Municipal Money-Market Funds Lose Out on Record Investor Cash Demand
- Muni funds have grown 3.4%, lagging the 18% boom in taxables
- Lower yields, consolidation of funds have hampered demand
The stability of taxable money-market funds that are yielding more than 5% has proved irresistible to many investors.
Photographer: Asif Hassan/AFPMunicipal money-market funds are missing out on record demand for cash as higher-yielding taxable products, volatile rates and fewer investment options make the niche sector less appealing for many retail buyers.
With the Federal Reserve raising interest rates to the highest in 22 years, Treasuries headed for another annual loss and questions swirling around the outlook for stocks, the stability of taxable money-market funds that are yielding more than 5% has proved irresistible to many investors. Such assets have soared 18.3% through September to a record of about $6 trillion, according to Crane Data. Meanwhile, tax-exempt money-market funds have only grown 3.4%, reaching $122.9 billion.