Late last week, we quoted the keynote speech from our recent Money Fund Symposium conference in Jersey City (see our July 2 News, "JP Morgan AM's Tufts Says Embrace Innovation in MF Symposium Keynote). Today, we quote from the "Major Money Fund Issues 2026" session, which was moderated by Crane Data's Peter Crane and which featured Federated Hermes' Deborah Cunningham, BNY Dreyfus' Frank Gutierrez and UBS Asset Management's Rob Sabatino. Asked about the importance of "repo" or repurchase agreements, Cunningham comments, "It's the product within our industry that has the most amount of attention, the most amount of assets, and has the most contractual risk associated with it. So, people think about repo as the front end, as what's left over from the day's decisions on where investments should be. But in fact, it really is, you know, the key to the returns and the key to the liquidity in money market funds.... [I]ncreasing amounts of repo have served the needs of the money market fund industry, which was also growing in balances at the same time. So literally, they go hand in hand." (Note: Conference materials are available in our "Money Fund Symposium 2026 Download Center." Watch for more highlights and excerpts in our upcoming issue of Money Fund Intelligence, and thanks again to those who supported `MFS'26 in Jersey City!)
Commenting on the keynote talk, Gutierrez tells us, "I think the two points that I captured were one ... the huge growth over the last few years -- post-COVID [there's been] a lot of liquidity, a lot of cash buildup. That's been driven by attractive yields and uncertainty. Then the other thing that sort of captures [attention], [is] of course, tokenization. I know this conference will touch on it in various ways, but it's an evolving space. I think as an investment manager, you want to be involved, and you want to have products, even though it's sort of a nascent ... part of our industry."
Asked about the earlier "World Cup of Money Markets" session, Sabatino says, "I think it's important to realize while the U.S. market is the largest, there is a large and growing segment of market in Europe. We've seen stronger growth there this year than here in the U.S. so far. We're also seeing innovation occur there as well in the tokenized space. Then [there are] also new entrants ... we just launched a new Aussie dollar fund to augment our existing product lineup. So there is expansion there."
He continues, "It's a global market. The U.S. drives most of it, but many of the issues that we're doing the research for, we're buying across multiple currencies. And, you know, the evolution of money markets isn't just in the U.S., it is global. So very similar to what we're seeing in the U.S. with the embracing of soccer, a global sport, a lot more interest. We're all connected."
Asked if the strong asset growth will continue, Sabatino replies, "We hope it will. Obviously, the interest rate environment is good for our products. One of the things that we're always talking about, we've spent years, you know, debating with colleagues on the equity side, just this notion of cash on the sidelines.... I think the asset class continues to have a tremendous amount of value, especially with the aging of our population and higher interest rates definitely to help us. If you look at the markets and the expectation with a more hawkish Fed from last week, I think things will continue to be positive for all of us."
Cunningham comments on money fund growth estimates, "I'm still in the high single digits, Pete. Part of the reasoning behind that is, more or less the most recent moves that we've seen from a rate standpoint. The yield curves in the money markets have steepened, and what we saw for '24 and the first half of '25, flows were driven mostly or to a larger degree from retail types, especially against deposit products that were still [yielding near] zero."
She continues, "Then that flipped a little bit in 2025 and into the beginning part of 2026 where institutional took over as kind of the lead in that regard. But I think now when you look at the yield curve as it stands, many institutional buyers have the capability of going back into the market themselves. So, as you see a yield curve that has steepened out and offers 4% handles ... I think that the likelihood of some of that leaving and migrating into the direct market will keep that percentage growth at something that's less than double digits. Although, it surprised me over the course of the last two years in the percentage growth that we saw. So, I would be okay if I was happily surprised on that front again this year."
On what's driving inflows, Gutierrez responds, "I think it's tied to an attractive industry environment [and] geopolitical uncertainty, economic uncertainty. You have corporates put their cash levels on high. So, I think that ... the tailwinds are even outside of just yield. [I]nvestors are carrying more cash. And to Debbie's point, I think it's still a very attractive environment. You're earning yield in this risk-adverse product, particularly with all the uncertainty around.... We [think] the tailwinds will continue this year to the degree that we've seen in the last few years."
Asked about the Fed and investing strategies, he states, "If you go back to earlier in the year, we as an investment team were thinking that the Fed was very likely on hold. You know, very early in the year, the market was pricing multiple cuts.... We started legging in and extending, opportunistically, and locking in some yield. Obviously, as we all know, the yield curve has shifted.... Now, you have to be a little more thoughtful."
Gutierrez adds, "Overall, we generally have extended in this period of higher yields. But at the same time, we need to be thoughtful. That's the benefit of a money fund, right? You have a highly liquid, highly diverse product.... There will be opportunities based on your individual call on how to extend. But overall, I'd say we've been active."
On tokenization, Cunningham tells us, "Let me just start out by referencing one of the things that Chris [Tufts] said in his opening remarks, that we are not in a period of time where regulation is changing. And so we're focusing on innovation, which is so much more fun than dealing with the regulatory environment and modifications that are happening to that. Importantly, though, I think governance and control have to be emphasized when we look at these new products."
She adds, "From an FHI standpoint, we are partnering with Bank of New York and Goldman Sachs to offer a tokenized share class of one of our non-repo government products. Also, in the UK, we've had some Sterling distribution through Archax ... [where] our funds look the same in those innovations. It's just the distribution method that's being used by our partners in the process that has changed.... More recent for us is a new fund, which is sort of a resurrection of an old fund, called Money Market Management Digital Treasury Fund."
We asked Sabatino about his asset base, and he responds, "I think it's important ... knowing your client, understanding their liquidity needs and trying to focus on the liability portion of a portfolio, right? It's not just what we're investing in, but what does our asset base look like? And building a portfolio that is unique to the underlying clients, right? We all have multiple money market funds and they're all slightly different, and many times that's because of the investor base and their habits. So, we're always monitoring that, keeping more liquidity for those that are maybe more flighty in terms of their cash needs. But one interesting thing about the investor base, it really hasn't changed dramatically. But with the introduction of digital assets, we are talking to new investors."
Finally, he adds, "We're talking to digital native investors, fintechs that know nothing about money market funds. So, it's very interesting that we're at the forefront of this innovation, and that we're talking to clients that are very technically astute. But they don't know anything about money market fund versus deposit versus commercial paper. So, it is opening and expanding our investor universe. I think that's one of the reasons why we're all moving in this direction, because we see the potential. While the assets aren't there today, we do think that there's the potential in the future to serve a broader investor base with these new products."
