There are signs of recovery in the money market funds, but will this console the wary investor who may consider exchange traded funds (ETFs) instead?
Since the disastrous mid-September panic when Reserve funds dipped below $1-per-share net asset value, money market funds gained $56 billion in assets, writes Beagan Wilcox for Ignites.
By Nov. 12, money funds hit $3.63 trillion in assets and in September, before the fiasco, total money fund assets were $3.58 trillion.
Prime money funds that invest in commercial paper, certificates of deposit and other taxable investments with the greatest outflows in September/October are gaining momentum.
Prime institutional money funds, which saw more than $400 billion in outflows during September/October, gained $21 billion in assets by Nov. 12. During that time, prime institutional money funds lost $418 billion while insitutional government money funds gained $337 billion.
After the Reserve funds broke the buck, net outflows totaled about $125 billion. By October, there were net inflows every week.
Retail prime money funds continue losing assets but on a lesser scale compared to the two weeks following news of the Reserve funds.
Even after investors who were burned by lack of transparency in these and other areas of the market, the industry seems to be hurting as assets were pulled out. Will this ultimately be to the benefit of ETFs?
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.