The money-market fund industry continues to thrive amidst the Federal Reserve’s decision to maintain steady interest rates. According to Bloomberg, data from Crane Data LLC reveals that the total capital invested in money-market funds has reached a new high of $7.4 trillion, with an influx of $320 billion in 2025 alone.
Money-market funds serve as investment vehicles for individuals seeking lower-risk opportunities in short-term debt securities, such as US Treasuries. Deborah Cunningham, the chief investment officer for global liquidity markets at Federated Hermes, predicts further growth in the industry, suggesting that assets could reach $7.5 trillion by the end of the year.
The Federal Reserve’s recent announcement to keep the federal funds rate within the range of 4.25-4.5% reflects its strategy to balance maximum employment and controlled inflation. This decision follows a series of rate adjustments, including a 0.25% cut in December. Michael Bird, a senior fund manager at Allspring Global Investments, notes that the continuous growth in money-market assets is expected, even if the Fed decides to adjust rates in the future.
As interest rates remain relatively high, investors are drawn to the stability and security offered by money-market funds. The industry’s resilience in the face of economic fluctuations underscores its appeal as a reliable investment option.
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