Treasury ends money market guaranty program

The Department of the Treasury's temporary guarantee program for money market funds will conclude today, one day after the ICI reported a jump in money fund outflows this week. Total money market mutual fund assets fell by $62.6 billion to $3.482 trillion for the week ending Wednesday, the Investment Company Institute said yesterday. Assets of the nation's retail money market mutual funds fell by $10.36 billion in the latest week, to $1.151 trillion. Assets of institutional money market funds fell by $52.24 billion, to $2.33 trillion for the same period. Among institutional funds, taxable money market fund assets fell by $46.97 billion, to $2.153 trillion; assets of institutional tax-exempt funds fell by $5.27 billion, to $178.76 billion. The temporary guaranty program was put in place following last year's run on money funds — a development that ensued once the $62 billion Reserve Primary Fund, offered by the Reserve Management Co. Inc., fell below a net asset value of $1 and “broke the buck.” While the $62 billion in outflows to money funds in the week ending Wednesday was an increase over the $15.3 billion in outflows reported the previous week, the spike is not necessarily attributable to an anticipated end of the guarantee program, said Peter Crane, president of Crane Data LLC, a research firm. “We've seen outflows coupled with the quarterly tax payment date of Sept. 15,” Mr. Crane said. “Money fund assets are notoriously volatile. The outflows were probably more a result of the tax payment than nervous investors.” The end of the guarantee program is “looking like a non-event,” Mr. Crane said. “There have not been any shocks or tremors in the broader marketplace that has also been a big help [to money funds],” he said. The Associated Press contributed to this story.