Bloomberg: Money Funds Hot Again
Bloomberg published an update entitled, "Money-Market Funds Are Hot Again After Years of Fee Discounts." They write, "Money-market funds -- those humdrum cash-equivalents that plodded along for years in the low-interest rate era -- have suddenly turned lucrative. The funds are throwing off reams of cash, buoyed by a flight to safety following the regional banking crisis, the US Federal Reserve's rate hikes and increased fees. About $369 billion net has flowed into money-funds since mid-March, and at the same time, money market funds stopped having to discount their fees to retain business. That combination propelled industry revenues for March to a record $14.9 billion on an annualized basis, according to Crane Data. The annualized figure for March 2022 was $10.3 billion." The piece explains, "The current value of all money-market funds stands at $5.3 trillion, an increase of $800 billion from a year ago, according to data from the Investment Company Institute. The good times could be a boon for asset managers, given that money-market funds charge higher fees than the stock and bond index funds that have attracted the most new cash in recent years. Experts predict the trend will last, as the Fed isn't expected to slash interest rates back to near-zero anytime soon. The biggest beneficiaries of the money-market renaissance include Fidelity Investments, BlackRock Inc., Federated Hermes Inc. and asset-management arms of Goldman Sachs Group Inc. and JPMorgan Chase & Co. In first-quarter results reported Thursday, Federated Hermes said money-market assets hit a record of $505.8 billion, up from $476.8 billion at the end of last year. The Pittsburgh, Pennsylvania-based firm's customers embraced money-market funds 'as interest rates continued their rise and as investors considered regional banking issues,' CEO J. Christopher Donahue said in a statement."
