Assets in money market mutual funds broke the $1 trillion mark in early August.
The funds, which have grown 18.8% in the past 12 months, held $1.019 trillion on Aug. 13, the Investment Company Institute reported. The $1 trillion mark was reached a week earlier.
Money markets are a big slice of the mutual fund business at banks. As of June 30, banks managed $292.4 billion in these short-term portfolios- 52.9% of their fund assets and 27.2% of all assets in money funds at that time, according to Lipper Analytical Services, Summit, N.J.
Money funds "are a nice source of fee income to banks trying to diversify their balance sheets," said Tom Nevin, president of PNC Institutional Management Co., the liquidity management arm of PNC Bank Corp., Pittsburgh. In the 1970s, a PNC unit created the first institutional money market fund.
Mr. Nevin noted that about 100 money funds have been launched this year, bringing the total to about 1,300. "Banks are still starting funds, but some will have a hard time of it because you need critical mass."
In addition to PNC, which managed $26.6 billion in proprietary money funds at midyear, top banks in the field include Mellon Bank Corp. ($45.3 billion) and Chase Manhattan Corp. ($18.0 billion.)