Money market funds have continued to remain popular with US investors, with US money market funds experiencing a net inflow of $20.51 billion in the week ending April 12. This figure, although the smallest since March 8, demonstrates a clear preference for such funds over traditional bank deposits as short-term interest rates have been on the rise.

Manifesting these higher returns are measures such as the yield on the 3-month U.S. Treasury bill, which reached a near 16-year high of 5.175% on Thursday, making money market fund investments an attractive option for investors.

In contrast to money market funds, equity funds saw a decline in outflows to a three-week low of $1.09 billion, with healthcare funds experiencing a sell off of $658 million. Small-cap equity on the other hand contributed $490.3 million and broke a three-week outflow streak. Further, communication services and financial sector funds experienced $951 million and $661 million in inflows respectively.

When looking at bond funds, U.S. bond funds recorded $1.7 billion in inflows which although significant, is a drop from the previous week's net buying which was $8.97 billion. Government bond funds however, heralded a net inflow of $2.44 billion, their smallest amount since eight weeks, while loan participation and U.S. investment-grade funds saw outflows of $542 million and $264 million, respectively.

The sustained popularity of U.S. money market funds in the face of fluctuating equity and bond investments reflects the increasing investor preference for higher returns in a rising interest rate environment. Going forward, money market funds are sure to remain a favorite for the foreseeable future.



Other News from Today