After yield-hungry investors yanked nearly $7.7 billion from tax-exempt money market funds last week, outflows slowed to $2.65 billion the week ending Jan. 25, leaving total assets at $390.97 billion, according to the Money Report, a service of iMoneyNet.com.
Investors tired of the paltry yields hovering closer to zero than 1% withdrew $7.67 billion in the week ending Jan. 18 as the average seven-day simple yield for the 499 tax-exempt funds in last week’s report remained unchanged at a record low of 0.02% for the second week in a row.
Investors saw no change in the average seven-day simple yield for the funds for the third week in a row while the Federal Open Market Committee Wednesday left the target federal funds rate at between zero and 0.25%. The average maturity declined one day from last week to 29 days.
After last week’s massive outflows, tax-exempt money fund assets settled at $393.62 billion for the week ending Jan. 18, according to the report.
The exit to higher-yielding, longer-term alternatives, such as municipal bond funds, continues a trend that has seen investors remove more than $106 billion out of tax-free money market funds in the past year, according to the Investment Company Institute.
Meanwhile, in the taxable market, 1,169 funds lost $11.11 billion and settled at $2.80 trillion in total assets for the week ending Jan. 26, according to iMoneyNet.com, compared to outflows of $38.18 billion for the week ending Jan. 19, when the funds finished with $2.811 trillion.
In addition, the average seven-day yield for all taxable funds was 0.03% where it has remained since Nov. 24.
The combined assets of the 1,668 funds in the report this week decreased by $13.75 billion and ended with total assets of $3.191 trillion for the week, compared with the prior week when all funds lost $45.86 billion and settled at $3.205 trillion, according to the report.