Tax-Free Money Market Funds Lose Cash for the Second Week

Cash flowed out of tax-free money market funds for the second week in a row, declining by a whopping $3.36 billion and settling at $465.66 billion in total assets for the week ending June 1, according to the Money Fund Report, a service of iMoneyNet.com of Westborough, Mass.

By comparison, tax-free money funds lost just $124.8 million and settled at $469.02 billion for the week ending May 25.

Since the average seven-day simple yield for 505 tax-exempt money funds hit a new record low of 0.23% for the week ending June 1, that could have caused investors seeking higher yields to pull their cash out of money market funds this week and move it into short-term municipal bond funds, noted Connie Bugbee, managing editor at iMoneyNet.

The average seven-day simple yield for tax-free money funds ended at 0.26% for the week ending May 25.

This week, the average maturity remained unchanged at 23 days.

The 1,202 taxable money funds, meanwhile, saw their assets decline by $18.14 billion to $3.236 trillion in total assets for the week ending June 2, while their average seven-day simple yield sank to an all-time low of 0.15%, down just one basis point compared with 0.16% for the week ending May 26.

Overall, the combined assets of the 1,707 money funds in the report fell by $21.49 billion — nearly double the inflows of $11.44 billion they generated last week. The funds settled at $3.701 trillion in total assets for the week ending June 2, compared with settling at $3.723 trillion in assets for the week ending May 26.

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