Money funds take losses to the banks in stride

It took nearly a decade for money market mutual funds to tally up more than $ 200 billion in assets. But because most of that money piled up in the last two or three years, the money funds' growth was considered ''remarkable.''

What do you call it, then, when two new ''money market'' accounts bring US banks and savings and loans over $200 billion in one month?

While the banks and thrifts are celebrating, the funds, for their part, seem to be calling it ''no big deal,'' even though they lost about 15 percent of their assets since the first of the new federally insured accounts, approved by the Depository Institutions Deregulation Committee (DIDC), was introduced Dec. 14.

Their view was summed up gastronomically by William Melton, vice-president and senior economist at Investors Diversified Services, a Minneapolis mutual fund. ''You name me one S&L or bank,'' he said, ''that can lose 15 percent of its assets in one month without falling into the arms of the Fed (Federal Reserve Board) or being forced to close or merge, and I'll eat it.''

The money funds, Mr. Melton and other fund executives explained, handle large amounts of money with very little overhead compared with the banks, so that even a much greater drop in assets would not affect them seriously.

They also point out that the steady drop in money fund assets was due to other factors than the new accounts:

* The funds reached their peak last summer and began to lose assets as the stock market picked up steam and many investors moved into equity or bond funds or took their money out to buy stocks and bonds directly.

* Many people used some of the cash in their money fund accounts to buy Christmas presents, meaning that some early shoppers took the money out before the first DIDC certificate became available Dec. 14.

* Money fund shareholders who make estimated quarterly income tax payments withdrew money by Jan. 15 for these payments.

* Although some investors did move part of their money to banks which were offering exceptionally high rates to attract attention and new customers, some of that money is returning to the funds, now that rates on the DIDC accounts at most banking institutions have dropped.

The funds are, however, ''vulnerable to further declines as long as the banks are able to offer bonus yields,'' notes Norman Fosback, president of the Institute for Econometric Research, a Fort Lauderdale, Fla., firm which publishes ''Money Fund Safety Ratings,'' a newsletter on money funds. ''But at some point . . . those bonus yields will be curtailed.''

That may have already happened. A survey early this month by Bank Rate Monitor, a newsletter published by Advertising News Service in Miami Beach, found that the average interest rate on the higher yields in money market deposit accounts stood at 8.85 percent. It had been 9.2 percent a week earlier. The average rate listed by Donoghue's Money Fund Report for the same week was 7. 81 percent.

''All other things being equal,'' Mr. Fosback continued, ''a person would rather do business with the bank down the street than with an institution in New York City. But all other things aren't equal. Money tends to be sticky.''

It took yields in the high teens to get many people to move their money out of banks and into the funds, he noted, and now that they are there, they are reluctant to move back.

''I feel the money funds are every bit as safe a place to be as the banks, even though they're not insured,'' commented Philip Cooper, a financial planner in Boston. For this reason, he says, he has recommended that most of his clients stay with their money funds, even when the banks were offering particularly high yields to attract new customers.

Having reached the apparent conclusion that both money market funds and the DIDC accounts are here to stay, some banks and mutual fund companies have called a truce in their war and are looking for ways to work together.

A number of brokerage firms and mutual funds, including Prudential-Bache Securities Inc., Dean Witter Reynolds Inc., Merrill Lynch & Co., and the Calvert Group have found ways to move some of their customers' money into the new money market accounts at selected banks. The moves help them give customers higher yields, keeps management of assets in the brokers' hands even when the money is in insured bank accounts, and adds to the banks' supplies of lendable funds.