A record amount of cash is sitting in money market mutual funds
It makes sense, they’re paying over 5%, risk-free.
It’s been a good year for stocks. The S&P 500 is up almost 14%. But, of course, it hasn’t been without some drama. The blue-chip index sputtered significantly at times, with the gains for the year dwindling from 10% to 4% in just a few weeks back in late March and April.
Such volatility is part and parcel of stock investing, of course. But for those that don’t want to put all their assets on the roller coaster, the safety of money market mutual funds is pretty compelling — especially since they’re paying on average 5.12% annualized according to money fund trade publication Crane’s. (It’s also possible to find funds paying more than 5.35%.)
According to the Investment Company Institute — the mutual fund industry trade group — cash in money funds hit a record last week, climbing to $6.12 trillion.
Until the Fed shows signs on delivering those rate cuts the market keeps expecting — yields on money market funds are closely tied to the short-term interest rates the US central bank controls — incentives to sit in cash will continue to be pretty compelling for some.
