Investors Rush to Pour Cash Into $7.4 Trillion US Money-Market Fund Industry
Bezos Wedding Draws Protests, Soul-Searching Over Tourism in Venice
One Architect's Quest to Save Mumbai's Heritage From Disappearing
NYC Congestion Toll Cuts Manhattan Gridlock by 25%, RPA Reports
Investors have poured more than $320 billion into the funds so far this year, according to Crane Data LLC, making it one of the biggest benefactors of the Federal Reserve's current monetary policy. That's something of a surprise for those on Wall Street who'd gone into 2025 assuming officials would lower interest rates and sap the attractive returns offered by the industry.
'$7 trillion can easily be $7.5 trillion in 2025,' said Deborah Cunningham, chief investment officer for global liquidity markets at Federated Hermes. 'Five-percent-plus rates were nirvana, four-percent-plus is still very good — and if we dip down into the high threes, that's quite acceptable as well.'
The average simple seven-day yield is now 3.95% for government funds and 4.03% for prime, an 8 basis point spread, according to Bank of America Corp. It's a compelling backdrop as some 600 participants gather at the annual Crane's Money Fund Symposium, which kicks off Monday in Boston.
Money funds have seen their coffers swell in recent years, notably in early 2020 for their haven appeal and again as the Fed's rate-hiking cycle boosted yields. Even as the Fed pivoted to cutting rates last year, assets continued to rise, with these funds typically slower to pass along the effects of lower rates when compared to banks.
Households have been a key driver of the inflows. Since the Fed started raising rates in March 2022, total assets under management in US money funds have swelled by roughly $2.5 trillion, and retail investors have accounted for about 60% of that, Investment Company Institute data show. Data from ICI exclude firms' own internal money funds, unlike Crane Data, which tracks the money market industry.
Inflows have continued even as the industry sees some investors embrace alternatives, such as ultra-short funds in the fixed income or equities, Cunningham said. Overall, though, it's a far cry from the exodus of cash from money-market funds that some on Wall Street had forecast.
'It's not surprising asset levels have held on and grown,' said Michael Bird, senior fund manager at Allspring Global Investments. 'Even if the Fed picks up its easing campaign this year, rates will still be relatively high.'
The Fed last week laid out forecasts for two quarter-point rate cuts this year, aligning with market pricing. Although the risk that conflict in the Middle East drives up oil prices and causes a resurgence in inflation remains an uncertatinty, traders see a quarter-point reduction as likely in September and all but guaranteed by October.
Given that interest-rate backdrop, money-market funds are trying to extend the weighted-average maturity — known as WAM — of their holdings as long as possible to capture elevated yields.
Fund managers have also adjusted holdings to compensate for the effects of debt-ceiling drama. While Wall Street strategists largely expect the government to raise the debt limit as part of the reconciliation process by late of July or early August, some funds have put more cash toward repurchase agreements — loans collateralized by Treasuries or agency debt — as an alternative.
Still, 'the expectation is when the debt ceiling gets resolved, there will be a significant increase in bill issuance, which helps yields,' Bird said. 'Uncertainty is helping our product.'
Luxury Counterfeiters Keep Outsmarting the Makers of $10,000 Handbags
Is Mark Cuban the Loudmouth Billionaire that Democrats Need for 2028?
Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros
The US Has More Copper Than China But No Way to Refine All of It
Can 'MAMUWT' Be to Musk What 'TACO' Is to Trump?
©2025 Bloomberg L.P.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
21 minutes ago
- Yahoo
Don't Need Your Required Minimum Distribution (RMD) Right Now? What Can You Do With the Cash Influx?
