July 10, 2019 / 7:03 PM / a year ago

U.S. money fund assets hit highest since January 2010: iMoneyNet

(In this July 10 story iMoneyNet corrects level to highest since January 2010, not December 2009)

NEW YORK (Reuters) - U.S. money market fund assets rose to their highest level since early 2010, as investors poured more cash into these low-risk accounts even while major Wall Street indexes reached record peaks on hopes for rate cuts from the Federal Reserve, a private report released on Wednesday showed.

Total money fund assets jumped $41.12 billion to $3.234 trillion in the week ended July 9, a level not seen since Jan. 12, 2010, the Money Fund Report said on Wednesday.

Total fund assets have grown for 11 consecutive weeks, increasing by about $224 billion during the current stretch.

For some cautious investors, earning about a 2% yield with almost no risk has been more compelling than buying more junk bonds and stocks, which have produced the double-digit total returns in the first half of 2019.

The average yield on taxable money funds is comparable to the yields on benchmark 10-year Treasury notes US10YT=RR.

A softening global economy and trade conflicts have stoked the inflows into money funds, analysts said.

“It’s the fear. It’s a conservative way to deal with risks out there,” said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis.

Taxable money market fund assets increased by $39.58 billion to $3.095 trillion, the highest level since Aug. 11, 2009, according to the report, published by iMoneyNet.

Tax-free money fund assets rose by $1.54 billion to $139.40 billion.

The iMoneyNet average seven-day simple yield for taxable money funds rose to 2.02% from 2.00% the week before. The weighted average maturity among taxable funds was unchanged at 29 days.

The iMoneyNet average seven-day yield for tax-free and municipal funds dropped to 1.15% from 1.43%, which was its highest since early May. The weighted average maturity of tax-free funds shortened by one day to 28 days.

(GRAPHIC - U.S. money fund assets: tmsnrt.rs/2Em6sNq)

Reporting by Richard Leong; Editing by Susan Thomas

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