VettaFi Talks Money Market ETFs
An article titled, "Money Market ETFs: New Ways to Reach for Yield in 2025," published by VettaFi, states, "Stocks are holding firm near all-time highs. But Wall Street can't ignore the record amounts of cash still parked on the sidelines.... The reinvestment risk into lower rates is significantly lessened this year from 2024. So the $7 trillion money market suddenly looks more appealing. Recent developments here may offer advisors and investors fresh pathways with which to attain higher yield in 2025." It continues, "BlackRock recently expanded its cash management strategies with the launch of two new money market ETFs. They are the iShares Government Money Market ETF (GMMF) and the iShares Prime Money Market ETF (PMMF). The funds both charge a fee 0.2%. They enable investors to diversify their cash holdings beyond traditional deposit accounts. This allows them to manage their cash needs flexibly.... The new products add to a small but growing lineup of money market ETFs. Last year, Texas Capital was the first to launch an ETF with the money market moniker -- the Texas Capital Money Market ETF (MMKT). Like GMMF, the fund acts as a government money market ETF that invests nearly all its assets in cash and U.S. government securities." The piece adds, "Short-term rate demand has driven monster flows into money market funds. Staying within a range of two to three years allows investors to pick up a little extra risk cushioned by a flight-to-safety trade that offers stability with minimal rate risk. Two actively managed ETFs drew in the bulk of last year's inflows. The Dimensional Short-Duration Fixed Income ETF (DFSD) boasts a low expense ratio of 0.16% and largely offers exposure to high-quality investment-grade bonds. The $12 billion PIMCO Enhanced Short Maturity Active ETF (MINT) is designed to provide a higher yield than traditional money market funds while maintaining minimal risk. Both funds drew in nearly $2 billion in net inflows last year."
