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[Bullwinkle]

U.S. tax-free money funds have record inflows
Wed Jan 11, 2006 4:08 PM ET


NEW YORK, Jan 11 (Reuters) - U.S. taxable money market funds had $14.1 billion of inflows in the latest reporting week, while tax-free funds recorded a record $14.96 billion of inflows, the Money Fund Report said on Wednesday.

Taxable money fund yields averaged 3.68 percent in the latest week, up 7 basis points from the prior week, and the highest since June 2001, according to the report published by iMoneyNet Inc. Tax-free yields plunged 33 basis points to 2.47 percent.

The record tax-free weekly inflows were fueled mainly by institutional investors socking away cash in their short-term tax-free accounts, said Pete Crane, managing editor of the Money Fund Report.

The combined $29 billion of weekly inflows for all money funds was close to the record set in June of last year, when all funds took in $30 billion in one week, Crane said.

Strong inflows were mainly driven by seasonal factors at the start of a new year, when investors park bonuses and other one-time payments in a liquid instrument, Crane said.

Tax-free yields likely declined because there was a large amount of money chasing a limited supply of securities, Crane added. The average yield is likely to pop back up in coming weeks, he said.

Total assets of tax-free money funds reached a record high of $352 billion in the latest week, the report said. Taxable money fund assets totaled nearly $1.68 trillion.

http://today.reuters.com/investing/FinanceArticle.aspx?type=bondsNews&storyID=URI:urn:newsml:reu...