MONEY-FUND RIVALS SHOW QUARTERLY, YEARLY ASSET GROWTH
Our Enhanced Cash Report™ data for the three-month period that ended in March detailed $647.0 billion of combined U.S. and Offshore portfolio assets, when converted to dollars, compared to $606.7 billion in the final 2016 quarter. That translated to a quarterly total asset rise of $40.3 billion (up 6.6 percent) since Dec. 31. The latest quarter provided figures for 240 total portfolios, up by 19 portfolios since year-end.
On March 31, 2016, total assets of short-duration products tracked in the report stood at $619.6 billion (in dollar terms). The resulting 12-month asset increase was $27.4 billion or 4.4 percent.
U.S. Taxable Ultrashort Bonds accounted for roughly 49.2 percent of all assets reported for the beyond-money-market-fund product space and also represented 54.1 percent of U.S.-based enhanced-cash fund products, which totaled $588.0 billion for the initial 2017 quarter.
Ten taxable stable-NAV U.S. Cash Plus portfolios, which do not use amortized-cost valuations, showed combined assets of $83.7 billion, compared to $69.5 billion at year-end 2016. The one-year asset buildup for these products totaled $13.5 billion or 19.2 percent. Taxable U.S. Enhanced Cash fund assets remained on the rebound from sub-$100.0 billion levels of early 2014 with a March 31 total of $133.3 billion, a rise from the fourth-quarter 2016 total of $121.5 billion. March 2016 category assets were $106.9 billion, so early-year gains were $26.4 billion and 24.7 percent. The U.S. Taxable Ultrashort Bond category pushed up from previous-quarter levels of $307.0 billion to $318.3 billion on March 31. However, the resulting one-year category decline was $13.2 billion or 4.0 percent.
U.S. Ultrashort Bond funds provided much of the asset growth during the near-zero yield period that began in late 2008 due to the financial crisis which doomed the Reserve Primary MMF, and ended with the Federal Reserve’s decision in December 2015 to slightly raise short-term interest rates, a move that has since been repeated in December 2016 and twice so far this year. U.S.-based Ultrashort Bond funds recorded their all-time high asset levels of $335.3 billion on March 31, 2015. U.S. Ultrashort Bond funds have soared by $186.1 billion, or 140.8 percent, since levels of $132.2 billion were reported for such funds in December 2008.
Ultrashort Government portfolios notched 1-year net total returns ranging from minus-22-to-199 basis points as of March 31, compared to the iMoneyNet Government Institutional average of 17 basis points. Ultrashort Prime fund returns came in at minus-16-to-752 basis points. Prime + Sub-Investment Grade portfolios logged 1-year returns of 15-to-625 basis points, contrasting with the 40 basis point average for Prime Institutional MMFs.
Cash Plus – Prime funds’ 1-year net total returns as of March 31 ranged from 54-to-124 basis points, compared to an average of 40 basis points for Prime Institutional MMFs. A single reporting Cash Plus - Gov’t. portfolio showed a 1-year return of 16 basis points, just below the Government Institutional MMF average (17 basis points as of March 31).
Enhanced Cash Prime and Government portfolios posted 1-year net total returns on March 31 of from 35-to-107 basis points for Government portfolios; 28-to-224 basis points for Prime portfolios; and 121-to-207 basis points for Prime + Subinvestment Grade funds (compared to the iMoneyNet Government Institutional average of 17 basis points and the corresponding Prime Institutional average cited earlier of 40 basis points).
iMoneyNet has now been tracking data for the enhanced-cash universe for 12-plus years, beginning on March 31, 2005. The all-time low in this space for assets of $398.7 billion was reported in March 2009; record-high assets of $726.5 billion were noted on June 30, 2007.