With November well under way and the presidential election over, tax-free mutual funds saw inflows for the week ended Nov. 10, drawing in $1.59 billion and ending the week with $496.58 billion in total assets, according to the Money Fund Report.
The inflows came on the heels of two previous weeks of outflows, including last week when the funds lost $914 million and ended the week of Nov. 3 with $494.99 billion. In the prior week, the funds lost $1.96 billion and ended with $495.91 billion, according to the report, a service of iMoneyNet.com of Westborough, Mass.
However, in the month before the outflow activity, tax-exempt money funds had been generating cash - the largest of which was a $7 billion infusion that arrived the week ending Oct. 20, which saw total assets settle at $497.86 billion.
In the current week, the average seven-day yield for the 534 tax-free and municipal funds in the report fell to 1.04% from 1.42%, while the average maturity increased one day to 30 days.
Short-term market indicators demonstrate that activity appears to have returned to a more normal pattern following the extreme illiquidity and volatility stemming from the nation's economic turmoil in September and October, market players said.
For instance, the Securities Industry and Financial Markets Association's weekly swap index dropped to a 1.26% as of a week ago Wednesday - a substantial decline from its high of 7.96% back on Sept. 24, according to Municipal Market Data. On Oct. 29, the SIFMA index was at 1.82%, down from 2.28% on Oct. 22 and 3.45% on Oct. 15.
Meanwhile, the yield on daily and weekly variable-rate demand obligations continues to fall.
Daily VRDOs fell to 1.17% on Wednesday, compared with 1.09% last Wednesday, according to MMD. The yield for the daily VRDOs as of yesterday were not available on MMD's Web site at press time. In the weekly market, the yield dropped to 1.70% yesterday versus 1.87% last Thursday, MMD data showed.
Back in the money fund arena, the 1,286 taxable funds in the report increased by $19.63 billion to set a record high of $3.044 trillion - topping the previous record of $3.024 trillion set last week after they took in a whopping $42.92 billion.
The average seven-day yield for all taxable funds dropped nine basis points to 1.26% from 1.35%.
Overall, total assets of the 1,820 money funds in the report reached a high of $3.540 trillion after seeing a one-week boost of $21.21 billion, compared to last week when they saw inflows of $42.0 billion and ended with $3.518 trillion in total assets. The prior record for the highest total assets was set back on Sept. 9, when the funds added $29.3 billion and ended with $3.535 trillion - topping the previous record of $3.518 trillion on Aug. 19.