 billion, or 3.8%, in the latest quarter. Other Financial Business, which we believe includes Securities Lending, has increased by $16 billion, or 3.6%, over the previous 12 months.
The fourth-largest segment, Mutual Funds (a recent addition to the tables), held $238 billion (4.0%). Private Pension Funds was the 5th largest category with 4.0% of money fund assets ($236 billion); it was up by $7 billion (3.1%) for the quarter and down $4 billion, or -1.7% over the last 12 months. The Rest of World remained sixth place in market share among investor segments with 3.5%, or $208 billion, while Nonfinancial Noncorporate Business held $139 billion (2.3%), Life Insurance Companies held $81 billion (1.4%), State & Local Governments held $74 billion (1.3%), Property-Casualty Insurance held $48 billion (0.8%), Exchange-traded Funds held $33 billion (0.6%), and State & Local Govt Retirement held $23 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 $3.233 trillion, or 54.6% and "Debt Securities," or Credit Market Instruments, with $2.393 trillion, or 40.4% of the total. Debt securities includes: Open market paper ($263 billion, or 4.4%; we assume this is CP), Treasury securities ($1.244 trillion, or 21.0%), Agency and GSE-backed securities ($755 billion, or 12.8%), Municipal securities ($121 billion, or 2.0%) and Corporate and foreign bonds ($10 billion, or 0.2%).
Another large MMF position in the Fed's series includes `Time and savings deposits ($267 billion, or 4.5%). Money funds also hold minor positions in Miscellaneous assets ($22 billion, or 0.4%) and Foreign deposits ($3 billion, 0.1%). Note: The Fed also lists "Variable Annuity Money Funds," which currently total $44 billion.
During Q2, Debt Securities were up $186 billion. This subtotal included: Open Market Paper (up $13 billion), Treasury Securities (up $203 billion), Agency- and GSE-backed Securities (down $37 billion), Corporate and Foreign Bonds (up $1 billion) and Municipal Securities (up $7 billion). In the second quarter of 2023, Security Repurchase Agreements were down $2 billion, Foreign Deposits were up $1 billion, Time and Savings Deposits were up by $40 billion, and Miscellaneous Assets were up $1 billion.
Over the 12 months through 6/30/23, Debt Securities were up $168 billion, which included Open Market Paper (up $42B), Treasury Securities (down $215B), Agencies (up $332B), Municipal Securities (up $4B), and Corporate and Foreign Bonds (up $6B). Foreign Deposits (up $2 billion), Time and Savings Deposits were up $80B, Securities repurchase agreements were up $637 billion and Miscellaneous Assets were down $1B.
The L.121 table shows `Stable NAV money market funds with $5,263 billion, or 88.9% of the total (up $218.3 or 4.3% in Q2 and up $878B or 20.0% over 1-year), and Floating NAV money market funds with $654 billion, or 11.1% (up $6.1B or 0.9% in Q2 and up $7B or 1.1% over 1-year). Government money market funds total $4.597 trillion, or 77.7% (up $161.5B or 3.6% in Q2 and up $525B or 12.9% over 1-year), Prime money market funds total $1.198 trillion, or 20.3% (up $59.3B or 5.2% in Q2 and up $349B or 41.0% over 1-year) and Tax-exempt money market funds $122B, or 2.1% (up $3.5B or 3.0% in Q2 and up $11B or 9.4% last year).
The Federal Reserve made changes to the Z.1 tables six 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."
