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Tech giants boost money market fund holdings to record levels

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The five biggest companies in the S&P 500 index increased money fund investments by 47% this year while they sell off corporate bond holdings.

by Manpreet Singh

Published: 6 November 2019

The top five companies by market capitalization in the S&P 500 index – namely Apple, Amazon, Alphabet, Microsoft and Facebook – increased their holdings of money market funds to $45 billion this year, according to latest SEC filings by the companies. Individually, Apple holds most of them at $15 billion and Facebook comes second at $11 billion.

The increase partly offsets a $26 billion decrease in bond holdings at the five companies over the same period. At $455 billion, these investments in corporate bonds, government bonds and asset-backed securities are now 10% lower than their peak at the end of 2017, when US President Donald Trump signed a law lowering corporate tax rates.

The five tech giants posted a growth of nearly 47% in money market fund holdings from the previous financial year. Along with money market funds, deposits also grew at 22% from 2018. Corporate bonds, Government bonds and Mortgage-backed securities saw a dip in holdings by nearly 10%, 2% and 3% respectively.

Investment Holdings by Apple, Amazon, Microsoft, Alphabet and Facebook in 2019

Amazon, Alphabet, Microsoft and Facebook posted their collective holdings of cash equivalent and marketable securities at a record level since 2014. Apple Inc. saw a drop of 13% in its holdings from the previous financial year due to a decrease in marketable securities by $60 billon. Amazon’s marketable securities doubled from last year, while Apple added $23 billion to its cash holdings from the previous year, highest among top five companies. Since 2014, Facebook recorded 372% hike in its cash and marketable securities holdings.

Cash & Cash Equivalent and Marketable securities

The reduction in cash and bond holdings is even more dramatic at other S&P 500 companies. Not including the big five techs, the 25 biggest US companies as measured by cash holdings this April have reduced their total investments by more than $190 billion since the end of 2017. This 30% decline from the $650 billion end-2017 figure demonstrates the impact of the tax law change in encouraging a repatriation of cash and payouts to shareholders.