(Bloomberg) -- Money-market funds are already scooping up the Treasury's growing bill issuance now that the government has suspended the debt ceiling and is borrowing again. This comes as investors are turning to these funds in search of higher returns, despite concerns about increased risk.
Billions of dollars have flowed from traditional banks to money market funds in search of higher returns. These funds are supposed to be low-risk, with a focus on short-term, high-quality debt securities. However, as more money pours into these funds, some investors worry about the increased risk.
US money market fund assets have swelled to a record high this week, as the best yields available in years and the early May collapse of Archegos Capital Management have driven investors into these funds. The assets in these funds now total over $4.5 trillion.
Money market mutual fund yields have recently become more attractive, but some investors worry about increased risk as the debt ceiling suspension has led to increased borrowing by the government. This has led to concerns about the creditworthiness of the government and the potential for a downgrade of its debt.
Rising interest rates and a trio of regional bank failures have turbocharged the movement of cash into higher yielding money market funds. These funds typically invest in highly rated short-term securities and offer investors a way to earn more money on their cash while maintaining liquidity.
Yields are important, but so are liquidity considerations and guarantees. Money market funds are low-risk investments for parking your cash, earning interest while providing very good liquidity. These funds typically invest in highly rated short-term debt securities, making them a good choice for investors looking for safety and liquidity.
Money market accounts offer high interest rates for savers right now, but with the Fed expected to pause rate hikes today, it might be a good idea to lock in some of those gains now. Money market funds are a good choice for investors looking for safety and liquidity, but they also offer higher yields than traditional savings accounts.
There are trillions of dollars parked in money-market funds and other cash-like investments collecting about a 5% return. These funds are seeing record high assets as investors search for higher returns amid growing bill issuance.
Overall, money market funds are a popular choice for investors looking for safety and liquidity, but they also offer higher yields than traditional savings accounts. While concerns about increased risk exist, these funds are still considered low-risk investments for parking your cash. With record high assets, money market funds are likely to remain a popular choice for investors in the current economic climate.