Key Points The IRS eventually comes looking for the tax revenue it didn't get to collect earlier on the money invested within IRAs and other tax-deferred accounts. Just because you withdraw money from a tax-sheltered retirement account doesn't mean it can't continue providing value, or continue growing. There's a financial maneuver that can help negate your need to make future RMDs. The $23,760 Social Security bonus most retirees completely overlook › Are you going to be 73 years old (or older) at any point in 2025? If so, whether or not you need it -- or even want it -- you will be legally required to start taking money out of most types of tax-deferred retirement accounts you may own. These withdrawals are called required minimum distributions, in fact, or RMDs -- and failing to make those taxable withdrawals each year before the annual deadline can result in decent-sized penalties. Don't stress out if you just don't need this cash at this time, though. While you can't refuse to withdraw it, you can still do constructive things with it outside of your IRA. Here's a review of your four best options. But first things first. What's an RMD? If you've already been through your first required minimum distribution, then 2025's RMD isn't your first rodeo. If you're unfamiliar with them, though, here's the deal. All the money that's been growing tax-free inside your (non-Roth) IRA, 401(k), or similar account? The IRS eventually wants its cut. The federal government's revenue-collection arm figures that 73 years of age is about as late in life as it wants to let you keep this money completely untaxed. And once you start, you'll take these required minimum distributions every year for the rest of your life. But what's the minimum? It varies with your age. When you're 73, you'll only need to withdraw about 3.77% of your retirement account's value as of the end of the prior year. The proportion gets progressively larger as you age, though, reaching 50% of the prior year's closing value at the rarely seen age of 120. Your brokerage firm or your account's custodian will supply you with the information needed to determine your RMD, and in many cases can figure it out for you. Otherwise, refer to the IRS for instructions. If you own more than one retirement account, that's OK. You can mix and match your withdrawals from the same kinds of retirement accounts to come up with a sum-total RMD figure, and then make the withdrawal from just one of these accounts, or portions from each. The IRS only cares about the total amount it's owed -- not where the money comes from. However, you can't mix and match among different kinds of retirement accounts, like a 403(b) and a traditional IRA. Both of them do have RMDs, but you'll have to handle each category separately. You can only combine like-categorized retirement accounts for RMD calculation and withdrawal purposes. There's one exception to this: 401(k) accounts. If you happen to have more than one 401(k), you need to take your calculated RMD for each one from that one. As for timing, your very first required minimum distribution doesn't need to be completed until April 1 of the year after you turn 73. Past that point, these withdrawals are supposed to be completed by the end of the calendar tax year. That means if you wait to make your first one, you may end up taking two years' worth of RMDs in the year you turn 74. Options Suppose you don't actually need all of that money in that year, though. No problem. While you'll still need to make these withdrawals, there are several options for what you may want to do with the cash influx, some of them specific to IRAs. 1. Give it away (tax efficiently) You can always give money to charitable causes. And, while there are limits, donations to legitimate charities are at least somewhat tax-deductible. If you're over 70 and a half and are willing to transfer cash or assets directly from your IRA to a charity, though, tax-deductibility limits are much higher. Specifically, by categorizing your RMD as a qualified charitable distribution (or QCD), you can take as much as $108,000 worth of an IRA distribution that would have been considered your taxable income (or up to $216,00 for a married couple) and directly transfer it to a charitable cause -- and that maneuver will still satisfy your minimum distribution requirement. You can't do this with 401(k)s or similar accounts. Contact the charity in question for instructions on how they can receive this gift, and then confirm it for your record-keeping and documentation purposes. 2. Tuck it away for a rainy day Just because you don't need this money right now doesn't necessarily mean you want to get rid of it altogether, of course. The day may well come when you do need it. If that's the case, leaving a sizable wad of cash in a checking or savings account is an option, but arguably not your best one. These accounts pay little to no interest. If you're willing to make a minimal amount of effort to shop around, you can find a high-yield money market fund you like instead. Such accounts are currently paying in the ballpark of 4%, and almost all brokerage firms and most online banks offer them. Now, moving money into and out of such funds involves buying and selling just like an ordinary mutual fund. So, to convert that money back to something liquid and cash-like will take one full business day. It's certainly worth the trouble, though, for a good interest rate on the kind of money you're likely to be reallocating with an RMD. 3. Invest it -- or reinvest it -- with its new taxable status in mind Most people slated to collect a required minimum distribution who don't actually need the money at that time are likely just going to reinvest it. However, if you're only going to repurchase the same investments you sold to facilitate the RMD, you need not bother. You can simply request a transfer of assets from an IRA and into an ordinary brokerage account. Just instruct your broker/custodian to do what's called an in-kind transfer. It may take an extra day or two to complete, but you'll still get a precise distribution value figure for the day the transfer was officially done. That being said, while you're moving things around anyway, you might want to use the opportunity to make some smart changes to your portfolio. Just consider the new taxable status for any freed-up money or assets. Nothing that ever happened within your IRA was a taxable event. Now, everything this money could become presents a potential tax liability. If you want to keep your tax bill to a minimum, you probably won't want to invest your entire RMD in dividend stocks. While they're riskier, buy-and-hold growth stocks are also rather tax-efficient. 