June 26, 2019 / 8:17 PM / 9 months ago

Investors pile into U.S. money funds for nine straight weeks -iMoneyNet

NEW YORK (Reuters) - Investors shifted more cash into money market funds for nine consecutive weeks, suggesting they are somewhat nervous even as Wall Street is hovering at all-time highs, according to a private report released on Wednesday.

Traders work on the main trading floor after the opening bell at New York Stock Exchange (NYSE) in New York, U.S. June 20, 2019. REUTERS/Brendan McDermid

Assets of money market funds, which are considered nearly as safe as bank accounts, increased by $19.13 billion to $3.156 trillion in the week ended June 25, the Money Fund Report said.

During this nine-week stretch, total fund assets have risen by $146 billion.

Taxable money market fund assets grew by $17.92 billion to $3.020 trillion, while tax-free assets climbed by $1.21 billion to $135.74 billion, according to the report, published by iMoneyNet.

(For a graphic on 'U.S. money fund assets' click tmsnrt.rs/2Em6)

Money managers’ allocation to global equities dropped by 32 percentage points from May to a net 21% underweight, the lowest allocation to stocks since March 2009, a survey from Bank of America Merrill Lynch released last week showed.

On the other hand, their average allocation rose to 5.6% from 4.6% - the biggest jump since the 2011 debt ceiling crisis.

Even in light of those defensive moves by institutional investors, the S&P 500 hit a record high last Thursday on expectations the Federal Reserve would lower interest rates as early as next month to counter risk from global trade tension and sluggish domestic inflation.

Average yields on money funds were resilient even as U.S. bond yields have fallen on bets that Fed would lower key lending rates to preserve the current economic expansion.

The iMoneyNet average seven-day simple yield for taxable money funds held at 1.99%, its lowest level so far this year. The weighted average maturity among taxable funds shrank by one day to 29.

The iMoneyNet average seven-day yield for tax-free and municipal funds jumped to 1.41%, its highest since early May from 1.25%. The weighted average maturity of tax-free funds was unchanged at 27 days.

(For a graphic on 'Bets on bold first rate-cut from the Fed' click tmsnrt.rs/2XTkkpn)

(This version of the story fixes word in first paragraph to nervous from nervousness)

Reporting by Richard Leong; Editing by Alistair Bell

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