US money market fund assets increased for a fifth straight week to their highest level since early 2010, as investors further raised their cash pile due to recent market volatility, a private report released on Wednesday showed. Assets of money market funds, which are seen as nearly as safe as bank accounts, jumped $35.62 billion to $3.029 trillion in the week ended Jan. 8.
This marked the first time that money fund assets surpassed $3 trillion since the week ended March 9, 2010, according to the Money Fund Report published by iMoneyNet. During this five-week stretch, money fund assets have risen by $159.53 billion.
Yields on taxable money funds are approaching levels seen on yields on short-dated Treasuries in the aftermath of the Federal Reserve's rate increase in December. "Cash is attractive at today's levels. Yields have come up a lot without taking on too much risks," said Collin Martin, director of fixed income with the Schwab Center for Financial Research in New York.
The seven-day simple yield on taxable money-market funds averaged 2.07 percent, up from 2.04 percent the previous week, but the average seven-day simple yield for tax-free and municipal money-market funds fell to 1.19 percent from 1.28 percent last week, iMoneyNet said. The yield on two-year Treasuries was 2.56 percent, down 2 basis points from late on Tuesday.
Meanwhile, taxable money market fund assets increased by $34.03 billion to $2.883 trillion, while tax-free assets rose by $1.59 billion to $146.53 billion in the latest week, Money Fund Report said. While investors built up their money fund holdings, they withdrew from stock and bond funds at the start of 2019, according to the Investment Company Institute. Equity funds saw $11.29 billion in outflows in the week ended Jan. 2, while bond funds recorded $14.16 billion in outflows, ICI said earlier on Wednesday.