4. Start saving for a Roth conversion Finally, if you know taking taxable withdrawals out of your retirement account every year is going to be more of a drag than you care to deal with, you've always got the option of converting an ordinary IRA into a Roth IRA -- Roths aren't subject to RMDs. The downside to this move is that when you convert money from an ordinary IRA into a Roth, all the taxes on this withdrawal come due at once. This can get expensive, especially if doing so bumps you into a higher tax bracket for the year. That's why many people who opt for Roth conversions perform them over the course of multiple years, completing the conversion in tranches, each of which is a relatively small income-taxable event. Assuming you'd rather not leave any money out of the newly converted (but still tax-deferring) Roth when you don't have to, you can cover this tax bill with other funds ... including your RMD money. Just bear in mind that a Roth conversion doesn't satisfy your RMD for that year. And, paying taxes on one doesn't negate the tax bill for the other. Every year's required minimum distribution is already determined at the end of the prior year, and is owed whether you do a conversion that year or not. If you like this idea, you'll simply want to convert as much money as possible as quickly as possible to keep your RMDs -- and the number of years you must take them -- to their lowest-possible minimum. The $23,760 Social Security bonus most retirees completely overlook If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these Motley Fool has a disclosure policy. Don't Need Your Required Minimum Distribution (RMD) Right Now? What Can You Do With the Cash Influx? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
21 minutes ago
- Yahoo
5 Reasons You Should Cancel Your Walmart+ Membership
A Walmart+ membership can be a valuable tool for the right person, especially for those who regularly shop at Walmart and would like the convenience of free home delivery plus other money-saving perks. For those who are wondering whether to cancel after the free 30-day trial or whether to renew their current membership, here are a few things to think about. Check Out: Read Next: Your 30-Day Trial Is Up and You Hardly Used the Membership If you decided to give a Walmart+ membership a whirl and didn't use it much, that's a good reason to cancel it. Unless you have rock-solid plans to use it in the future, why pay $98 a year for something you'll barely use? You Don't Want To Tip the Delivery Driver If one of the reasons you wanted the membership was for the convenience of Walmart delivering purchases and prescriptions to your doorstep, but you don't want to tip the delivery driver, you'll probably want to cancel. Even though Walmart does not require shoppers to tip, drivers may expect tips and pass over your order if they know you aren't planning to tip. Unfortunately, this can delay your order, which is an inconvenience and not worth the membership fee. Discover More: The Mobile Scan-and-Go Feature Won't Work Consistently The mobile scan-and-go feature is one of the perks of the Walmart+ membership because it saves time. It allows shoppers to scan their items while shopping and skip scanning at the checkout kiosk. However, some shoppers complain it doesn't work consistently, leaving them to have to rescan all of their items before checkout — which was what they were trying to avoid in the first place. You might as well save time and check out as normal if you experience these issues. Your Items Don't Arrive on Time Look online and you'll find plenty of complaints from Walmart+ members who say their items don't arrive on time. Other complaints include getting the wrong order, having missing items or having their order misdirected. If during your 30-day trial you experience more than one instance like these, it's likely you will continue to experience more of the same. Why pay for a service that doesn't deliver on its promises? Save time and frustration by utilizing curbside pickup or shopping in-store to pick up your items. You're Not Interested in Any of the Other Perks A Walmart+ membership isn't only for free delivery; it also offers the following perks: Free shipping with no order minimum Free pharmacy delivery with no order minimum Save $0.10 per gallon on fuel at more than 13,000 stations nationwide Free Paramount+ subscription 25% off daily Burger King purchases and a free Whopper with purchase every three months While these are all valuable perks, if you're not interested in utilizing any of them, you should probably cancel your Walmart+ membership. More From GOBankingRates 7 Tax Loopholes the Rich Use To Pay Less and Build More Wealth This article originally appeared on 5 Reasons You Should Cancel Your Walmart+ Membership
Fox News
23 minutes ago
- Fox News
Workers praise Trump's ‘no tax on tips' policy
Sen. Markwayne Mullin, R-Okla., discusses President Donald Trump's economic policies in the One, Big Beautiful Bill Act and more on 'Fox & Friends Weekend.'
